<PAGE>

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 2002

                                                      REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                       ENDURANCE SPECIALTY HOLDINGS LTD.
             (Exact Name of Registrant as Specified in Its Charter)

<Table>
<S>                                  <C>                                  <C>
              BERMUDA                                6331                            NOT APPLICABLE
  (State or Other Jurisdiction of        (Primary Standard Industrial     (I.R.S. Employer Identification No.)
   Incorporation or Organization)        Classification Code Number)
</Table>

                                  CROWN HOUSE
                              4 PAR-LA-VILLE ROAD
                            HAMILTON HM 08, BERMUDA
                                 (441) 278-0400
  (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)

                             CT CORPORATION SYSTEM
                         111 EIGHTH AVENUE, 13TH FLOOR
                            NEW YORK, NEW YORK 10011
 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
                             of Agent For Service)
                             ---------------------

                                   COPIES TO:

<Table>
<S>                                                    <C>
              SUSAN J. SUTHERLAND, ESQ.                                 MICHAEL GROLL, ESQ.
       SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP                       SHERI E. BLOOMBERG, ESQ.
                  FOUR TIMES SQUARE                            LEBOEUF, LAMB, GREENE & MACRAE, L.L.P.
               NEW YORK, NEW YORK 10036                                 125 WEST 55TH STREET
                    (212) 735-3000                                    NEW YORK, NEW YORK 10019
              (212) 735-2000 (FACSIMILE)                     (212) 424-8000; (212) 424-8500 (FACSIMILE)
</Table>

                             ---------------------
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date of this Registration Statement.

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.  [ ]

                        CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
                                                                 PROPOSED MAXIMUM
                   TITLE OF EACH CLASS OF                       AGGREGATE OFFERING           AMOUNT OF
                SECURITIES TO BE REGISTERED                        PRICE(1)(2)            REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                      <C>
Ordinary Shares, $1.00 par value............................       $200,000,000               $18,400
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</Table>

(1) Includes shares to cover over-allotments, if any, pursuant to an
    over-allotment option granted to the underwriters.

(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(c) under the Securities Act of 1933, as amended.

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

                Subject to Completion. Dated December 19, 2002.
PROSPECTUS

                                  ,000,000 SHARES

                                (ENDURANCE LOGO)

                       ENDURANCE SPECIALTY HOLDINGS LTD.
                                ORDINARY SHARES
                             ----------------------

       This is the initial public offering of ordinary shares of Endurance
Specialty Holdings Ltd. All of the           ordinary shares are being sold by
the Company.

       The Company expects the initial public offering price to be between
$     and $     per share. No public market currently exists for the ordinary
shares. The Company intends to apply to have the ordinary shares approved for
listing on the New York Stock Exchange under the symbol "ENH."
                             ----------------------

       INVESTING IN THE ORDINARY SHARES INVOLVES RISK.   SEE "RISK FACTORS"
BEGINNING ON PAGE 9 TO READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING
ORDINARY SHARES.
                             ----------------------

<Table>
<Caption>
                                                              PER SHARE              TOTAL
                                                              ---------              -----
<S>                                                           <C>                    <C>
Initial public offering price...............................    $                    $
Underwriting discount.......................................    $                    $
Proceeds, before expenses, to Endurance Specialty Holdings
  Ltd.......................................................    $                    $
</Table>

                             ----------------------
       To the extent that the underwriters sell more than      ordinary shares,
the underwriters have the option to purchase up to an additional      ordinary
shares from the Company at the initial price to public less the underwriting
discount.

       NEITHER THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION NOR ANY OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

       The shares will be ready for delivery on or about           , 2003.
                             ----------------------

                           JOINT BOOKRUNNING MANAGERS
GOLDMAN, SACHS & CO.                                         MERRILL LYNCH & CO.
                             ----------------------
                                    JPMORGAN
                             ----------------------
CREDIT SUISSE FIRST BOSTON                                         DEUTSCHE BANK
                             ----------------------

                The date of this prospectus is           , 2003.
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Prospectus Summary..........................................    1
Risk Factors................................................    9
Cautionary Statement Regarding Forward-Looking Statements...   27
Use of Proceeds.............................................   28
Dividend Policy.............................................   29
Capitalization..............................................   30
Dilution....................................................   31
Selected Consolidated Financial Information.................   32
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   34
Industry Background.........................................   46
Business....................................................   48
Regulatory Matters..........................................   65
Management..................................................   76
Principal Shareholders......................................   85
Certain Relationships and Related Transactions..............   88
Description of Share Capital................................   89
Certain Indebtedness........................................  101
Shares Eligible for Future Sale.............................  103
Material Tax Considerations.................................  105
Underwriting................................................  114
Legal Matters...............................................  117
Experts.....................................................  117
Where You Can Find More Information.........................  117
Enforceability of Civil Liabilities under United States
  Federal Securities Laws and Other Matters.................  118
Index to Consolidated Financial Statements..................  F-1
Glossary of Selected Insurance and Other Terms..............  G-1
</Table>

                             ---------------------

       YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
WE ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY THESE SECURITIES ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR ORDINARY SHARES.

       ORDINARY SHARES MAY BE OFFERED OR SOLD IN BERMUDA ONLY IN COMPLIANCE WITH
THE PROVISIONS OF THE INVESTMENT BUSINESS ACT OF 1998 OF BERMUDA WHICH REGULATES
THE SALE OF SECURITIES IN BERMUDA. IN ADDITION, THE BERMUDA MONETARY AUTHORITY
(THE "BMA") MUST APPROVE ALL ISSUANCES AND TRANSFERS OF SHARES OF A BERMUDA
EXEMPTED COMPANY. BEFORE THIS OFFERING, WE EXPECT THE BMA WILL HAVE ISSUED THEIR
PERMISSION FOR THE ISSUE AND FREE TRANSFERABILITY OF THE ORDINARY SHARES BEING
OFFERED PURSUANT TO THIS PROSPECTUS, AS LONG AS THE SHARES ARE LISTED ON THE
NYSE, TO AND AMONG PERSONS WHO ARE NON-RESIDENTS OF BERMUDA FOR EXCHANGE CONTROL
PURPOSES. IN ADDITION, WE WILL DELIVER TO AND FILE A COPY OF THIS PROSPECTUS
WITH THE REGISTRAR OF COMPANIES IN BERMUDA IN ACCORDANCE WITH BERMUDA LAW. THE
BMA AND THE REGISTRAR OF COMPANIES ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL
SOUNDNESS OF ANY PROPOSAL OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE
OR OPINIONS EXPRESSED IN THIS PROSPECTUS.

                                        i
<PAGE>

                               PROSPECTUS SUMMARY

       This summary highlights information contained elsewhere in this
prospectus. Because it is a summary, it does not contain all of the information
that you should consider before investing. You should read the entire prospectus
carefully, including the "Risk Factors" and "Cautionary Statement Regarding
Forward-Looking Statements" sections and our consolidated financial statements
and the notes to those financial statements before making an investment
decision. As used in this prospectus, unless the context otherwise requires,
references to "we," "us," "our" and "the Company" refer to the consolidated
operations of Endurance Specialty Holdings Ltd., and its direct and indirect
subsidiaries, including Endurance Specialty Insurance Ltd. ("Endurance
Bermuda"), Endurance Worldwide Holdings Limited, Endurance Worldwide Insurance
Limited ("Endurance U.K."), Endurance U.S. Holdings Corp. and Endurance
Reinsurance Corporation of America ("Endurance U.S."). "Endurance Holdings"
refers solely to Endurance Specialty Holdings Ltd. In this prospectus, amounts
are expressed in U.S. dollars and the financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP"), except as otherwise indicated. We have included a
glossary of insurance and other terms, commencing on page G-1. Each term defined
in the glossary is printed in boldface the first time it appears in this
prospectus. On December 17, 2002, we effected a share premium issuance to our
existing shareholders. Except as otherwise indicated, all share data in this
prospectus assumes the share premium issuance to our existing shareholders of
four additional shares for each common share outstanding had occurred as of the
date such data is presented. As used in this prospectus, "common shares" refers
to our ordinary shares and class A shares, collectively. Unless otherwise
indicated, all data in this prospectus assumes no exercise of either the
underwriters' over-allotment option or of any outstanding warrants or options to
purchase common shares of Endurance Holdings.

                                  THE COMPANY

OVERVIEW

       Endurance Holdings is a holding company domiciled in Bermuda. Through our
operating subsidiaries based in Bermuda, the United Kingdom and the United
States, we focus on writing specialty lines of commercial PROPERTY and CASUALTY
INSURANCE and REINSURANCE on a global basis. We define specialty lines as those
lines of insurance and reinsurance that require dedicated, specialized
UNDERWRITING skills and resources in order to be profitably underwritten. Our
portfolio of specialty lines of business is organized into the following
segments: property per risk treaty reinsurance, property catastrophe
reinsurance, casualty treaty reinsurance, property individual risk, casualty
individual risk and other specialty lines.

       We seek to create a portfolio of specialty lines which are profitable and
have limited CORRELATION with one another. We believe that a well constructed
portfolio of diversified risks will produce less volatile results than each of
the individual lines of business independently and will provide a superior
risk-adjusted return on our capital. We identify and underwrite attractive
insurance and reinsurance business through our experienced underwriting staff
and apply a centralized quantitative framework of risk analysis across all of
our business segments. We produce our business through the leading worldwide
insurance and reinsurance intermediaries.

       We began operations on December 17, 2001 after Endurance Bermuda
completed a private placement of $1.2 billion of its equity securities. Initial
investors in Endurance Bermuda included Aon Corporation ("Aon"), Zurich
Financial Services Group ("Zurich"), Thomas H. Lee Partners, L.P. ("THL"), Texas
Pacific Group ("TPG"), Capital Z Financial Services Fund II, L.P. ("Capital Z"),
Perry Capital, Metro Center Investments Pte Ltd, General Motors Asset Management
("GM"), Lightyear Capital, Credit Suisse First Boston, Golden Gate Capital,
Reservoir Capital and TIAA-CREF.

       Since our founding and initial private placement, we have been able to
achieve significant success in the development of our business. Our
accomplishments include recruiting a highly experienced management team and
building a staff of over 100; forming and licensing insurance subsidiaries in
Bermuda, the United Kingdom and the United States; acquiring the property
catastrophe business of
                                        1
<PAGE>

LaSalle Re Limited ("LaSalle"); establishing a $300 million credit facility; and
repurchasing the equity interests in the Company owned by Zurich. For the nine
months ended September 30, 2002, we had $623 million in GROSS PREMIUMS WRITTEN
AND ACQUIRED and $63 million in net income. At September 30, 2002, we had $1.9
billion in total assets and $1.2 billion in shareholders' equity.

       Current conditions in the global insurance and reinsurance markets
present an attractive opportunity for us to deploy our capital. Many global
property and casualty insurers and reinsurers are currently experiencing
significantly reduced capital resulting from several years of excessively
competitive pricing, expanding coverage terms, significant increases in LOSSES
from asbestos liability, under-reserving, poor investment performance and losses
from the World Trade Center tragedy. This reduction in capacity has resulted in
considerable increases in pricing and in terms and conditions that are
significantly more favorable for insurers and reinsurers. We believe that the
additional capital provided through this offering, combined with our business
strategy, experienced management team and unencumbered balance sheet, will
enhance our ability to benefit from this market environment.

OUR COMPETITIVE STRENGTHS

       We believe certain characteristics distinguish us from our competitors,
including:

       -     Extensive Specialized Underwriting and Risk Management
             Capabilities.  We have made significant initial investments in our
             technical capabilities, including hiring 38 experienced
             UNDERWRITERS, an actuarial staff of seven, and a risk analysis and
             modeling staff of six. We extensively integrate our underwriting
             decisions with actuarial analysis, developing our own view as to
             the adequacy of the pricing in the insurance and reinsurance
             business which we underwrite.

       -     Experienced Management Team.  Our senior management team averages
             over 20 years of experience in the insurance and reinsurance
             industry. Our senior management, underwriting and technical
             professionals participate in our stock option plan that ties
             compensation to the achievement of goals aligned with those of our
             shareholders.

       -     Strong Market Relationships.  The underwriting expertise and
             extensive industry relationships previously developed by our senior
             management team and underwriters have allowed us to quickly
             establish our presence in the global insurance and reinsurance
             markets. We have strong relationships with major insurance and
             reinsurance brokers, including: Aon, Marsh & McLennan Companies,
             Inc. ("Marsh"), Willis Group Holdings, Ltd. ("Willis"), Benfield
             Group plc ("Benfield") and A.J. Gallagher & Co. ("A.J. Gallagher").
             To date, we have written business with approximately 550 clients.

       -     Bermuda-Based Operations.  Bermuda is our principal base of
             operations. As one of the leading centers of the global insurance
             industry, Bermuda provides us with ready access to clients who
             increasingly seek Bermuda-based capacity to meet their insurance
             and reinsurance needs. Bermuda also has a well developed network of
             insurance and reinsurance brokers, an experienced pool of employees
             with significant insurance expertise and a very responsive
             regulatory environment which allows for rapid innovation in
             insurance and reinsurance products.

       -     Conservative Investment Policy.  We have a conservative investment
             policy aimed at minimizing the volatility of our investment
             results. At September 30, 2002, 100% of our invested assets were
             held in cash equivalents and fixed maturity securities, 86% of
             which were rated AAA and 100% were rated A or better, with an
             average duration of 2.6 years.

       -     Unencumbered Capital Base.  We have statutory capital and surplus
             of approximately $1.2 billion. As a newly formed company, we are
             unencumbered by any historical losses relating to asbestos
             liabilities, the World Trade Center tragedy and other historical
             liability EXPOSURES currently affecting many of our competitors. By
             choosing to form and license new subsidiaries rather than assuming
             unknown liabilities through the acquisition of existing
                                        2
<PAGE>

             licensed "shell" companies, we have no risk that loss reserve
             development relating to historical exposures prior to our formation
             will negatively impact our future financial results. We believe
             that our unencumbered capital will allow us to distinguish
             ourselves from many of our competitors and help to attract clients
             who are seeking long-term financial stability from their insurers
             and reinsurers.

BUSINESS STRATEGY

       Our goal is to generate a superior long-term return on capital by
leveraging our competitive strengths and executing our strategy. The key
elements of our strategy are:

       -     Maintain a Portfolio of Profitable Specialty Lines.  We believe
             that there are significant opportunities in a number of lines of
             business in the current market environment. We participate in those
             specific specialty lines which we believe have the potential to
             offer the highest risk-adjusted return on capital and in which we
             believe we can establish a competitive advantage through our
             specialized teams of expert underwriters. We intend to use our
             ability to participate in multiple lines of business to deploy
             capital and resources to the most attractive business lines at the
             most opportune times.

       -     Utilize Monoline Level of Expertise in Each Line of Business.  We
             have formed teams of highly experienced professionals to manage
             each of our specific lines of business. Each team is led by a
             senior executive with extensive experience in the distinct business
             line for which the team is responsible and is supported by highly
             experienced underwriting personnel who are specialists in their
             unique business line.

       -     Apply Extensive Technical Analysis to Our Underwriting.  We manage
             our portfolio of risks through the utilization of CATASTROPHE
             modeling and dynamic financial analysis techniques that provide a
             quantitative basis for the management of risk aggregation and
             correlation. We license a broad array of catastrophe modeling
             products available from AIR Worldwide Corporation ("AIR") and RMS,
             Inc. ("RMS"). We have also launched our own proprietary
             underwriting risk management system and are building a proprietary
             suite of individual contract, portfolio and market risk management
             and price monitoring tools around this system. We intend to
             proactively monitor market trends to look for competitive threats
             to the lines of business in which we are operating as well as
             analyze potential new lines that may provide attractive
             opportunities.

             We require significant amounts of data in our underwriting process.
             We avoid writing business for which we believe sufficient data is
             not available, and therefore, to date have written no QUALIFYING
             QUOTA SHARES and only a limited amount of retrocessional business.
             We also limit the use of retrocessional protection, relying upon
             our underwriting analysis for risk management purposes.

       -     Maintain an Efficient Expense Structure.  We believe an efficient
             expense structure will allow us to produce more profitable results
             and more easily deploy our resources to those lines of business
             that become more attractive as market conditions change. Several
             factors contribute to our low cost structure, including our
             utilization of variable cost brokerage distribution, our presence
             in the Bermuda market which targets large insurance and reinsurance
             programs for clients, our current focus on high severity, low
             FREQUENCY lines which can be underwritten by relatively small
             teams, and our centralized risk management structure which limits
             redundant expenses and systems.

       -     Proactively Manage Our Capital Base.  We actively manage our
             capital by allocating resources to underwriting opportunities which
             we believe will offer the highest risk-adjusted return on capital.
             Over the long-term, we will seek to return excess capital to our
             shareholders rather than use excess capital to underwrite business
             at unattractive pricing levels. We believe the acquisition of the
             LaSalle property catastrophe business and the

                                        3
<PAGE>

             repurchase of the Zurich equity stake in the Company demonstrates
             two different aspects of our proactive capital management.

RECENT DEVELOPMENTS

       In September 2002, Endurance Holdings repurchased 5,000,000 of its
ordinary shares and cancelled warrants to purchase 2,049,600 of its ordinary
shares from two subsidiaries of Zurich for $100 million in cash. We financed the
purchase by drawing down $100 million from our existing term loan facility. This
debt currently bears interest at the London Interbank Offer Rate ("LIBOR") plus
1.00%. See "Certain Indebtedness" for additional disclosure.

       Endurance U.K. was incorporated on April 10, 2002. On December 4, 2002,
Endurance U.K. was authorized by the United Kingdom's Financial Services
Authority ("FSA") to begin writing certain lines of insurance and reinsurance in
the United Kingdom. As an authorized insurer in the United Kingdom, Endurance
U.K. would be able to operate throughout the European Union, subject to
compliance with certain notification requirements of the FSA and, in some cases,
certain local regulatory requirements.

       Endurance U.S. was incorporated on September 5, 2002. On December 18,
2002, it received a license to write certain lines of reinsurance business in
the State of New York from the New York State Department of Insurance (the "New
York Department").

       On November 21, 2002, Endurance Holdings borrowed $92 million available
under the term loan facility. These funds were used as part of a capital
contribution to Endurance Bermuda, which in turn made contributions to Endurance
U.S. and Endurance U.K. as part of their initial capitalization. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" for additional disclosure.

                             ---------------------

       Our principal executive offices are located at Crown House, 4
Par-la-Ville Road, Hamilton HM 08, Bermuda and our telephone number is (441)
278-0400.

                                        4
<PAGE>

                                  THE OFFERING

Shares we are offering........        ordinary shares

Over-allotment option.........        ordinary shares

Common shares to be
outstanding after this
offering......................                  shares

Voting rights.................   On all matters submitted to a vote of
                                 shareholders, holders of our ordinary shares
                                 are entitled to one vote per share, subject to
                                 the adjustments regarding voting set forth in
                                 "Description of Share Capital -- Voting
                                 Rights."

Use of proceeds...............   Assuming our ordinary shares are offered at an
                                 initial public offering price of $
                                 (the midpoint of the range stated on the front
                                 cover page of this prospectus), the net
                                 proceeds from this offering after deducting the
                                 estimated underwriting discount and our
                                 estimated offering expenses are estimated to be
                                 approximately $          million (assuming no
                                 exercise of the underwriters' over-allotment
                                 option) or approximately $          million
                                 (assuming the full exercise of the
                                 underwriters' over-allotment option). We intend
                                 to use these proceeds to provide additional
                                 capital to our subsidiaries, to repay a portion
                                 of the outstanding debt under our credit
                                 facilities and for other general corporate
                                 purposes.

Dividend policy...............   Our board of directors has not yet determined
                                 its intention regarding the payment of
                                 dividends on our ordinary shares. Our ability
                                 to pay dividends is subject to significant
                                 restrictions which are described under
                                 "Dividend Policy," "Regulatory Matters" and
                                 elsewhere in this prospectus.

Risk factors..................   See "Risk Factors" and other information
                                 included in this prospectus for a discussion of
                                 factors you should carefully consider before
                                 deciding to invest in our ordinary shares.

Stock exchange listing........   We intend to apply to have our ordinary shares
                                 approved for listing on the New York Stock
                                 Exchange under the symbol "ENH."

The number of common shares to be outstanding after the offering is based upon
the number of shares to be outstanding as of December 18, 2002 and reflects a
share premium issuance of four additional shares for each common share
outstanding that was effected immediately prior to that date. The information
above does not include           ordinary shares that may be issued pursuant to
the underwriters' over-allotment option, 3,287,290 ordinary shares issuable upon
the exercise of stock options that had been granted as of September 30, 2002 or
6,641,960 ordinary shares and 600,930 class A shares issuable upon the exercise
of warrants outstanding as of September 30, 2002.

                                        5
<PAGE>

                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION

       The following table sets forth our summary consolidated financial
information for the periods ended and as of the dates indicated. As described in
Note 1 to our consolidated financial statements included elsewhere in this
prospectus, our consolidated financial statements include the accounts of both
Endurance Holdings and Endurance Bermuda (our only operating subsidiary as of
September 30, 2002). Endurance Bermuda was incorporated on November 30, 2001 and
commenced operations on December 17, 2001. Endurance Holdings was incorporated
on June 27, 2002 and effected an exchange offer in July 2002 with the
shareholders of Endurance Bermuda. The exchange offer was accounted for as a
business combination of companies under common control.

       The summary consolidated financial information presented below is derived
from our consolidated financial statements included elsewhere in this
prospectus. The financial information for and as of the nine months ended
September 30, 2002 is based on our unaudited financial statements. These
historical results are not necessarily indicative of results to be expected from
any future period or of our full year performance. You should read this summary
consolidated financial information together with our consolidated financial
statements and related notes and the section of this prospectus entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<Table>
<Caption>
                                                                 PERIOD ENDED           NINE MONTHS ENDED
                                                               DECEMBER 31, 2001        SEPTEMBER 30, 2002
                                                             ---------------------    ----------------------
                                                             (IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
<S>                                                          <C>                      <C>
SUMMARY INCOME STATEMENT DATA:
Gross premiums written and acquired(a).....................         $   376                  $623,472
Net premiums written and acquired(b).......................             376                   590,513
Net premiums earned........................................               1                   204,282
Net investment income......................................             838                    29,355
Net realized gains on sales of investments.................              --                     3,688
Losses and loss expenses...................................              --                   115,146
Acquisition expenses.......................................              --                    33,304
General and administrative expenses........................             527                    26,494
Net income.................................................             312                    63,488
PER SHARE DATA:
Basic earnings per share...................................         $  0.01                  $   1.06
Diluted earnings per share.................................         $  0.01                  $   1.06
Weighted average number of common shares outstanding
  Basic....................................................          39,630                    59,945
  Diluted..................................................          39,630                    60,088
</Table>

                                        6
<PAGE>

<Table>
<Caption>
                                                                             AS OF SEPTEMBER 30, 2002
                                                        AS OF          -------------------------------------
                                                  DECEMBER 31, 2001        ACTUAL           AS ADJUSTED(C)
                                                  -----------------    --------------     ------------------
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                               <C>                  <C>                <C>
SUMMARY BALANCE SHEET DATA:
Cash and investments............................     $1,162,498          $1,453,234
Total assets....................................      1,165,099           1,853,083
Reserve for losses and loss expenses............             --             114,779
Reserve for unearned premiums...................            375             402,803
Bank debt(d)....................................             --             100,000
Total shareholders' equity......................      1,162,312           1,174,408
PER SHARE DATA:
Book value per share(e).........................     $    19.37          $    21.35
Diluted book value per share(f).................     $    19.37          $    21.10
SELECTED NON-U.S. GAAP DATA:
Net operating income(g).........................     $      312          $   59,800
</Table>

<Table>
<Caption>
                                                              NINE MONTHS ENDED
                                                              SEPTEMBER 30, 2002
                                                              ------------------
<S>                                                           <C>
Loss ratio(h)...............................................         56.4%
Acquisition expense ratio(i)................................         16.3%
General and administrative expense ratio(j).................         13.0%
                                                                     ----
Combined ratio(k)...........................................         85.7%
                                                                     ====
</Table>

                                        7
<PAGE>

------------

(a) Gross premiums written and acquired for the nine months ended September 30,
    2002 include $89 million of gross premiums acquired in the LaSalle
    transaction. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations."

(b) NET PREMIUMS WRITTEN AND ACQUIRED for the nine months ended September 30,
    2002 include $67 million of net premiums acquired in the LaSalle
    transaction. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations."

(c) The as adjusted summary balance sheet data as of September 30, 2002 reflects
    the application of the net proceeds of the sale of           ordinary shares
    in this offering at an assumed initial public offering price of $     , the
    midpoint of the range set forth on the cover of this prospectus (assuming no
    exercise of the underwriters' over-allotment option) after deducting the
    estimated underwriting discount and our estimated offering expenses. See
    "Use of Proceeds."

(d) On November 21, 2002, Endurance Holdings borrowed the remaining $92 million
    available under its term loan facility. For a full description of the
    Company's credit facilities, see "Certain Indebtedness."

(e) Book value per share is based on total shareholders' equity divided by basic
    common shares outstanding of 60,000,000 at December 31, 2001 and 55,000,000
    at September 30, 2002.

(f) Diluted book value per share is based on total shareholders' equity divided
    by the number of common shares and common share equivalents outstanding at
    the end of the period, using the treasury stock method. Common share
    equivalents include options and warrants which are dilutive when the book
    value of the Company exceeds the exercise price of the options or warrants.
    Diluted shares outstanding at December 31, 2001 were 60,000,000, and at
    September 30, 2002 were 55,667,170.

(g) Net operating income for the nine months ended September 30, 2002 is
    calculated by subtracting net realized gains on sales of investments of $3.7
    million from net income of $63.5 million. Net operating income was equal to
    net income for the period ended December 31, 2001.

(h) The loss ratio is calculated by dividing losses and loss expenses by net
    premiums earned.

(i) The acquisition expense ratio is calculated by dividing acquisition expenses
    by net premiums earned.

(j) The general and administrative expense ratio is calculated by dividing
    general and administrative expenses by net premiums earned.

(k) The combined ratio is the sum of the loss ratio, the acquisition expense
    ratio and the general and administrative expense ratio.

                                        8
<PAGE>

                                  RISK FACTORS

       Before investing in our ordinary shares you should carefully consider the
following risk factors and all other information set forth in this prospectus.
These risks could materially affect our business, results of operations or
financial condition and cause the trading price of our ordinary shares to
decline. You could lose all or part of your investment.

                         RISKS RELATING TO OUR BUSINESS

SINCE WE HAVE A LIMITED OPERATING HISTORY, IT IS DIFFICULT TO PREDICT OUR FUTURE
PERFORMANCE.

       Our Bermuda insurance subsidiary, Endurance Bermuda, was formed on
November 30, 2001 and began operations on December 17, 2001. Endurance Holdings
was formed on June 27, 2002 and our other subsidiaries were only recently
formed. We therefore have a limited operating and financial history. As a
result, there is limited historical financial and operating information
available to help you evaluate our past performance or to make a decision about
an investment in our ordinary shares. Companies in their initial stages of
development present substantial business and financial risks and may suffer
significant losses. These new companies must successfully develop business
relationships, establish operating procedures, hire staff, install information
management and other systems, establish facilities and obtain licenses, as well
as take other steps necessary to conduct their intended business activities.
There can be no assurance that we will be successful in implementing our
business strategy or in completing the development of the infrastructure
necessary to run our business. In addition, because our business consists of a
relatively limited number of insurance and reinsurance transactions, and because
we have not experienced any substantial CLAIMS to date, our historical financial
results may not accurately predict our future performance. As a result of
industry factors or factors specific to us, we may have to alter our anticipated
methods of conducting our business, such as the nature, amount and types of
risks we assume.

AS A PROPERTY AND PROPERTY CATASTROPHE INSURER AND REINSURER, WE ARE
PARTICULARLY VULNERABLE TO LOSSES FROM CATASTROPHES.

       Our property and property catastrophe insurance and reinsurance
operations expose us to claims arising out of catastrophes. Catastrophes can be
caused by various unpredictable events, including earthquakes, hurricanes,
hailstorms, severe winter weather, floods, fires, tornadoes, explosions and
other natural or man-made disasters. We also face substantial exposure to losses
resulting from acts of war, acts of terrorism and political instability. The
global geographic distribution of our business subjects us to catastrophe
exposure for natural events occurring in a number of areas throughout the world,
including, but not limited to, windstorms in Europe, hurricanes in Florida, the
Gulf Coast and the Atlantic coast regions of the United States, typhoons and
earthquakes in Japan and earthquakes in California and the New Madrid region of
the United States. The loss experience of property catastrophe insurers and
reinsurers has generally been characterized as low frequency but high severity
in nature. In the event that we experience CATASTROPHE LOSSES, there is no
assurance that our unearned premium and LOSS RESERVES will be adequate to cover
these risks. In addition, because accounting regulations do not permit insurers
and reinsurers to reserve for such catastrophic events until they occur, claims
from catastrophic events could cause substantial volatility in our financial
results for any fiscal quarter or year and could have a material adverse affect
on our financial condition or results of operations. Our ability to write new
business also could be adversely impacted. See "Business -- Underwriting and
Risk Management."

IF ACTUAL CLAIMS EXCEED OUR RESERVE FOR LOSSES AND LOSS EXPENSES, OUR FINANCIAL
CONDITION COULD BE ADVERSELY AFFECTED.

       Our success depends upon our ability to accurately assess the risks
associated with the businesses that we insure or reinsure. We establish loss
reserves to cover our estimated liability for the payment of all losses and LOSS
EXPENSES incurred with respect to premiums earned on the policies that we write.
Loss reserves do not represent an exact calculation of liability. Rather, loss
reserves are estimates of what we

                                        9
<PAGE>

expect the ultimate settlement and administration of claims will cost. These
estimates are based upon actuarial and statistical projections and on our
assessment of currently available data, as well as estimates of future trends in
claims severity and frequency, judicial theories of liability and other factors.
Loss reserve estimates are refined continually in an ongoing process as
experience develops and claims are reported and settled. Establishing an
appropriate level of loss reserves is an inherently uncertain process. Moreover,
these uncertainties are greater for new issuers like us than for an issuer with
a longer operating history because we do not yet have an established loss
history. Because of this uncertainty, we cannot assure you that our reserves at
any given time will prove adequate.

       To the extent we determine that actual losses and loss expenses exceed
our expectations and reserves reflected in our financial statements, we will be
required to immediately reflect these changes. This could cause a material
increase in our liabilities and a reduction in our profitability, including an
operating loss and reduction of capital. The number and size of reported claims
that we have received to date has been small. In the future, the number of
claims will increase, and their cumulative size could exceed our loss reserves.

THE RISKS ASSOCIATED WITH REINSURANCE UNDERWRITING COULD ADVERSELY AFFECT US.

       Because we participate in reinsurance markets, the success of our
underwriting efforts depends, in part, upon the policies, procedures and
expertise of the CEDING COMPANIES making the original underwriting decisions. We
face the risk that these ceding companies may fail to accurately assess the
risks that they assume initially, which, in turn, may lead us to inaccurately
assess the risks we assume. If we fail to establish and receive appropriate
premium RATES, we could face significant losses on these contracts.

THE FAILURE OF ANY OF THE LOSS LIMITATION METHODS WE EMPLOY COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION OR ON OUR RESULTS OF
OPERATIONS.

       We seek to limit our loss exposure by writing many of our insurance and
reinsurance contracts on an EXCESS OF LOSS basis, adhering to maximum
limitations on policies written in defined geographical zones, limiting program
size for each client, establishing PER RISK and PER OCCURRENCE LIMITATIONS for
each event and prudent underwriting guidelines for each program written. In the
case of PROPORTIONAL TREATIES, we seek per occurrence limitations or LOSS RATIO
CAPS to limit the impact of losses from any one event. Most of our direct
LIABILITY INSURANCE policies include MAXIMUM AGGREGATE LIMITATIONS. We also seek
to limit our loss exposure through geographic diversification. Geographic zone
limitations involve significant underwriting judgments, including the
determination of the area of the zones and whether a policy falls within
particular zone LIMITS. Disputes relating to coverage and choice of legal forum
may also arise. There can be no assurance that various provisions of our
policies, such as limitations or exclusions from coverage or choice of forum,
will be enforceable in the manner we intend nor can there be any assurance that
any of our other loss limitation methods will be effective. Underwriting is a
matter of judgment, involving important assumptions about matters that are
inherently unpredictable and beyond our control, and for which historical
experience and probability analysis may not provide sufficient guidance. One or
more catastrophic or other events could result in claims that substantially
exceed our expectations, which could have a material adverse effect on our
financial condition and our results of operations, possibly to the extent of
eliminating our shareholders' equity.

WE ARE DEPENDENT ON KEY EXECUTIVES.

       Our success substantially depends upon our ability to attract and retain
qualified employees and upon the ability of our senior management and other key
employees to implement our business strategy. We believe there are only a
limited number of available qualified executives in the business lines in which
we compete. Although we are not aware of any planned departures, we rely
substantially upon the services of Kenneth J. LeStrange, our Chief Executive
Officer, President and Chairman of the board of directors, Steven W. Carlsen,
President of Endurance U.S., and James R. Kroner, our Chief Financial Officer.
The loss of any of their services or the services of other members of our
management team or the inability to attract and retain other talented personnel
could impede the further implementation of our business
                                        10
<PAGE>

strategy, which could have a material adverse effect on our business. We do not
currently maintain key man life insurance policies with respect to any of our
employees.

OUR BUSINESS COULD BE ADVERSELY AFFECTED BY BERMUDA EMPLOYMENT RESTRICTIONS.

       We will need to hire additional employees to work in Bermuda. Under
Bermuda law, non-Bermudians (other than spouses of Bermudians) may not engage in
any gainful occupation in Bermuda without an appropriate governmental work
permit. Work permits may be granted or extended by the Bermuda government upon
showing that, after proper public advertisement in most cases, no Bermudian (or
spouse of a Bermudian) is available who meets the minimum standard requirements
for the advertised position. The Bermuda government recently announced a new
policy limiting the duration of work permits to six years, with certain
exemptions for key employees. All of our Bermuda-based professional employees
who require work permits have been granted permits by the Bermuda government.
The terms of these permits range from three to five years depending on the
individual. None of our current Bermuda employees for whom we have applied for a
work permit have been denied. It is possible that we could lose the services of
one or more of our key employees if we are unable to obtain or renew their work
permits, which could have a material adverse affect on our business.

ENDURANCE BERMUDA AND ENDURANCE U.K. ARE RATED "A-" (EXCELLENT) BY A.M. BEST
COMPANY AND A DECLINE IN THIS RATING COULD AFFECT THEIR STANDING AMONG BROKERS
AND CUSTOMERS AND CAUSE OUR PREMIUMS AND EARNINGS TO DECREASE. OUR OTHER
INSURANCE SUBSIDIARY MAY NOT BE ABLE TO OBTAIN OR MAINTAIN RATINGS.

       Ratings have become an increasingly important factor in establishing the
competitive position of insurance and reinsurance companies. A.M. Best assigned
to Endurance Bermuda and Endurance U.K. a financial strength rating of "A-"
(Excellent). The objective of A.M. Best's rating system is to provide an opinion
of an insurer's or reinsurer's financial strength and ability to meet ongoing
obligations to its policyholders. These ratings reflect A.M. Best's opinion of
Endurance Bermuda's and Endurance U.K.'s initial capitalization, management and
sponsorship, and are not an evaluation directed to investors in our ordinary
shares and are not a recommendation to buy, sell or hold our ordinary shares.
These ratings are subject to periodic review by, and may be revised downward or
revoked at the sole discretion of, A.M. Best, and we cannot assure you that we
will be able to retain these ratings.

       If Endurance Bermuda's or Endurance U.K.'s rating is reduced from its
current level by A.M. Best, our competitive position in the insurance and
reinsurance industry would suffer, and it would be more difficult for us to
market our products. A downgrade could result in a significant reduction in the
number of insurance and reinsurance contracts we write and in a substantial loss
of business as client companies, and brokers that place such business, move to
other competitors with higher ratings.

       Our other insurance subsidiary, Endurance U.S., has not yet received a
rating from any rating agency. There can be no assurances that this insurance
subsidiary will receive or be able to maintain any particular ratings, which
could have an adverse effect on its competitive position.

OUR HOLDING COMPANY STRUCTURE AND CERTAIN REGULATORY AND OTHER CONSTRAINTS
AFFECT OUR ABILITY TO PAY DIVIDENDS AND MAKE OTHER PAYMENTS.

       Endurance Holdings is a holding company and, as such, has no substantial
operations of its own. Endurance Holdings does not have any significant
operations or assets other than its ownership of the shares of its direct and
indirect subsidiaries, including Endurance Bermuda, Endurance U.K. and Endurance
U.S. Dividends and other permitted distributions from insurance subsidiaries are
expected to be Endurance Holdings' sole source of funds to meet ongoing cash
requirements, including debt service payments and other expenses, and to pay
dividends, if any, to shareholders. Bermuda law and regulations, including, but
not limited to Bermuda insurance regulation, restrict the declaration and
payment of dividends and the making of distributions by Endurance Bermuda unless
certain regulatory requirements are met. The inability of Endurance Bermuda to
pay dividends in an amount sufficient to enable Endurance Holdings to meet its
cash requirements at the holding company level could have a material

                                        11
<PAGE>

adverse effect on its operations. In addition, Endurance U.K. and Endurance U.S.
are subject to significant regulatory restrictions limiting their ability to
declare and pay dividends. We therefore do not expect to receive dividends from
either of those subsidiaries for the foreseeable future.

       Endurance Holdings is subject to Bermuda regulatory constraints that will
affect its ability to pay dividends on its ordinary shares and make other
payments. Under the Bermuda Companies Act of 1981, as amended (the "Companies
Act"), Endurance Holdings may declare or pay a dividend out of distributable
reserves only if it has reasonable grounds for believing that it is, or would
after the payment be, able to pay its liabilities as they become due and if the
realizable value of its assets would thereby not be less than the aggregate of
its liabilities and issued share capital and share premium accounts. In
addition, our credit facilities prohibit Endurance Holdings from declaring or
paying any dividends if a default or event of default has occurred and is
continuing at the time of such declaration or payment or would result from such
declaration or payment. For a discussion of the legal limitations on our
subsidiaries' ability to pay dividends to Endurance Holdings and of Endurance
Holdings to pay dividends to its shareholders, see "Dividend Policy,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Certain Indebtedness" and
"Regulatory Matters."

THE COST OF REINSURANCE SECURITY ARRANGEMENTS MAY MATERIALLY IMPACT OUR MARGINS.

       As a Bermuda reinsurer, Endurance Bermuda is required to post collateral
security with respect to reinsurance liabilities it assumes from ceding insurers
domiciled in the U.S. The posting of collateral security is generally required
in order for U.S. ceding companies to obtain credit on their U.S. statutory
financial statements with respect to reinsurance liabilities CEDED to unlicensed
or unaccredited reinsurers. Under applicable statutory provisions, the security
arrangements may be in the form of letters of credit, reinsurance trusts
maintained by third-party trustees or funds-withheld arrangements whereby the
trusted assets are held by the ceding company. Endurance Bermuda has the ability
to issue up to $108 million in letters of credit under the Company's revolving
credit facility that expires on August 11, 2003. If this facility is not
sufficient or if the Company is unable to renew this facility or is unable to
arrange for other types of security on commercially acceptable terms, the
ability of Endurance Bermuda to provide reinsurance to U.S.-based clients may be
severely limited.

       Security arrangements may subject our assets to security interests and/or
require that a portion of our assets may be pledged to, or otherwise held by,
third parties. Although the investment income derived from our assets while held
in trust typically accrues to our benefit, the investment of these assets is
governed by the investment regulations of the state of domicile of the ceding
insurer, which may be more restrictive than the investment regulations
applicable to us under Bermuda law. The restrictions may result in lower
investment yields on these assets, which could materially adversely affect our
profitability.

OUR LEAD INVESTORS CURRENTLY HAVE THE RIGHT TO DESIGNATE A MAJORITY OF THE
DIRECTORS ON OUR BOARD, AND WE MAY BE ADVERSELY AFFECTED BY PERCEIVED OR
POTENTIAL CONFLICTS OF INTEREST RELATING TO OUR LEAD INVESTORS OR THEIR BOARD
DESIGNEES.

       Immediately upon completion of this offering, our existing shareholders,
including the lead investors in our original private placement, are expected to
beneficially own ordinary shares aggregating      % of the combined voting power
and      % of the equity interest in our ordinary shares on a fully diluted
basis assuming the full exercise of all vested share options and warrants
exercisable for ordinary shares or class A shares and full conversion of
outstanding class A shares for ordinary shares. Certain of our lead investors
have contractual rights to representation on our board of directors and
committees of our board of directors, and have designated eight of our existing
twelve directors. See "Description of Share Capital -- Shareholders Agreement."

       As a result of their ownership position and board and committee
representation, our lead investors and their board representatives,
independently and voting together with our other existing shareholders, will
have the ability to significantly influence matters requiring shareholder
approval, including, without

                                        12
<PAGE>

limitation, the election of directors and amalgamations, consolidations and
sales of all or substantially all of our assets.

       Certain of our lead investors engage in commercial activities and enter
into transactions or agreements with us or in competition with us, which may
give rise to conflicts of interest. We derive a significant portion of our
business through reinsurance relationships and other arrangements in which Aon
has acted as a broker or insurance or reinsurance intermediary. Due to Aon's
investment in us and their involvement in our formation, it is possible that
certain brokers and intermediaries that compete with Aon will perceive a
conflict of interest in our relationships with Aon and may, therefore, be
hesitant to present insurance and reinsurance proposals and opportunities to us.

       Our lead investors or their affiliates have sponsored, and may in the
future sponsor, other entities engaged in or intending to engage in insurance
and reinsurance underwriting, some of which, together with the lead investors,
may compete with us. Certain of our lead investors and their affiliates have
also entered into agreements with and made investments in numerous companies
that may compete with us. In particular, THL, Capital Z and Credit Suisse First
Boston have each made significant investments in new and existing companies
which compete directly with us.

PROFITABILITY MAY BE ADVERSELY IMPACTED BY INFLATION.

       The effects of inflation could cause the severity of claims from
catastrophes or other events to rise in the future. Our reserve for losses and
loss expenses includes 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, we will be required to increase our loss reserves
with a corresponding reduction in our net income in the period in which the
deficiency is identified.

OUR INVESTMENT PERFORMANCE MAY AFFECT OUR FINANCIAL ASSETS AND ABILITY TO
CONDUCT BUSINESS.

       We derive a significant portion of our income from our invested assets.
As a result, our operating results depend in part on the performance of our
investment portfolio, which currently consists of fixed maturity securities. Our
operating results are subject to a variety of investment risks, including risks
relating to general economic conditions, market volatility, interest rate
fluctuations, liquidity risk and credit and default risk. Additionally, with
respect to certain of our investments, we are subject to pre-payment or
reinvestment risk. Fixed income markets have become increasingly volatile in the
last year, particularly since the events of September 11, 2001.

       With respect to our longer-term liabilities, we strive to structure our
investments in a manner that recognizes our liquidity needs for our future
liabilities. In that regard, we attempt to correlate the maturity and duration
of our investment portfolio to our general and specific liability profile. We
cannot assure you that we will be successful in continuing to structure our
investment portfolio in that manner. The market value of our fixed maturity
investments will be subject to fluctuation depending on changes in various
factors, including prevailing interest rates. To the extent that we are
unsuccessful in correlating our investment portfolio with our expected
liabilities, we may be forced to liquidate our investments at times and prices
that are not optimal, which could have a material adverse affect on the
performance of our investment portfolio.

       Interest rates are highly sensitive to many factors, including
governmental monetary policies, domestic and international economic and
political conditions and other factors beyond our control. Although we attempt
to take measures to manage the risks of investing in a changing interest rate
environment, we may not be able to mitigate interest rate sensitivity
effectively. A significant increase in interest rates could have a material
adverse effect on our book value.

                                        13
<PAGE>

WE MAY BE ADVERSELY AFFECTED BY FOREIGN CURRENCY FLUCTUATIONS.

       Our functional currency is U.S. dollars for Endurance Bermuda and
Endurance U.S. and British Sterling for Endurance U.K. The reporting currency
for all entities is U.S. dollars. We maintain a portion of our investments and
liabilities in currencies other than the U.S. dollar. We have made a significant
investment in the capitalization of Endurance U.K. Endurance U.K. is subject to
the FSA 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. We may, from time to time,
experience losses resulting from fluctuations in the values of foreign
currencies, which could have a material adverse effect on our results of
operations.

WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE WHICH MAY NOT BE AVAILABLE OR
ONLY AVAILABLE ON UNFAVORABLE TERMS.

       Our future capital requirements depend on many factors, including our
ability to write new business successfully and to establish premium rates and
reserves at levels sufficient to cover losses. To the extent that the funds
generated by this offering are insufficient to fund future operating
requirements and cover claim losses, we may need to raise additional funds
through financings or curtail our growth and reduce our assets. Any equity or
debt financing, if available at all, may be on terms that are not favorable to
us. In the case of equity financings, dilution to our shareholders could result,
and in any case such securities may have rights, preferences and privileges that
are senior to those of the ordinary shares offered hereby. If we cannot obtain
adequate capital, our business, results of operations and financial condition
could be adversely affected.

SINCE WE DEPEND ON A FEW BROKERS FOR A LARGE PORTION OF OUR REVENUES, LOSS OF
BUSINESS PROVIDED BY ANY ONE OF THEM COULD ADVERSELY AFFECT US.

       We market our insurance and reinsurance worldwide primarily through
insurance and reinsurance brokers. In the nine months ended September 30, 2002,
our top five brokers represented approximately 90% of our gross premiums
written, excluding gross premiums acquired in the LaSalle transaction. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." One of those brokers, Aon, is one of our investors. Affiliates of
two of these brokers, Marsh and Benfield, have also co-sponsored the formation
of Bermuda reinsurers that may compete with us, and those brokers may decide to
favor the reinsurers they sponsored over other companies. Loss of all or a
substantial portion of the business provided by one or more of these brokers
could have a material adverse effect on our business.

OUR RELIANCE ON BROKERS SUBJECTS US TO THEIR CREDIT RISK.

       In accordance with industry practice, we frequently pay amounts owed on
claims under our insurance or reinsurance contracts to brokers, and these
brokers, in turn, pay these amounts over to the clients that have purchased
insurance or reinsurance from us. In some jurisdictions, if a broker fails to
make such a payment, we may remain liable to the client for the deficiency.
Conversely, in certain jurisdictions, when the client pays premiums for these
policies to brokers for payment over to us, these premiums are considered to
have been paid and the client will no longer be liable to us for those amounts,
whether or not we have actually received the premiums. Consequently, we assume a
degree of credit risk associated with brokers around the world.

THE EFFECTS OF EMERGING CLAIM AND COVERAGE ISSUES ON OUR BUSINESS ARE UNCERTAIN.

       As industry practices and legal, judicial, social and other environmental
conditions change, unexpected and unintended issues related to claims and
coverage may emerge. These issues can have a negative effect on our business by
either extending coverage beyond our underwriting intent or by increasing the
number or size of claims. The effects of unforeseen emerging claim and coverage
issues are extremely hard to predict and could harm our business.

                                        14
<PAGE>

WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT WHICH COULD ADVERSELY IMPACT OUR
OPERATING MARGINS.

       The insurance and reinsurance industries are highly competitive. We
compete with major U.S. and non-U.S. insurers and reinsurers, including other
Bermuda-based insurers and reinsurers. Many of our competitors have greater
financial, marketing and management resources. A number of newly-organized,
Bermuda-based insurance and reinsurance entities compete in the same market
segments in which we operate. In addition, we may not be aware of other
companies that may be planning to enter the segments of the insurance and
reinsurance market in which we operate or of existing companies that may be
planning to raise additional capital. Increasing competition could result in
fewer submissions, lower premium rates and less favorable policy terms and
conditions, which could have a material adverse impact on our growth and
profitability.

       Further, insurance/risk-linked securities and derivative and other
non-traditional risk transfer mechanisms and vehicles are being developed and
offered by other parties, including non-insurance company entities, which could
impact the demand for traditional reinsurance. A number of new, proposed or
potential legislative or industry developments could also increase competition
in our industries. In addition, insurance companies that merge may be able to
enhance their negotiating position when buying reinsurance and may be able to
spread their risks across a consolidated, larger capital base so that they
require less reinsurance.

       New competition from these developments could cause the demand for
insurance or reinsurance to fall or the expense of customer acquisition and
RETENTION to increase, either of which could have a material adverse affect on
our growth and profitability.

THE HISTORICAL CYCLICALITY OF THE PROPERTY AND CASUALTY INSURANCE AND
REINSURANCE INDUSTRIES MAY CAUSE FLUCTUATIONS IN OUR RESULTS.

       Historically, reinsurers have experienced significant fluctuations in
operating results due to competition, frequency of occurrence or severity of
catastrophic events, levels of capacity, general economic conditions and other
factors. Demand for reinsurance is influenced significantly by underwriting
results of primary property and casualty insurers and prevailing general
economic conditions. The supply of reinsurance is related to prevailing prices,
the levels of insured losses and the levels of industry surplus which, in turn,
may fluctuate in response to changes in rates of return on investments being
earned in the reinsurance industry. As a result, the reinsurance business
historically has been a cyclical industry characterized by periods of intense
price competition due to excessive underwriting capacity as well as periods when
shortages of capacity permitted favorable premium levels. Although premium
levels for many products have increased in recent months, the supply of
reinsurance may increase, either by capital provided by new entrants or by the
commitment of additional capital by existing reinsurers, which may cause prices
to decrease. Any of these factors could lead to a significant reduction in
premium rates, less favorable policy terms and conditions and fewer submissions
for our underwriting services. In addition to these considerations, changes in
the frequency and severity of losses suffered by insurers may affect the cycles
of the reinsurance business significantly, and we expect to experience the
effects of such cyclicality.

THE REGULATORY SYSTEM UNDER WHICH WE OPERATE, AND POTENTIAL CHANGES THERETO,
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

       General.  Our insurance subsidiaries may not be able to obtain or
maintain necessary licenses, permits, authorizations or accreditations, or may
be able to do so only at great cost. In addition, we may not be able to comply
fully with, or obtain appropriate exemptions from, the wide variety of laws and
regulations applicable to insurance or reinsurance companies or holding
companies. Failure to comply with or to obtain appropriate exemptions under any
applicable laws could result in restrictions on our ability to do business in
one or more of the jurisdictions in which we operate and fines and other
sanctions, which could have a material adverse effect on our business. See
"Regulatory Matters."

       Endurance Bermuda.  Endurance Bermuda is a registered Class 4 Bermuda
insurance and reinsurance company. Among other matters, Bermuda statutes,
regulations and policies of the BMA
                                        15
<PAGE>

require Endurance Bermuda to maintain minimum levels of statutory capital,
statutory capital and surplus and liquidity, to meet solvency standards, to
obtain prior approval of ownership and transfer of shares and to submit to
certain periodic examinations of its financial condition. These statutes and
regulations may, in effect, restrict Endurance Bermuda's ability to write
insurance and reinsurance policies, to make certain investments and to
distribute funds.

       Endurance Bermuda does not maintain a principal office, and its personnel
do not solicit, advertise, settle claims or conduct other activities that may
constitute the transaction of the business of insurance or reinsurance, in any
jurisdiction in which it is not licensed or otherwise not authorized to engage
in such activities. Although Endurance Bermuda does not believe it is or will be
in violation of insurance laws or regulations of any jurisdiction outside
Bermuda, inquiries or challenges to Endurance Bermuda's insurance or reinsurance
activities may still be raised in the future.

       The offshore insurance and reinsurance regulatory environment has become
subject to increased scrutiny in many jurisdictions, including the United States
and various states within the United States. Compliance with any new laws
regulating offshore insurers or reinsurers could have a material adverse effect
on our business.

       Endurance U.K.  Endurance U.K. has received authorization from the FSA to
begin writing certain lines of insurance and reinsurance in the United Kingdom.
As an authorized insurer in the United Kingdom, Endurance U.K. would be able to
operate throughout the European Union, subject to compliance with certain
notification requirements of the FSA and in some cases, certain local regulatory
requirements. As an FSA authorized insurer, the insurance and reinsurance
businesses of Endurance U.K. will be subject to close supervision by the FSA.
The FSA is currently seeking to strengthen its requirements for senior
management arrangements, systems and controls of insurance and reinsurance
companies under its jurisdiction and intends to place an increased emphasis on
risk identification and management in relation to the prudential regulation of
insurance and reinsurance business in the United Kingdom. Changes in the FSA's
requirements may have an adverse impact on the business of Endurance U.K.

       In addition, given that the framework for supervision of insurance and
reinsurance companies in the United Kingdom is largely formed by E.U. directives
(which are implemented by member states through national legislation), changes
at the E.U. level may affect the regulatory scheme under which Endurance U.K.
will operate. A general review of E.U. insurance directives is currently in
progress and may lead to changes such as increased minimum capital requirements.

       Endurance U.S.  Endurance U.S. is organized in and has received a license
to write certain lines of reinsurance business in the State of New York and, as
a result, is subject to New York law and regulation under the supervision of the
Superintendent of Insurance of the State of New York. The New York
Superintendent also has regulatory authority over a number of affiliate
transactions between Endurance U.S. and other members of our holding company
system. The purpose of the state insurance regulatory statutes is to protect
U.S. insureds and U.S. ceding insurance companies, not our shareholders. Among
other matters, state insurance regulations will require Endurance U.S. to
maintain minimum levels of capital, surplus and liquidity, require Endurance
U.S. to comply with applicable RISK-BASED CAPITAL requirements and will impose
restrictions on the payment of dividends and distributions. These statutes and
regulations may, in effect, restrict the ability of Endurance U.S. to write new
business or distribute assets to Endurance Holdings.

       In recent years, the U.S. insurance regulatory framework has come under
increased federal scrutiny, and some state legislators have considered or
enacted laws that may alter or increase state regulation of insurance and
reinsurance companies and holding companies. Moreover, the NATIONAL ASSOCIATION
OF INSURANCE COMMISSIONERS ("NAIC"), which is an association of the insurance
commissioners of all 50 states and the District of Columbia, and state insurance
regulators regularly reexamine existing laws and regulations. Changes in these
laws and regulations or the interpretation of these laws and regulations could
have a material adverse effect on our business.

                                        16
<PAGE>

       For example, in response to the tightening of supply in certain insurance
and reinsurance markets resulting from, among other things, the World Trade
Center tragedy, the Terrorism Risk Insurance Act of 2002 was enacted to ensure
the availability of insurance coverage for terrorist acts in the United States.
This law establishes a federal assistance program through the end of 2005 to
help the commercial property and casualty insurance industry cover claims
related to future terrorism related losses and regulates the terms of insurance
relating to terrorism coverage. This law could adversely affect our business by
increasing underwriting capacity for our competitors as well as by requiring
that coverage for terrorist acts be offered by insurers. We are in the process
of evaluating the likely impact of this law on our future operations. We are
currently unable to predict the extent to which the foregoing new initiative may
affect the demand for our products or the risks which may be available for us to
consider underwriting.

               RISKS RELATED TO OWNERSHIP OF OUR ORDINARY SHARES

THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR ORDINARY SHARES.

       Currently there is no public trading market for our ordinary shares and
there can be no assurance that an active trading market will develop and
continue upon completion of this offering or that the market price of our
ordinary shares will not decline below the initial public offering price. We
intend to apply to have our ordinary shares approved for listing on the NYSE
under the symbol "ENH." The initial public offering price per ordinary share
will be determined by agreement among us and the representatives of the
underwriters and may not be indicative of the market price of our ordinary
shares after our initial public offering.

FUTURE SALES OF ORDINARY SHARES MAY AFFECT THEIR MARKET PRICE.

       We cannot predict what effect, if any, future sales of our ordinary
shares, or the availability of ordinary shares for future sale, will have on the
market price of our ordinary shares. Sales of substantial amounts of our
ordinary shares in the public market following our initial public offering, or
the perception that such sales could occur, could adversely affect the market
price of our ordinary shares and may make it more difficult for you to sell your
ordinary shares at a time and price which you deem appropriate. See "Description
of Share Capital -- Registration Rights Agreement" and "Shares Eligible for
Future Sale" for further information regarding circumstances under which
additional ordinary shares may be sold. Upon completion of our initial public
offering, we will have           ordinary shares outstanding and an additional
          ordinary shares will be issuable upon the full exercise or conversion
of outstanding vested options, warrants and class A shares. If the underwriters'
over-allotment option is exercised, an additional           ordinary shares will
be outstanding. Of these shares, the ordinary shares sold in this offering will
be freely transferable, except for any shares sold to our "affiliates," as that
term is defined in Rule 144 under the Securities Act. The remaining shares will
be "restricted securities" subject to the volume limitations and the other
conditions of Rule 144.

       We, our directors, officers and certain of our existing shareholders have
agreed, with limited exceptions, for a period of 180 days after the effective
date of this prospectus, that we and they will not, without the prior written
consent of the representatives on behalf of the underwriters, directly or
indirectly, offer to sell, sell or otherwise dispose of any of our ordinary
shares. Upon the consummation of this offering, all existing shareholders and
their transferees will have the right to require us to register their ordinary
shares under the Securities Act for sale into the public markets, subject to the
180-day lock-up agreements. Upon the effectiveness of any such registration
statement, all shares covered by the registration statement will be freely
transferable. In addition, following the consummation of this offering, we
intend to file a registration statement on Form S-8 under the Securities Act to
register an aggregate of           ordinary shares reserved for issuance under
our 2002 Stock Option Plan. Subject to the exercise of issued and outstanding
options, shares registered under the registration statement on Form S-8 will be
available for sale into the public markets after the expiration of the 180-day
lock-up agreements.

                                        17
<PAGE>

PUBLIC INVESTORS MAY SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

       The initial public offering price per ordinary share may be higher than
our net book value per share. Accordingly, if you purchase ordinary shares in
this offering, you will suffer immediate and substantial dilution of your
investment. Based upon the issuance and sale of           ordinary shares, you
will incur immediate dilution of approximately $          in the net book value
per common share if you purchase ordinary shares in this offering.

THERE ARE PROVISIONS IN OUR CHARTER DOCUMENTS THAT MAY REDUCE OR INCREASE THE
VOTING RIGHTS OF OUR ORDINARY SHARES.

       Endurance Holdings' bye-laws provide generally that any shareholder
owning, directly, indirectly or, in the case of any U.S. PERSON, by attribution,
more than 9.5% of our ordinary shares will have the voting rights attached to
such ordinary shares reduced so that it may not exercise more than 9.5% of the
total voting rights. The reduction in votes is generally to be applied
proportionately among all shareholders who are members of the first
shareholder's "control group." A "control group" means, with respect to any
person, all shares directly owned by such person and all shares directly owned
by each other shareholder any of whose shares are included in the "controlled
shares" of such person. "Controlled shares" means all ordinary shares that a
person is deemed to own directly, indirectly (within the meaning of Section
958(a) of the Internal Revenue Code of 1986, as amended (the "Code")) or, in the
case of a U.S. Person, constructively (within the meaning of Section 958(b) of
the Code). A similar limitation is to be applied to shares held directly by
members of a "related group." A "related group" means a group of shareholders
that are investment vehicles and are under common control and management. Any
reduction in votes will generally be allocated proportionately among members of
the shareholder's "control group" or "related group," as the case may be. The
amount of any reduction of votes that occurs by operation of the above
limitations will generally be reallocated proportionately among all other
shareholders of Endurance Holdings who were not members of these groups so long
as such reallocation does not cause any person to become a 9.5% shareholder.

       Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could
have the effect of reducing the votes of certain shareholders who would not
otherwise be subject to the 9.5% limitation by virtue of their direct share
ownership. The bye-laws of Endurance Holdings provide that shareholders will be
notified of their voting interests prior to any vote to be taken by the
shareholders. See "Description of Share Capital -- Voting Rights."

       As a result of any reallocation of votes, your voting rights might
increase above 5% of the aggregate voting power of the outstanding ordinary
shares, thereby possibly resulting in your becoming a reporting person subject
to Schedule 13D or 13G filing requirements under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In addition, the reallocation of your
votes could result in your becoming subject to filing requirements under Section
16 of the Exchange Act.

       The Company also has the authority to request information from any
shareholder for the purpose of determining whether a shareholder's voting rights
are to be reallocated pursuant to the bye-laws. If a shareholder fails to
respond to a request for information from the Company or submits incomplete or
inaccurate information (after a reasonable cure period) in response to a
request, the Company, in its reasonable discretion, may reduce or eliminate the
shareholder's voting rights.

PROVISIONS OF ENDURANCE HOLDINGS' BYE-LAWS MAY RESTRICT THE ABILITY TO TRANSFER
SHARES.

       Endurance Holdings' board of directors may decline to register a transfer
of any ordinary shares under certain circumstances, including if the relevant
instrument of transfer (if any) is in favor of five persons or more jointly or
is not properly executed, the transferred shares are not fully paid shares or if
the transferor fails to comply with all applicable laws and regulations
governing the transfer.

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<PAGE>

A SHAREHOLDER MAY BE REQUIRED TO SELL ITS SHARES.

       Endurance Holdings' bye-laws provide that we have the option, but not the
obligation, to require a shareholder to sell its ordinary shares for their fair
market value to us, to other shareholders or to third parties if we determine,
based on the written advice of legal counsel, that failure to exercise our
option would result in adverse tax consequences to us or certain U.S. Persons as
to which the shares held by such shareholder constitute controlled shares. In
the latter case, our right to require a shareholder to sell its ordinary shares
to us will be limited to the purchase of a number of ordinary shares that will
permit avoidance of those adverse tax consequences. See "Description of Share
Capital -- Acquisition of Ordinary Shares by Endurance Holdings."

INDEMNIFICATION BY A SHAREHOLDER FOR TAX LIABILITY RESULTING FROM ACTS OF THE
SHAREHOLDER.

       Our bye-laws provide certain protections against adverse tax consequences
to us resulting from laws that apply to our shareholders. If a shareholder's
death or non-payment of any tax or duty payable by the shareholder, or any other
act or thing involving the shareholder, causes any adverse tax consequences to
us, (i) the shareholder (or his executor or administrator) is required to
indemnify us against any tax liability that we incur as a result, (ii) we will
have a lien on any dividends or any other distributions payable to the
shareholder by us to the extent of the tax liability, and (iii) if any amounts
not covered by our lien on dividends and distributions are owed to us by the
shareholder as a result of our tax liability, we have the right to refuse to
register any transfer of the shareholder's shares.

THERE ARE REGULATORY LIMITATIONS ON THE OWNERSHIP AND TRANSFER OF OUR ORDINARY
SHARES.

       Ordinary shares may be offered or sold in Bermuda only in compliance with
the provisions of the Investment Business Act of 1998 of Bermuda which regulates
the sale of securities in Bermuda. In addition, the BMA must approve all
issuances and transfers of shares of a Bermuda exempted company. Before this
offering, we expect the BMA will have issued their permission for the issue and
free transferability of the ordinary shares being offered pursuant to this
prospectus, as long as the shares are listed on the NYSE, to and among persons
who are non-residents of Bermuda for exchange control purposes. In addition, we
will deliver to and file a copy of this prospectus with the Registrar of
Companies in Bermuda in accordance with Bermuda law. The BMA and the Registrar
of Companies accept no responsibility for the financial soundness of any
proposal or for the correctness of any of the statements made or opinions
expressed in this prospectus.

       The Financial Services and Markets Act 2000 ("FSMA") regulates the
acquisition of "control" of any U.K. insurance company authorized under FSMA.
Any company or individual that (together with its or his associates) directly or
indirectly acquires 10% or more of the shares of a U.K. authorized insurance
company or its parent company, or is entitled to exercise or control the
exercise of 10% or more of the voting power in such authorized insurance company
or its parent company, would be considered to have acquired "control" for the
purposes of FSMA, as would a person who had significant influence over the
management of such authorized insurance company or its parent company by virtue
of his shareholding or voting power in either. A purchaser of more than 10% of
our ordinary shares would therefore be considered to have acquired "control" of
Endurance U.K. Under the FSMA, any person proposing to acquire "control" over a
U.K. authorized insurance company must notify the FSA of his intention to do so
and obtain the FSA's prior approval. The FSA would then have three months to
consider that person's application to acquire "control." In considering whether
to approve such application, the FSA must be satisfied both that the acquirer is
a fit and proper person to have such "control" and that the interests of
consumers would not be threatened by such acquisition of "control." Failure to
make the relevant prior application would constitute a criminal offense.

       State laws in the United States also require prior notices or regulatory
agency approval of changes in control of an insurer or its holding company. The
insurance laws of the State of New York, where Endurance U.S. will be domiciled,
provide that no corporation or other person except an authorized insurer may
acquire control of a domestic insurance or reinsurance company unless it has
given notice to such

                                        19
<PAGE>

company and obtained prior written approval of the New York Superintendent. Any
purchaser of 10% or more of our ordinary shares could become subject to such
regulations and could be required to file certain notices and reports with the
New York Superintendent prior to such acquisition.

U.S. PERSONS WHO OWN OUR ORDINARY SHARES MAY HAVE MORE DIFFICULTY IN PROTECTING
THEIR INTERESTS THAN U.S. PERSONS WHO ARE SHAREHOLDERS OF A U.S. CORPORATION.

       The Companies Act, which applies to Endurance Holdings and Endurance
Bermuda, differs in certain material respects from laws generally applicable to
U.S. corporations and their shareholders. In order to highlight those
differences, set forth below is a summary of certain significant provisions of
the Companies Act, including, where relevant, information on Endurance Holdings'
bye-laws, which differ in certain respects from provisions of Delaware corporate
law. Because the following statements are summaries, they do not discuss all
aspects of Bermuda law that may be relevant to Endurance Holdings and our
shareholders.

       Interested Directors.  Under Bermuda law and Endurance Holdings'
bye-laws, we cannot void any transaction we enter into in which a director has
an interest, nor can such director be accountable to us for any benefit realized
pursuant to such transaction, provided the nature of the interest is disclosed
at the first opportunity at a meeting of directors, or in writing, to the
directors. In addition, Endurance Holdings' bye-laws allow a director to be
taken into account in determining whether a quorum is present and to vote on a
transaction in which he has an interest, but the resolution with respect to such
transactions will fail unless it is approved by a majority of the disinterested
directors voting on such a transaction. Under Delaware law such transaction
would not be voidable if:

       -     the material facts as to such interested director's relationship or
             interests were disclosed or were known to the board of directors
             and the board had in good faith authorized the transaction by the
             affirmative vote of a majority of the disinterested directors;

       -     such material facts were disclosed or were known to the
             shareholders entitled to vote on such transaction and the
             transaction were specifically approved in good faith by vote of the
             majority of shares entitled to vote thereon; or

       -     the transaction were fair as to the corporation as of the time it
             was authorized, approved or ratified.

       Under Delaware law, the interested director could be held liable for a
transaction in which the director derived an improper personal benefit.

       Business Combinations with Large Shareholders or Affiliates.  As a
Bermuda company, Endurance Holdings may enter into business combinations with
its large shareholders or one or more wholly-owned subsidiaries, including asset
sales and other transactions in which a large shareholder or a wholly-owned
subsidiary receives, or could receive, a financial benefit that is greater than
that received, or to be received, by other shareholders or other wholly-owned
subsidiaries, without obtaining prior approval from our shareholders and without
special approval from our board of directors. Under Bermuda law, amalgamations
require the approval of the board of directors, and in some instances,
shareholder approval. However, when the affairs of a Bermuda company are being
conducted in a manner which is oppressive or prejudicial to the interests of
some shareholders, one or more shareholders may apply to a Bermuda court, which
may make such order as it sees fit, including an order regulating the conduct of
the company's affairs in the future or ordering the purchase of the shares of
any shareholders by other shareholders or the company. If we were a Delaware
company, we would need prior approval from our board of directors or a
supermajority of our shareholders to enter into a business combination with an
interested shareholder for a period of three years from the time the person
became an interested shareholder, unless we opted out of the relevant Delaware
statute. Bermuda law or Endurance Holdings' bye-laws would require board
approval and in some instances, shareholder approval, of such transactions.

       Shareholders' Suits.  The rights of shareholders under Bermuda law are
not as extensive as the rights of shareholders in many United States
jurisdictions. Class actions and derivative actions are
                                        20
<PAGE>

generally not available to shareholders under Bermuda law. However, the Bermuda
courts ordinarily would be expected to follow English case law precedent, which
would permit a shareholder to commence a derivative action in the name of a
company where the act complained of is alleged to be beyond the corporate power
of the company, is illegal or would result in the violation of Endurance
Holdings' memorandum of association or bye-laws. Furthermore, consideration
would be given by the court to acts that are alleged to constitute a fraud
against the minority shareholders or where an act requires the approval of a
greater percentage of our shareholders than actually approved it. The successful
party in such an action generally would be able to recover a portion of
attorneys' fees incurred in connection with such action. Endurance Holdings'
bye-laws provide that shareholders waive all claims or rights of action that
they might have, individually or in the right of Endurance Holdings, against any
director or officer for any action or failure to act in the performance of such
director's or officer's duties, except such waiver shall not extend to any
claims or rights of action that would render the waiver void pursuant to the
Companies Act, that arise out of fraud or dishonesty on the part of such
director or officer or with respect to the recovery of any gain, personal profit
or advantage to which the officer or director is not legally entitled.

       Class actions and derivative actions generally are available to
shareholders under Delaware law for, among other things, breach of fiduciary
duty, corporate waste and actions not taken in accordance with applicable law.
In such actions, the court has discretion to permit the winning party to recover
attorneys' fees incurred in connection with such action.

       Indemnification of Directors and Officers.  Under Bermuda law and
Endurance Holdings' bye-laws, Endurance Holdings will indemnify its directors or
officers or any person appointed to any committee by the board of directors and
any resident representative (and their respective heirs, executors or
administrators) against all actions, costs, charges, liabilities, loss, damage
or expense, to the fullest extent permitted by law, incurred or suffered by such
officer, director or other person by reason of any act done, conceived in or
omitted in the conduct of the company's business or in the discharge of his/her
duties; provided that such indemnification shall not extend to any matter
involving any fraud or dishonesty on the part of such director, officer or other
person. Under Delaware law, a corporation may indemnify a director or officer of
the corporation against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in defense of an
action, suit or proceeding by reason of such position if such director or
officer acted in good faith and in a manner he or she reasonably believed to be
in or not be opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, such director or officer had no reasonable
cause to believe his or her conduct was unlawful.

       For more information on the differences between Bermuda and Delaware
corporate laws, see "Description of Share Capital -- Differences in Corporate
Law."

ANTI-TAKEOVER PROVISIONS IN OUR BYE-LAWS COULD IMPEDE AN ATTEMPT TO REPLACE OR
REMOVE OUR DIRECTORS, WHICH COULD DIMINISH THE VALUE OF OUR ORDINARY SHARES.

       Endurance Holdings' bye-laws contain provisions that may entrench
directors and make it more difficult for shareholders to replace directors even
if the shareholders consider it beneficial to do so. In addition, these
provisions could delay or prevent a change of control that a shareholder might
consider favorable. For example, these provisions may prevent a shareholder from
receiving the benefit from any premium over the market price of our ordinary
shares offered by a bidder in a potential takeover. Even in the absence of an
attempt to effect a change in management or a takeover attempt, these provisions
may adversely affect the prevailing market price of our ordinary shares if they
are viewed as discouraging changes in management and takeover attempts in the
future.

       Examples of provisions in our bye-laws that could have such an effect
include:

       -     election of our directors is staggered, meaning that the members of
             only one of four classes of our directors are elected each year;

       -     the total voting power of any shareholder owning more than 9.5% of
             our ordinary shares will be reduced to 9.5% of the total voting
             power of our ordinary shares;

                                        21
<PAGE>

       -     our directors may, in their discretion, decline to record the
             transfer of any ordinary shares on our share register, unless the
             instrument of transfer is in favor of less than five persons
             jointly or if they are not satisfied that all required regulatory
             approvals for such transfer have been obtained; and

       -     we have the option, but not the obligation, to require a
             shareholder to sell its ordinary shares to us, to our other
             shareholders or to third parties at fair market value if we
             determine, based on the advice of legal counsel, that failure to
             exercise our option would result in adverse tax consequences to us
             or certain U.S. Persons as to which the shares held by such
             shareholder constitute controlled shares.

IT MAY BE DIFFICULT TO ENFORCE SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
AGAINST US AND OUR OFFICERS AND DIRECTORS.

       Endurance Holdings is a Bermuda company and certain of its officers and
directors are residents of various jurisdictions outside the United States. A
substantial portion of its assets and its officers and directors, at any one
time, are or may be located in jurisdictions outside the United States. Although
Endurance Holdings has irrevocably appointed CT Corporation System as an agent
in New York, New York to receive service of process with respect to actions
against Endurance Holdings arising out of violations of the U.S. federal
securities laws in any federal or state court in the United States relating to
the transactions covered by this prospectus, it may be difficult for investors
to effect service of process within the United States on our directors and
officers who reside outside the United States or to enforce against us or our
directors and officers judgments of U.S. courts predicated upon civil liability
provisions of the U.S. federal securities laws.

       We have been advised by Appleby Spurling & Kempe, our Bermuda counsel,
that there is no treaty in force between the United States and Bermuda providing
for the reciprocal recognition and enforcement of judgments in civil and
commercial matters. As a result, whether a United States judgment would be
enforceable in Bermuda against us or our directors and officers depends on
whether the U.S. court that entered the judgment is recognized by the Bermuda
court as having jurisdiction over us or our directors and officers, as
determined by reference to Bermuda conflict of law rules. A judgment debt from a
U.S. court that is final and for a sum certain based on U.S. federal securities
laws will not be enforceable in Bermuda unless the judgment debtor had submitted
to the jurisdiction of the U.S. court, and the issue of submission and
jurisdiction is a matter of Bermuda (not United States) law.

       In addition to and irrespective of jurisdictional issues, the Bermuda
courts will not enforce a United States federal securities law that is either
penal or contrary to public policy. Certain remedies available under the laws of
U.S. jurisdictions, including certain remedies under U.S. federal securities
laws, would not be available under Bermuda law or enforceable in a Bermuda
court, as they would be contrary to Bermuda public policy. Further, no claim may
be brought in Bermuda against us or our directors and officers in the first
instance for violation of U.S. federal securities laws because these laws have
no extraterritorial jurisdiction under Bermuda law and do not have force of law
in Bermuda. A Bermuda court may, however, impose civil liability on us or our
directors and officers if the facts alleged in a complaint constitute or give
rise to a cause of action under Bermuda law.

                           RISKS RELATED TO TAXATION

WE MAY BECOME SUBJECT TO TAXES IN BERMUDA AFTER MARCH 28, 2016, WHICH MAY HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION.

       The Bermuda Minister of Finance, under the Exempted Undertakings Tax
Protection Act 1966, as amended, of Bermuda, has given Endurance Holdings and
Endurance Bermuda an assurance that if any legislation is enacted in Bermuda
that would impose tax computed on profits or income, or computed on any capital
asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of any such tax will not be applicable to
Endurance Holdings, Endurance Bermuda or any of
                                        22
<PAGE>

their respective operations, shares, debentures or other obligations until March
28, 2016. See "Material Tax Considerations -- Certain Bermuda Tax
Considerations." We cannot assure you that we will not be subject to any Bermuda
tax after that date.

WE AND OUR SUBSIDIARIES MAY BE SUBJECT TO U.S. TAX.

       Endurance Holdings and Endurance Bermuda are Bermuda companies and
Endurance U.K. is an English company. We believe that Endurance Holdings,
Endurance Bermuda and Endurance U.K. will each operate in such a manner that
none of these companies will be subject to U.S. tax (other than U.S. excise tax
on reinsurance premiums and withholding tax on certain investment income from
U.S. sources) because they will not be engaged in a trade or business conducted
within the United States. Nevertheless, because definitive identification of
activities which constitute being engaged in a trade or business in the United
States is not provided by the Code, or regulations or court decisions, the
Internal Revenue Service, or the IRS, might contend that any of Endurance
Holdings, Endurance Bermuda and/or Endurance U.K. are/is engaged in a trade or
business in the United States. If Endurance Holdings, Endurance Bermuda and/or
Endurance U.K. were engaged in a trade or business in the United States, and if
Endurance U.K. or Endurance Bermuda were to qualify for benefits under the
applicable income tax treaty with the United States, but such trade or business
were attributable to a "permanent establishment" in the United States (or in the
case of Endurance Bermuda, with respect to investment income, arguably even if
such income were not attributable to a "permanent establishment"), Endurance
Holdings, Endurance U.K. and/or Endurance Bermuda would be subject to U.S.
federal income tax at regular corporate rates on the income that is effectively
connected with the U.S. trade or business, plus an additional 30% "branch
profits" tax in certain circumstances, in which case our results of operations
and your investment could be materially adversely affected. See "Material Tax
Considerations -- Certain United States Federal Income Tax
Considerations -- United States Taxation of Endurance Holdings, Endurance
Bermuda, Endurance U.K. and Endurance U.S."

       Endurance Holdings and/or any of its subsidiaries could be subject to
U.S. tax on a portion of its income that is earned from U.S. sources if any of
them are considered to be a personal holding company, or a PHC, for U.S. federal
income tax purposes. This status will depend on the portion of our shareholder
base, based on value, that consists of or is deemed to consist of individuals
and the percentage of our income, or the income of our subsidiaries, as
determined for U.S. federal income tax purposes, that consists of "personal
holding company income." We believe that neither we nor any of our subsidiaries
will be considered a PHC, but we cannot assure you that this will be the case or
that the amount of U.S. tax that would be imposed if it were not the case would
be immaterial. See "Material Tax Considerations -- Certain United States Federal
Income Tax Considerations -- United States Taxation of Endurance Holdings,
Endurance Bermuda, Endurance U.K. and Endurance U.S. -- Personal Holding
Companies."

WE AND OUR SUBSIDIARIES MAY BE SUBJECT TO U.K. TAX.

       Endurance Holdings and Endurance Bermuda are incorporated in Bermuda and
Endurance U.S. is a company incorporated in the United States. Accordingly,
because they are not incorporated in the United Kingdom, none of Endurance
Holdings, Endurance Bermuda or Endurance U.S. will be treated as being resident
in the United Kingdom unless their central management and control is exercised
in the United Kingdom. The concept of central management and control is
indicative of the highest level of control of a company, which is wholly a
question of fact. The directors of Endurance Holdings, Endurance Bermuda and
Endurance U.S. intend to manage their affairs so that none of them are resident
in the United Kingdom for tax purposes.

       A company not resident in the United Kingdom for corporation tax purposes
can nevertheless be subject to U.K. corporation tax if it carries on a trade
through a branch or agency in the United Kingdom but the charge to U.K.
corporation tax is limited to profits (including revenue profits and capital
gains) connected with such branch or agency. The directors of Endurance
Holdings, Endurance Bermuda and Endurance U.S. intend that each will operate in
such a manner that none of these companies carry on a

                                        23
<PAGE>

trade through a branch or agency in the United Kingdom. Nevertheless, because
neither case law nor U.K. statute definitively defines the activities that
constitute trading in the United Kingdom through a branch or agency, the U.K.
Inland Revenue might contend that any of Endurance Holdings, Endurance Bermuda
and/or Endurance U.S. are/is trading in the United Kingdom through a branch or
agency in the United Kingdom. If Endurance U.S. were trading in the U.K. through
a branch or agency and Endurance U.S. were to qualify for benefits under the
applicable income tax treaty between the United Kingdom and the United States,
only those profits which were attributable to a permanent establishment in the
United Kingdom would be subject to U.K. corporation tax. The United Kingdom has
no income tax treaty with Bermuda.

       If Endurance Holdings, Endurance Bermuda or Endurance U.S. were treated
as being resident in the United Kingdom for U.K. corporation tax purposes, or as
carrying on a trade in the United Kingdom through a branch or agency, our
earnings and your investment could be materially adversely affected.

IF YOU ACQUIRE 10% OR MORE OF ENDURANCE HOLDINGS' ORDINARY SHARES, "CONTROLLED
FOREIGN CORPORATION" ("CFC") RULES MAY APPLY TO YOU.

       Each "10% U.S. Shareholder" of a foreign corporation that is a CFC for an
uninterrupted period of 30 days or more during a taxable year, and who owns
shares in the CFC directly or indirectly through foreign entities on the last
day of the CFC's taxable year, must include in its gross income for U.S. federal
income tax purposes its pro rata share of the CFC's "subpart F income," even if
the subpart F income is not distributed. A foreign corporation is considered a
CFC if "10% U.S. Shareholders" own more than 50% of the total combined voting
power of all classes of voting stock of such foreign corporation, or the total
value of all stock of such corporation. A 10% U.S. Shareholder is a U.S. Person
who owns at least 10% of the total combined voting power of all classes of stock
entitled to vote of the foreign corporation. For purposes of taking into account
insurance income, a CFC also includes a foreign corporation in which more than
25% of the total combined voting power of all classes of stock (or more than 25%
of the total value of the stock) is owned by 10% U.S. Shareholders, on any day
during the taxable year of such corporation, if the gross amount of premiums or
other consideration for the reinsurance or the issuing of insurance or annuity
contracts exceeds 75% of the gross amount of all premiums or other consideration
in respect of all risks. For purposes of determining whether a corporation is a
CFC, and therefore whether the 50% (or 25%, in the case of insurance income) and
10% ownership tests have been satisfied, "own" means owned directly, indirectly
through foreign entities or is considered as owned by application of certain
constructive ownership rules. Endurance Holdings believes that it is currently,
and after the offering, that it could be, considered a CFC under the 25%
ownership test. Endurance Holdings believes, however, that due to the
anticipated dispersion of its share ownership among holders, its bye-law
provisions that impose limitations on the concentration of voting power of its
ordinary shares, authorize the board to purchase such shares under certain
circumstances, and other factors, no U.S. Person that owns shares in Endurance
Holdings directly or indirectly through foreign entities should be subject to
treatment as a 10% U.S. Shareholder of a CFC. There can be no assurance,
however, that the IRS will not challenge the effectiveness of these provisions
or that a court will not sustain such a challenge. See "Material Tax
Considerations -- United States Taxation of Holders of Ordinary
Shares -- Shareholders Who Are U.S. Persons."

U.S. PERSONS WHO HOLD ORDINARY SHARES MAY BE SUBJECT TO U.S. INCOME TAXATION ON
THEIR PRO RATA SHARE OF OUR "RELATED PARTY INSURANCE INCOME" ("RPII").

       If Endurance U.K.'s or Endurance Bermuda's RPII were to equal or exceed
20% of Endurance U.K.'s or Endurance Bermuda's gross insurance income in any
taxable year and direct or indirect insureds (and persons related to such
insureds) own (or are treated as owning directly or indirectly) 20% or more of
the voting power or value of the shares of Endurance U.K. or Endurance Bermuda,
a U.S. Person who owns ordinary shares of Endurance Holdings directly or
indirectly through foreign entities on the last day of the taxable year would be
required to include in its income for U.S. federal income tax purposes the
shareholder's pro rata share of Endurance U.K.'s or Endurance
                                        24
<PAGE>

Bermuda's RPII for the entire taxable year, determined as if such RPII were
distributed proportionately to such U.S. shareholders at that date regardless of
whether such income is distributed. In addition, any RPII that is includible in
the income of a U.S. tax-exempt organization will be treated as unrelated
business taxable income. The amount of RPII earned by Endurance U.K. or
Endurance Bermuda (generally, premium and related investment income from the
direct or indirect insurance or reinsurance of any direct or indirect U.S.
shareholder of Endurance U.K. or Endurance Bermuda or any person related to such
shareholder) will depend on a number of factors, including the geographic
distribution of Endurance U.K.'s or Endurance Bermuda's business and the
identity of persons directly or indirectly insured or reinsured by Endurance
U.K. or Endurance Bermuda. Some of the factors, which determine the extent of
RPII in any period, may be beyond Endurance U.K.'s or Endurance Bermuda's
control. Consequently, Endurance U.K.'s or Endurance Bermuda's RPII could equal
or exceed 20% of its gross insurance income in any taxable year and ownership of
its shares by direct or indirect insureds and related persons could equal or
exceed the 20% threshold described above.

       The RPII rules provide that if a shareholder who is a U.S. Person
disposes of shares in a foreign insurance corporation that has RPII (even if the
amount of RPII is less than 20% of the corporation's gross insurance income or
the ownership of its shares by direct or indirect insureds and related persons
is less than the 20% threshold) and in which U.S. Persons own 25% or more of the
shares, any gain from the disposition will generally be treated as ordinary
income to the extent of the shareholder's share of the corporation's
undistributed earnings and profits that were accumulated during the period that
the shareholder owned the shares (whether or not such earnings and profits are
attributable to RPII). In addition, such a shareholder will be required to
comply with certain reporting requirements, regardless of the amount of shares
owned by the shareholder. These rules should not apply to dispositions of
ordinary shares because Endurance Holdings will not itself be directly engaged
in the insurance business and because proposed U.S. Treasury regulations appear
to apply only in the case of shares of corporations that are directly engaged in
the insurance business. However, the IRS might interpret the proposed
regulations in a different manner and the applicable proposed regulations may be
promulgated in final form in a manner that would cause these rules to apply to
dispositions of our ordinary shares. See "Material Tax Considerations -- United
States Taxation of Holders of Ordinary Shares -- Shareholders Who Are U.S.
Persons."

U.S. PERSONS WHO HOLD ORDINARY SHARES WILL BE SUBJECT TO ADVERSE TAX
CONSEQUENCES IF WE ARE CONSIDERED A PASSIVE FOREIGN INVESTMENT COMPANY (A
"PFIC") FOR U.S. FEDERAL INCOME TAX PURPOSES.

       We believe that we are not, and we currently do not expect to become, a
PFIC for U.S. federal income purposes. We cannot assure you, however, that we
will not be considered a PFIC. If we were considered a PFIC it could have
material adverse tax consequences for an investor that is subject to U.S.
federal income taxation, including subjecting the investor to a greater tax
liability than might otherwise apply or subjecting the investor to tax on
amounts in advance of when tax would otherwise be imposed. There are currently
no regulations regarding the application of the PFIC provisions to an insurance
company. New regulations or pronouncements interpreting or clarifying these
rules may be forthcoming. We cannot predict what impact, if any, such guidance
would have on a shareholder that is subject to U.S. federal income taxation. See
"Material Tax Considerations -- United States Taxation of Holders of Ordinary
Shares -- Shareholders Who Are U.S. Persons."

U.S. PERSONS WHO HOLD ORDINARY SHARES WILL BE SUBJECT TO ADVERSE TAX
CONSEQUENCES IF WE OR ANY OF OUR SUBSIDIARIES ARE CONSIDERED A "FOREIGN PERSONAL
HOLDING COMPANY" ("FPHC") FOR U.S. FEDERAL INCOME TAX PURPOSES.

       We believe that neither we nor any of our subsidiaries are, and we
currently do not expect any of them or us to become, a FPHC for U.S. federal
income tax purposes. We cannot assure you, however, that we will not be
considered a FPHC. If we were considered a FPHC it could have material adverse
tax consequences for an investor that is subject to U.S. federal income taxation
including subjecting the investor to a greater tax liability than might
otherwise apply and subjecting the investor to tax on amounts

                                        25
<PAGE>

in advance of when tax would otherwise be imposed. See "Material Tax
Considerations -- United States Taxation of Holders of Ordinary
Shares -- Shareholders Who Are U.S. Persons."

CHANGES IN U.S. FEDERAL INCOME TAX LAW COULD MATERIALLY ADVERSELY AFFECT
SHAREHOLDERS' INVESTMENT.

       Legislation has been introduced in the U.S. Congress intended to
eliminate certain perceived tax advantages of companies (including insurance
companies) that have legal domiciles outside the United States but have certain
U.S. connections. While there is no currently pending legislative proposal
which, if enacted, would have a material adverse effect on us, our subsidiaries
or our shareholders, it is possible that broader-based legislative proposals
could emerge in the future that could have an adverse impact on us, our
subsidiaries or our shareholders.

                                        26
<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

       Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus may include
forward-looking statements which reflect our 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.

       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 industry
             consolidation and development of competing financial products;

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

       -     the effects of terrorist related insurance legislation and laws;

       -     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;

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

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

       -     uncertainties in our reserving process;

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

       -     acceptance of our products and services, including new products and
             services;

       -     changes in the availability, cost or quality of reinsurance or
             RETROCESSIONAL COVERAGE;

       -     loss of key personnel;

       -     political stability of Bermuda;

       -     changes in accounting policies or practices; and

       -     changes in general economic conditions, including inflation,
             foreign currency exchange rates and other factors which could
             affect our investment portfolio.

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 this prospectus. We undertake no obligation to publicly update or
review any forward-looking statement, whether as a result of new information,
future developments or otherwise.

                                        27
<PAGE>

                                USE OF PROCEEDS

       Assuming our ordinary shares are offered at an initial public offering
price of $          (the midpoint of the range stated on the cover page of this
prospectus), the net proceeds from this offering after deducting the estimated
underwriting discount and our estimated offering expenses are estimated to be
approximately $          million (assuming no exercise of the underwriters'
over-allotment option) or approximately $          million (assuming the full
exercise of the underwriters' over-allotment option). We intend to use these
proceeds to provide additional capital to our subsidiaries, to repay a portion
of the outstanding debt under our credit facilities and for other general
corporate purposes.

       As of September 30, 2002, we had $100 million of principal outstanding
under our term loan facility. These borrowings were used to repurchase the
interests in the Company owned by Zurich. Endurance Holdings borrowed the
remaining $92 million available under the term loan facility on November 21,
2002 to make a capital contribution to Endurance Bermuda, which in turn made
contributions to Endurance U.S. and Endurance U.K. as part of their initial
capitalization.

       Currently, the $100 million outstanding under the term loan facility
bears interest at the rate of 2.81% per annum; the remaining $92 million
outstanding under the term loan facility bears interest at 2.50% per annum.
Under the current terms of the term loan facility, we must apply 50% of the cash
proceeds of any sale of equity securities we or any of our subsidiaries may
issue to the repayment of outstanding principal of term loans outstanding under
the term loan facility. The amounts outstanding under the term loan must be
repaid in three installments: the first installment equals 20% of all
outstanding principal and is due one year after the initial borrowing under the
term loan facility or September 30, 2003, whichever occurs first. The second
installment equals 40% of all outstanding principal and is due two years after
the initial borrowing or September 30, 2004, whichever occurs first. The final
installment equals all remaining outstanding principal and is due three years
after the initial borrowing or September 30, 2005, whichever occurs first.

                                        28
<PAGE>

                                DIVIDEND POLICY

       Our board of directors has not yet determined its intention regarding the
payment of dividends on our ordinary shares. Any determination to pay dividends
will be at the discretion of our board of directors and will be dependent upon
our results of operations and cash flows, our financial position and capital
requirements, general business conditions, legal, tax, regulatory and any
contractual restrictions on the payment of dividends and any other factors our
board of directors deems relevant.

       Endurance Holdings is a holding company and has no direct operations. The
ability of Endurance Holdings to pay dividends or distributions will depend
almost exclusively on the ability of its subsidiaries to pay dividends to
Endurance Holdings. 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 other distributions. Endurance U.K. is subject to significant
regulatory restrictions limiting its ability to pay dividends. In addition,
Endurance U.S. has agreed with the New York Department to not pay a dividend for
two years after its license is issued without prior regulatory approval. For a
further description of the restrictions on the ability of our subsidiaries to
pay dividends, see "Regulatory Matters -- Bermuda -- Minimum Solvency Margin and
Restrictions on Dividends and Distributions," "-- U.K. Regulation --
Restrictions on Dividend Payments" and "-- U.S. Regulation -- New York State
Dividend Limitations." In addition, our credit facilities prohibit Endurance
Holdings from declaring or paying any dividends if a default or event of default
has occurred and is continuing at the time of such declaration or payment or
would result from such declaration or payment. See "Certain Indebtedness."

       As of September 30, 2002, the maximum amount of distributions that
Endurance Bermuda could pay to Endurance Holdings under applicable insurance and
Companies Act regulations without prior regulatory approval was approximately
$112 million. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."

                                        29
<PAGE>

                                 CAPITALIZATION

       The following table sets forth our consolidated capitalization as of
September 30, 2002:

       -     on an actual basis, as adjusted for the share premium issuance
             effected in December 2002, and

       -     as adjusted to give effect to the sale of ordinary shares offered
             by us in this offering at an assumed initial public offering price
             of $     per share, the midpoint of the range set forth on the
             cover page of this prospectus, with net proceeds of approximately
             $          million (assuming no exercise of the underwriters'
             over-allotment option) after deducting the estimated underwriting
             discount and our estimated offering expenses.

       You should read this table in conjunction with "Selected Consolidated
Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and related
notes that are included elsewhere in this prospectus.

<Table>
<Caption>
                                                              AS OF SEPTEMBER 30, 2002
                                                              ------------------------
                                                                ACTUAL     AS ADJUSTED
                                                              ----------   -----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>          <C>
DEBT OUTSTANDING:
Bank debt(a)................................................  $  100,000     $

SHAREHOLDERS' EQUITY(b):
Ordinary shares (par value $1.00); 54,061,185 shares
  outstanding(c)............................................      54,061
Class A shares (par value $1.00); 938,815 shares
  outstanding(c)............................................         939
Additional paid-in capital..................................   1,007,000
Accumulated other comprehensive income......................      48,608
Retained earnings...........................................      63,800
                                                              ----------     ------
  Total shareholders' equity................................  $1,174,408     $
                                                              ----------     ------
TOTAL CAPITALIZATION........................................  $1,274,408     $
                                                              ==========     ======
</Table>

------------

(a) On November 21, 2002, Endurance Holdings borrowed the remaining $92 million
    available under its term loan facility. For a full description of the
    Company's credit facilities, see "Certain Indebtedness."

(b) As of September 30, 2002, the Company had 120,000,000 common shares of $1.00
    par value authorized. This table does not give effect to warrants currently
    exercisable for 6,641,960 ordinary shares, class A warrants currently
    exercisable for 600,930 class A shares and options to purchase 438,640
    ordinary shares that were fully vested at September 30, 2002.

(c) For a description of the terms of our ordinary shares and class A shares,
    see "Description of Share Capital." Our outstanding non-voting class A
    shares are convertible into ordinary shares and are currently held by one of
    our lead investors.

                                        30
<PAGE>

                                    DILUTION

       As of September 30, 2002, our net book value was $1.17 billion, or $21.35
per common share, assuming 55,000,000 common shares outstanding. As used below,
our net book value per common share represents shareholders' equity divided by
the number of common shares outstanding. After giving effect to the issuance of
               of our ordinary shares at an assumed initial public offering
price of $     per ordinary share (the midpoint of the range set forth on the
cover page of this prospectus) and after deducting the estimated underwriting
discount and our estimated offering expenses (assuming that the underwriters'
over-allotment option is not exercised), and the application of the estimated
net proceeds therefrom, our net book value as of September 30, 2002 would have
been $ million, or $     per common share. This amount represents an immediate
increase of $     per common share to the existing shareholders and an immediate
dilution of $     per common share issued to the new investors purchasing shares
offered hereby at the assumed public offering price. The following table
illustrates this per share dilution:

<Table>
<S>                                                            <C>
Assumed initial public offering price per ordinary share....   $
  Net book value per common share before the offering.......    21.35
  Increase attributable to the offering.....................
Net book value per common share after the offering..........
Dilution per common share to new investors(a)...............   $
</Table>

------------

(a) If the underwriters' overallotment option is exercised in full, dilution per
    common share to new investors will be $          .

       The following table sets forth as of September 30, 2002 the number of our
common shares issued, the total consideration paid and the average price per
common share paid by all of our existing shareholders (assuming the exchange of
class A shares for           ordinary shares) and by new investors, after giving
effect to the issuance of                ordinary shares in the offering at an
assumed initial public offering price of $     per share (the midpoint of the
range set forth on the cover page of this prospectus, before deducting the
estimated underwriting discount and our estimated offering expenses and assuming
that the underwriters' over-allotment option is not exercised).

<Table>
<Caption>
                             COMMON SHARES ISSUED     TOTAL CONSIDERATION      AVERAGE PRICE
                             --------------------   ------------------------    PER COMMON
                               NUMBER     PERCENT       AMOUNT       PERCENT       SHARE
                             ----------   -------   --------------   -------   -------------
<S>                          <C>          <C>       <C>              <C>       <C>
Existing shareholders......  55,000,000     100%    $1,100,000,000     100%       $20.00
                             ----------     ---     --------------     ---        ------
New investors..............
                             ----------     ---     --------------     ---        ------
     Total.................
                             ==========     ===     ==============     ===        ======
</Table>

       This table does not give effect to warrants currently exercisable for
6,641,960 ordinary shares, class A warrants currently exercisable for 600,930
class A shares and options to purchase 438,640 ordinary shares that were fully
vested at September 30, 2002.

                                        31
<PAGE>

                  SELECTED CONSOLIDATED FINANCIAL INFORMATION

       The following table sets forth our selected consolidated financial
information for the periods ended and as of the dates indicated. As described in
Note 1 to our consolidated financial statements included elsewhere in this
prospectus, our consolidated financial statements include the accounts of both
Endurance Holdings and Endurance Bermuda (our only operating subsidiary as of
September 30, 2002). Endurance Bermuda was incorporated on November 30, 2001 and
commenced operations on December 17, 2001. Endurance Holdings was incorporated
on June 27, 2002 and effected an exchange offer in July 2002 with the
shareholders of Endurance Bermuda. The exchange offer was accounted for as a
business combination of companies under common control.

       We derived the following selected consolidated financial and additional
data for the period from November 30, 2001(inception) through December 31, 2001
from our audited consolidated financial statements and related notes. We derived
the following selected consolidated financial and additional data for the nine
months ended September 30, 2002 from unaudited financial statements, which
include all adjustments, consisting of normal recurring accruals, which we
consider necessary for a fair presentation of the financial position and the
results of operations for this period. These historical results are not
necessarily indicative of results to be expected from any future period and the
results presented below are not necessarily indicative of our full year
performance.

       You should read the following selected consolidated financial information
along with the information contained in this prospectus, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere in
this prospectus.

<Table>
<Caption>
                                                               PERIOD ENDED            NINE MONTHS ENDED
                                                            DECEMBER 31, 2001         SEPTEMBER 30, 2002
                                                           --------------------      ---------------------
                                                           (IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
<S>                                                        <C>                       <C>
SELECTED INCOME STATEMENT DATA:
Gross premiums written and acquired(a)...................        $   376                   $623,472
Net premiums written and acquired(b).....................            376                    590,513
Net premiums earned......................................              1                    204,282
Net investment income....................................            838                     29,355
Net realized gains on sales of investments...............             --                      3,688
Losses and loss expenses.................................             --                    115,146
Acquisition expenses.....................................             --                     33,304
General and administrative expenses......................            527                     26,494
Net income...............................................            312                     63,488

PER SHARE DATA:
Basic earnings per share.................................        $  0.01                   $   1.06
Diluted earnings per share...............................        $  0.01                   $   1.06
Weighted average number of common shares outstanding
  Basic..................................................         39,630                     59,945
  Diluted................................................         39,630                     60,088
</Table>

                                        32
<PAGE>

<Table>
<Caption>
                                                                          AS OF SEPTEMBER 30, 2002
                                                           AS OF         ---------------------------
                                                     DECEMBER 31, 2001     ACTUAL     AS ADJUSTED(C)
                                                     -----------------   ----------   --------------
                                                                          (IN THOUSANDS, EXCEPT PER
                                                                                 SHARE DATA)
<S>                                                  <C>                 <C>          <C>
SELECTED BALANCE SHEET DATA:
Cash and investments...............................     $1,162,498       $1,453,234
Total assets.......................................      1,165,099        1,853,083
Reserve for losses and loss expenses...............             --          114,779
Reserve for unearned premiums......................            375          402,803
Bank debt(d).......................................             --          100,000
Total shareholders' equity.........................      1,162,312        1,174,408

PER SHARE DATA:
Book value per share(e)............................     $    19.37       $    21.35
Diluted book value per share(f)....................     $    19.37       $    21.10

SELECTED NON-U.S. GAAP DATA:
Net operating income(g)............................     $      312       $   59,800
</Table>

<Table>
<Caption>
                                                              NINE MONTHS ENDED
                                                              SEPTEMBER 30, 2002
                                                              ------------------
<S>                                                           <C>
Loss ratio(h)...............................................         56.4%
Acquisition expense ratio(i)................................         16.3%
General and administrative expense ratio(j).................         13.0%
                                                                     ----
Combined ratio(k)...........................................         85.7%
                                                                     ====
</Table>

------------

(a)  Gross premiums written and acquired for the nine months ended September 30,
     2002 include $89 million of gross premiums acquired in the LaSalle
     transaction. See "Management's Discussion and Analysis of Financial
     Condition and Results of Operations."

(b) Net premiums written and acquired for the nine months ended September 30,
    2002 include $67 million of net premiums acquired in the LaSalle
    transaction. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations."

(c)  The as adjusted summary balance sheet data as of September 30, 2002
     reflects the application of the net proceeds of the sale of
     ordinary shares in this offering at an assumed initial public offering
     price of $          , the midpoint of the range set forth on the cover of
     this prospectus (assuming no exercise of the underwriters' over-allotment
     option) after deducting the estimated underwriting discount and our
     estimated offering expenses. See "Use of Proceeds."

(d) On November 21, 2002, Endurance Holdings borrowed the remaining $92 million
    available under its term loan facility. For a full description of the
    Company's credit facilities, see "Certain Indebtedness."

(e)  Book value per share is based on total shareholders' equity divided by
     basic common shares outstanding of 60,000,000 at December 31, 2001 and
     55,000,000 at September 30, 2002.

(f)  Diluted book value per share is based on total shareholders' equity divided
     by the number of common shares and common share equivalents outstanding at
     the end of the period, using the treasury stock method. Common share
     equivalents include options and warrants which are dilutive when the book
     value of the Company exceeds the exercise price of the options or warrants.
     Diluted shares outstanding at December 31, 2001 were 60,000,000, and at
     September 30, 2002 were 55,667,170.

(g)  Net operating income for the nine months ended September 30, 2002 is
     calculated by subtracting net realized gains on sales of investments of
     $3.7 million from net income of $63.5 million. Net operating income was
     equal to net income for the period ended December 31, 2001.

(h) The loss ratio is calculated by dividing losses and loss expenses by net
    premiums earned.

(i)  The acquisition expense ratio is calculated by dividing acquisition
     expenses by net premiums earned.

(j)  The general and administrative expense ratio is calculated by dividing
     general and administrative expenses by net premiums earned.

(k) The combined ratio is the sum of the loss ratio, the acquisition expense
    ratio and the general and administrative expense ratio.

                                        33
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

       The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this prospectus.
Some of the information contained in this discussion and analysis or set forth
elsewhere in this prospectus, including information with respect to our plans
and strategy for our business, includes forward-looking statements that involve
risk and uncertainties. Please see the "Cautionary Statement Regarding
Forward-Looking Statements" for more information. You should review the "Risk
Factors" set forth elsewhere in this prospectus 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.

       Our results of operations are affected by the following business and
accounting factors and critical accounting policies:

REVENUES

       We derive our revenues primarily from premiums from our insurance
policies and reinsurance contracts and, to a lesser extent, income from our
investment portfolio. Insurance and reinsurance premiums are a function of the
amount and type of policies and contracts we write, as well as prevailing market
prices.

EXPENSES

       Our expenses consist primarily of losses and loss expenses, acquisition
expenses and general and administrative expenses. Losses and loss expenses are
estimated by management and reflect our best estimate of ultimate losses and
costs arising during the reporting period and revisions of prior period
estimates. We record losses and loss expenses based on an actuarial analysis of
the estimated losses we expect to be reported on policies and contracts written.
We reserve for catastrophe losses as soon as a loss event is known to have
occurred. The ultimate losses and loss expenses will depend on the actual costs
to settle claims. Acquisition expenses consist principally of commissions and
brokerage expenses that are typically a percentage of the premiums on insurance
policies or reinsurance contracts written. General and administrative expenses
consist primarily of personnel expenses, general operating expenses and interest
expense.

CRITICAL ACCOUNTING POLICIES

       Our consolidated financial statements contain certain amounts that are
inherently subjective in nature and require management to make assumptions and
best estimates to determine the reported values. If factors such as those
described in the "Risk Factors" section of this prospectus cause actual events
or results to differ materially from management's underlying assumptions or
estimates, there could be a material adverse effect on our results of operations
and financial condition and liquidity.

       We believe that the following critical accounting policies affect
significant estimates used in the preparation of our consolidated financial
statements.

       Premiums.  Premiums written and assumed are earned on a pro-rata basis
over the terms of the underlying contracts and policies. Reinsurance contracts
and insurance policies written on a LOSSES OCCURRING BASIS cover losses which
occur during the term of the contract or policy, typically 12 months.
Accordingly, the premium is earned evenly over the term. Reinsurance contracts
written on a POLICIES ATTACHING BASIS cover losses which attach to the
underlying insurance policies written during the terms of the contracts.
Premiums earned on a policies attaching basis usually extend beyond the original
term of the reinsurance contract, typically resulting in recognition of premiums
earned over a 24 month period rather than the traditional 12 month period.
Policies attaching contracts accounted for 34% of our gross premiums written and
acquired during the nine-month period ended September 30, 2002.

                                        34
<PAGE>

       Premiums written and assumed include estimates based on information
received from brokers, ceding companies and insureds, and any subsequent
differences arising on such estimates are recorded in the periods in which they
are determined. Premiums on our excess of loss and proportional reinsurance
contracts are estimated by management when the business is underwritten. For
excess of loss contracts, the minimum and deposit premium, as defined in the
contract, is generally considered to be the best estimate of the contract's
written premium at inception. Accordingly, this is the amount we generally
record as written premium in the period the underlying risks incept. Estimates
of premiums assumed under proportional contracts, primarily written on a
policies attaching basis, are recorded in the period in which the underlying
risks are expected to incept and are based on information provided by brokers
and ceding companies and estimates of the underlying economic conditions at the
time the risk is underwritten. As actual premiums are reported by the ceding
companies, management evaluates the appropriateness of the premium estimate and
any adjustment to this estimate is recorded in the period in which it becomes
known. Adjustments to original premium estimates could be material and such
adjustments may directly and significantly impact earnings in the period they
are determined because the subject premium may be fully or substantially earned.

       Reserve for Losses and Loss Expenses.  The reserve for losses and loss
expenses includes reserves for unpaid reported losses and losses INCURRED BUT
NOT REPORTED ("IBNR"). The reserve for unpaid reported losses and loss expenses
is established by management based on reports from brokers, ceding companies and
insureds and consultations with independent legal counsel, and represents the
estimated ultimate cost of events or conditions that have been reported to or
specifically identified by the Company. The reserve for incurred but not
reported losses and loss expenses is established by management based on
estimates of ultimate losses and loss expenses.

       Reserves for losses and loss expenses are based in part upon the
estimation of losses resulting from catastrophic events. Estimation of the
losses and loss expenses resulting from catastrophic events based upon the
Company's historical claim experience is inherently difficult because of the
Company's short operating history and the possible severity of catastrophe
claims. Therefore, the Company utilizes both proprietary and commercially
available models, as well as historical reinsurance industry catastrophe claims
experience, for purposes of evaluating future trends and providing an estimate
of ultimate claims costs.

       Several aspects of the Company's casualty insurance and reinsurance
operations complicate the actuarial reserving techniques for loss reserves as
compared to other insurance and reinsurance operations. Among these aspects are
the differences in the Company's policy forms from more traditional forms, the
lack of complete historical data for losses of the same type intended to be
covered by the policies and contracts written by the Company, and the
expectation that losses in excess of the Company's attachment levels will be low
frequency and high severity in nature, limiting the utility of claims experience
of other insurers and reinsurers for similar claims.

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
reporting of a loss to the Company and the settlement of the Company's liability
may be several years. During this period, additional facts and trends will be
revealed. As these factors become apparent, CASE RESERVES will be adjusted,
sometimes requiring an increase in the overall reserves of the Company, and at
other times requiring a reallocation of IBNR reserves to specific case reserves.
These estimates are reviewed regularly, and such adjustments, if any, are
reflected in earnings in the period in which they become known. The
establishment of new reserves or the adjustment of previously recorded reserves
could result in significant upward or downward changes to our financial
condition for any particular period. While management believes that it has made
a reasonable estimate of ultimate losses, the ultimate claims experience may not
be as reliably predicted as may be the case with other insurance and reinsurance
operations, and there can be no assurance that losses and loss expenses will not
exceed the total reserves.

       Accordingly, ultimate losses and loss expenses may differ materially from
the amounts recorded in our consolidated financial statements. These estimates
are reviewed regularly and, as experience develops

                                        35
<PAGE>

and new information becomes known, the reserves are adjusted as necessary. Such
adjustments, if any, are reflected in earnings in the period in which they are
determined.

       Stock-based Employee Compensation Plans.  Stock-based compensation is
accounted for using the intrinsic value-based method in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." As the exercise price of the options granted exceeded the fair value
of the underlying stock on the date of grant, no stock compensation expense has
been recognized in the Company's financial statements.

       The Company is evaluating the impact of adopting the fair value method of
recording stock-based compensation as contained in Statement of Financial
Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation"
("SFAS No. 123"). Under SFAS No. 123, employee stock option grants and other
stock-based compensation will be expensed and included in general and
administrative expenses over the vesting period based on the estimated fair
value at the date the stock-based compensation is granted. The Financial
Accounting Standards Board has issued an exposure draft, which, if finalized as
drafted, would allow companies adopting the fair value method permitted under
SFAS No. 123 to choose from three alternative transition methods. The Company
will evaluate these alternatives and select an appropriate transition method
after the issuance of the final standard, which is expected later in 2002. The
ultimate impact on the Company's financial statements will depend upon the
transition method selected.

RESULTS OF OPERATIONS

       The following is a discussion and analysis of the Company's consolidated
results of operations for the period from November 30, 2001 (inception) to
December 31, 2001 and separately for the nine months ended September 30, 2002.

  PERIOD ENDED DECEMBER 31, 2001

       During the period from November 30, 2001 to December 31, 2001, the
Company wrote a small volume of business, with gross premiums written of $0.4
million and an immaterial amount of earned premiums. The Company did not incur
any losses during this period. Net investment income resulting from the
investment of the proceeds from our private placement contributed $0.8 million
to our earnings. General and administrative expenses for the period were $0.5
million and net income was $0.3 million.

  NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written and acquired were $623.5 million. Gross premiums written and acquired
were comprised of gross premiums written of $534.9 million and gross premiums
acquired from LaSalle of $88.6 million. Reinsurance premiums ceded for the nine
months ended September 30, 2002 were $33.0 million. These premiums consisted
primarily of $21.5 million of reinsurance protection provided to the Company in
conjunction with the LaSalle transaction and $10.6 million of reinsurance
purchased in August 2002. Endurance Bermuda purchased such reinsurance in August
to manage its exposure to certain identified catastrophic losses in its property
and property catastrophe segments. Net premiums earned for the nine months ended
September 30, 2002 were $204.3 million.

       Net Investment Income.  Net investment income for the nine months ended
September 30, 2002 was $29.4 million, and was primarily comprised of interest on
coupon paying bonds partially offset by investment management fees for the
period of $0.9 million.

       The Company invested its assets in cash and cash equivalents until the
end of February 2002. In March 2002, the Company and its asset managers embarked
on a program to invest in a broader array of assets based upon the Company's
investment guidelines. The Company reached its target level of investment by
June 30, 2002.

                                        36
<PAGE>

       The annualized 2002 book yield (which is the average yield of the
invested portfolio after adjusting for accretion and amortization from the
purchase dates of its aggregate assets) and total return (which is the implied
yield attributable to the accretion in market value of the invested portfolio)
were 4.49% and 6.63% for the nine months ended September 30, 2002, respectively.
Total return includes unrealized gains and losses.

       Net Realized Investment Gains.  Net realized investment gains for the
nine months ended September 30, 2002 were $3.7 million, and were primarily due
to gains realized from the sale of fixed maturity securities, executed as part
of the ongoing management of our investment portfolio.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $115.1 million. The loss ratio for the nine months
ended September 30, 2002 was 56.4%. The overall loss reserves were established
by the Company's actuaries and reflect the best estimate of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $33.3 million. The acquisition expense ratio for the
nine months ended September 30, 2002 was 16.3%.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $26.5 million, and were
comprised of $14.9 million in personnel costs, $4.8 million relating to the
implementation of the Company's structure and commencement of business and $6.8
million in other expenses. The general and administrative expense ratio for the
nine months ended September 30, 2002 was 13.0%.

       Net Income.  Net income for the nine months ended September 30, 2002 was
$63.5 million, comprised of net underwriting income of $29.3 million, net
investment income of $29.4 million, net realized investment gains of $3.7
million and net foreign exchange gains of $1.1 million.

       Comprehensive Income.  Comprehensive income for the nine months ended
September 30, 2002 was $112.1 million, which was comprised of the net income of
$63.5 million described above and a net increase in unrealized investment gains
of $48.6 million.

UNDERWRITING RESULTS BY OPERATING SEGMENTS

       The determination of the Company's business segments was based on how the
Company monitors the performance of its underwriting operations. Management
measures segment 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 does not
manage its assets by segment; accordingly, investment income and total assets
are not allocated to the individual segments. General and administrative
expenses are allocated to segments based on each segment's proportional share of
gross premiums written and acquired.

                                        37
<PAGE>

       The following table summarizes the underwriting results and associated
ratios for our six business segments for the nine months ended September 30,
2002.

<Table>
<Caption>
                                     PROPERTY PER     PROPERTY
                                     RISK TREATY     CATASTROPHE    CASUALTY TREATY
                                     REINSURANCE     REINSURANCE      REINSURANCE
(IN THOUSANDS)                       ------------    -----------    ---------------
<S>                                  <C>             <C>            <C>               <C>
REVENUES
Gross premiums written and
  acquired.........................    $123,585       $170,185         $143,481
                                       --------       --------         --------
Net premiums written and
  acquired.........................     123,585        138,099          143,481
                                       --------       --------         --------
Net premiums earned................      28,448         77,257           35,405
                                       --------       --------         --------

EXPENSES
Losses and loss expenses...........      14,657         45,937           20,820
Acquisition expenses...............       6,019         11,419            8,452
General and administrative
  expenses.........................       5,252          7,232            6,097
                                       --------       --------         --------
Total Expenses.....................      25,928         64,588           35,369
                                       --------       --------         --------

UNDERWRITING INCOME................    $  2,520       $ 12,669         $     36
                                       ========       ========         ========

RATIOS
Loss ratio.........................        51.5%          59.5%            58.8%
Acquisition expense ratio..........        21.2%          14.8%            23.9%
General and administrative expense
  ratio............................        18.5%           9.4%            17.2%
                                       --------       --------         --------
Combined ratio.....................        91.2%          83.7%            99.9%
                                       ========       ========         ========
</Table>

<Table>
<Caption>
                                        PROPERTY
                                       INDIVIDUAL      CASUALTY            OTHER
                                          RISK      INDIVIDUAL RISK   SPECIALTY LINES    TOTAL
(IN THOUSANDS)                         ----------   ---------------   ---------------   --------
<S>                                    <C>          <C>               <C>               <C>
REVENUES
Gross premiums written and
  acquired...........................   $50,989         $66,289           $68,943       $623,472
                                        -------         -------           -------       --------
Net premiums written and acquired....    50,116          66,289            68,943        590,513
                                        -------         -------           -------       --------
Net premiums earned..................    19,263          21,525            22,384        204,282
                                        -------         -------           -------       --------

EXPENSES
Losses and loss expenses.............     4,661          16,425            12,646        115,146
Acquisition expenses.................     1,909           1,894             3,611         33,304
General and administrative
  expenses...........................     2,167           2,817             2,929         26,494
                                        -------         -------           -------       --------
Total Expenses.......................     8,737          21,136            19,186        174,944
                                        -------         -------           -------       --------

UNDERWRITING INCOME..................   $10,526         $   389           $ 3,198       $ 29,338
                                        =======         =======           =======       ========

RATIOS
Loss ratio...........................      24.2%           76.3%             56.5%          56.4%
Acquisition expense ratio............       9.9%            8.8%             16.1%          16.3%
General and administrative expense
  ratio..............................      11.2%           13.1%             13.1%          13.0%
                                        -------         -------           -------       --------
Combined ratio.......................      45.3%           98.2%             85.7%          85.7%
                                        =======         =======           =======       ========
</Table>

                                        38
<PAGE>

PROPERTY PER RISK TREATY REINSURANCE

       Our Property Per Risk Treaty Reinsurance business segment reinsures
individual property risks of ceding companies on a treaty basis. Our property
per risk reinsurance contracts cover claims from individual insurance policies
written by our ceding company clients and include both personal lines and
commercial lines exposures.

  NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  For the nine months ended September 30, 2002, gross premiums
written were $123.6 million and net premiums earned were $28.4 million. The
ratio of net premiums earned to net premiums written during this period was 23%
due to 57% of the premiums in this segment having been written on a policies
attaching basis. The majority of the policies attaching contracts have a
24-month risk period and, as such, the premiums are earned over that risk
period.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $14.7 million and the loss ratio was 51.5%.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $6.0 million or 21.2% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $5.3 million.

PROPERTY CATASTROPHE REINSURANCE

       Our Property Catastrophe Reinsurance business segment reinsures
catastrophic perils for ceding companies on a treaty basis. Our property
catastrophe reinsurance contracts provide protection for most catastrophic
losses that are covered in the underlying insurance policies written by our
ceding company clients. Protection under property catastrophe treaties is
provided on an occurrence basis, allowing our ceding company clients to combine
losses that have been incurred in any single event from multiple underlying
policies.

  NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  For the nine months ended September 30, 2002, gross premiums
written and acquired were $170.2 million, representing gross premiums written of
$81.6 million and gross premiums acquired from LaSalle of $88.6 million. The
majority of the contracts associated with this segment are written on a losses
occurring basis. Accordingly, the premium is earned evenly over the term.
Reinsurance premiums ceded during this period were approximately $32.1 million
and were comprised of $21.5 million of reinsurance protection assumed by
Endurance Bermuda in conjunction with the LaSalle transaction and $10.6 million
of reinsurance purchased in August 2002. This reinsurance was purchased to
reduce Endurance Bermuda's exposure to catastrophic losses.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $45.9 million. The loss ratio of 59.5% was
principally attributable to the small number of catastrophe losses experienced
in the nine months ended September 30, 2002. Results in this segment were
adversely impacted by approximately $30 million of losses from the August 2002
flooding in Central Europe which were partially offset by light catastrophic
loss activity in other regions. The losses and loss expenses recorded have not
resulted in any recoveries under the reinsurance protection purchased.
Accordingly, no losses recoverable have been recorded.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $11.4 million or 14.8% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $7.2 million.

                                        39
<PAGE>

CASUALTY TREATY REINSURANCE

       Our Casualty Treaty Reinsurance business segment reinsures third party
liability exposures from ceding companies on a treaty basis. The exposures that
we reinsure include AUTOMOBILE LIABILITY, PROFESSIONAL LIABILITY, DIRECTORS' AND
OFFICERS' LIABILITY, UMBRELLA LIABILITY and WORKERS' COMPENSATION. We focus on
business that is exposed to severity losses and not expected to produce high
levels of claims frequency.

         NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $143.5 million and net premiums earned were $35.4 million. For the
nine months ended September 30, 2002, 70% of premiums in this segment were
written on a policies attaching basis. The majority of the policies attaching
contracts have a 24-month risk period, and as such, the premiums are earned over
the risk period.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $20.8 million and the loss ratio was 58.8%. The
losses and loss expenses of $20.8 million, established by the Company's
actuaries, reflect management's best estimate of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $8.5 million or 23.9% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $6.1 million.

PROPERTY INDIVIDUAL RISK

       Our Property Individual Risk business segment is comprised of the
insurance and FACULTATIVE REINSURANCE of commercial properties. The policies
written in this segment provide coverage for one insured for each policy. The
types of risks insured are generally commercial properties with sufficiently
large values to require multiple insurers and reinsurers to accommodate their
insurance capacity needs.

         NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $51.0 million and net premiums earned were $19.3 million. The ratio
of net premiums earned to net premiums written during this period was 38.4%. The
earned premium percentage reflects the fact that staffing in this operating
segment increased substantially during 2002. On January 1, 2002 this operating
segment had one underwriter while at September 30, 2002 there were six
underwriters. As the number of underwriters increased, the volume of premiums
written increased. Policies written in this segment are written on a losses
occurring basis and typically earn over the 12-month period of the contract.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $4.7 million, and the loss ratio was 24.2%. As of
September 30, 2002, we had not received any notices of losses for this segment.
Accordingly, the losses and loss expenses of $4.7 million were established by
the Company's actuaries based on historical industry reporting patterns and
qualitative factors and represent management's best estimate of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $1.9 million or 9.9% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $2.2 million.

                                        40
<PAGE>

CASUALTY INDIVIDUAL RISK

       Our Casualty Individual Risk business segment is comprised of the
insurance and facultative reinsurance of third party liability exposures. This
includes third party general liability insurance, directors' and officers'
liability insurance, errors and omissions insurance and employment practices
liability insurance, all written for a wide range of industry groups, as well as
medical professional liability insurance which is written for large
institutional healthcare providers. Our clients in this segment typically employ
sophisticated risk management practices and retain significant portions of their
own risk in addition to purchasing large insurance limits.

        NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $66.3 million and net premiums earned were $21.5 million. The ratio
of net premiums earned to net premiums written during this period was 32.5%. The
majority of the policies were written subsequent to March 31, 2002, and all
premiums written by this segment are earned ratably over the terms of the
insurance policies. At March 31, 2002, two underwriters were employed in this
business segment and at September 30, 2002, there were seven underwriters on the
team. As the number of underwriters has increased, the amount of premiums
written also has increased.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $16.4 million, and the loss ratio was 76.3%. We
have received only a limited number of notices of potential losses for this
segment, none of which have yet reached a level which would result in our paying
a claim. Accordingly, the losses and loss expenses of $16.4 million were
established by the Company's actuaries based on historical industry loss data
and program specific loss information, and represent management's best estimate
of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $1.9 million or 8.8% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $2.8 million.

OTHER SPECIALTY LINES

       Our Other Specialty Lines business segment is comprised of the insurance
and reinsurance of unique opportunities, including Aerospace, Self Insured Risks
and a limited number of other reinsurance programs such as surety, marine,
energy, personal accident, terrorism and others. Aerospace includes aviation
hull, aircraft liability and aircraft products coverage, and the space business
includes satellite launch and in-orbit coverage. Our Self Insured Risks business
provides traditional property and casualty insurance products to entities that
are able to bear a significant portion of their own risk. The coverages we
provide include general liability, automobile liability, workers' compensation
and property insurance. We provide both insurance and reinsurance coverages,
with the reinsurance written both in the form of facultative and treaty
reinsurance.

        NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $68.9 million and net premiums earned were $22.4 million. For the
nine months ended September 30, 2002, 57% of premiums were written on a policies
attaching basis. The majority of the policies attaching contracts have a
24-month risk period, and as such, the premiums are earned over the risk period.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $12.6 million, and the loss ratio was 56.5%.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $3.6 million or 16.1% of net premiums earned.

                                        41
<PAGE>

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $2.9 million.

SIGNIFICANT TRANSACTIONS

       On May 16, 2002, Endurance Bermuda completed a transaction with LaSalle,
and LaSalle's parent, Trenwick Group Ltd. The transaction was structured as a
quota share retrocession agreement effective as of April 1, 2002, a purchase of
renewal rights, a transfer and purchase agreement and an administrative services
agreement. Endurance Bermuda did not assume any of LaSalle's historical
reinsurance liabilities. The primary reasons for the transaction were to
increase the Company's presence in the property catastrophe marketplace and to
increase the Bermuda-based staff of the Company. The transaction was accounted
for as a purchase method business combination in accordance with SFAS No. 141
"Business Combinations."

       At closing, Endurance Bermuda agreed to pay a 25.0% ceding commission on
the net unearned premiums, to be paid as premiums are collected under the
assumed contracts, and Endurance Bermuda assumed $67.1 million of net unearned
premium, comprised of $88.6 million of gross unearned premiums and $21.5 million
of prepaid reinsurance premiums. Endurance Bermuda is also required to pay a
renewal commission of 12.5% on all net reinsurance premiums renewed and
collected during the first twelve months of the quota share retrocession
agreement, subject to a minimum renewal fee of $8 million which was paid to
LaSalle at the closing. In addition to the initial purchase price, Endurance
Bermuda may be required to pay additional amounts. Such contingent amounts are
based on the profitability during 2002 of the April 1, 2002 in-force contracts
acquired and will be recorded in the period in which they are determined to be
payable.

       On August 13, 2002, the Company entered into a $192 million three-year
term loan agreement and a $108 million 364 day revolving credit facility with a
syndicate of commercial banks. See "Certain Indebtedness." Proceeds from the
three-year term loan agreement may be utilized by the Company for general
corporate purposes and working capital requirements. The revolving credit
facility also provides for the issuance of standby letters of credit. The
revolving credit facility will terminate on August 11, 2003, at which point any
revolving credit balance can be converted into a six-month term loan. Costs
associated with the establishment of the debt facility were capitalized and are
included in other assets. These capitalized costs will be amortized ratably over
the term of the debt facility commitment periods.

       As of September 30, 2002, the Company had drawn down $100 million under
the term loan facility, and letters of credit totaling $2.8 million were
outstanding under the revolving credit facility. The term loan borrowing
occurred on September 27, 2002, when Endurance Holdings drew down $100 million
to repurchase 5,000,000 ordinary shares from subsidiaries of Zurich for $100
million. On November 21, 2002, Endurance Holdings borrowed the remaining $92
million under the term loan facility. Proceeds from the second term loan
borrowing were used to provide additional capital to Endurance Bermuda and
subsequently used by Endurance Bermuda to capitalize Endurance U.K. and
Endurance U.S. Such borrowings currently carry interest at LIBOR plus 1.0%,
2.81% per annum on the first term loan borrowing and 2.50% per annum on the
second term loan borrowing, and are subject to principal amortization of 20%,
40% and 40% by September 30, 2003, 2004 and 2005, respectively.

       Endurance U.K. was incorporated on April 10, 2002. On December 4, 2002,
Endurance U.K. was authorized by the FSA to begin writing insurance and
reinsurance in the United Kingdom. On November 27, 2002, Endurance Bermuda
contributed L100 million to Endurance Worldwide Holdings Limited which, in turn,
subsequently contributed such amount to capitalize Endurance U.K.

       Endurance U.S. was incorporated on September 5, 2002. On December 4,
2002, Endurance Bermuda contributed $335 million in cash and invested assets to
Endurance U.S. Holdings Corp., which in turn, subsequently contributed such
amount as statutory surplus of Endurance U.S. On December 18, 2002, Endurance
U.S. received a license to write certain lines of insurance and reinsurance
business from the New York Department.

                                        42
<PAGE>

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, including Endurance Bermuda, Endurance U.K.
and Endurance U.S. 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 common shares. There
are restrictions on the payment of dividends by Endurance Bermuda, Endurance
U.K. and Endurance U.S. to Endurance Holdings, which are described in more
detail below.

       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, 2002, Endurance Bermuda could
pay a dividend or return additional paid-in capital totaling approximately $112
million without prior regulatory approval based upon insurance and Companies Act
regulations. See "Regulatory Matters -- Bermuda -- Minimum Solvency Margin and
Restrictions on Dividends and Distributions."

       We have agreed with the New York Department to not take a dividend from
Endurance U.S. for two years after its license is issued without prior
regulatory approval. Endurance U.K. is subject to significant regulatory
restrictions limiting its ability to pay dividends. Accordingly, we do not
currently intend to seek a dividend from Endurance U.K.

       Our aggregate invested assets as of September 30, 2002 totaled
approximately $1.4 billion. The increase of cash and invested assets since
December 14, 2001 resulted from collections of premiums on insurance policies
and reinsurance contracts and investment income, offset by acquisition expenses
paid, reinsurance premiums paid, general and administrative expenses paid and
payments related to the LaSalle transaction. Total net cash flow from operations
from December 17, 2001 through September 30, 2002 was approximately $223
million.

       We have $38.4 million in principal payments due and payable by September
30, 2003 for outstanding borrowings on our term loan facility. We anticipate
using a combination of the proceeds from this offering and dividends from
Endurance Bermuda to make such principal payments.

       We expect that the proceeds of this offering, together with the capital
base we established in the private placement and under our credit facilities,
will permit us to continue to implement our business strategy. On an ongoing
basis, we expect our internally generated funds, together with borrowings
available under our credit facilities and our capital base established by this
offering and the private placement, to be sufficient to operate our business.
There can be no assurance that we will not be required to incur other
indebtedness to implement our business strategy or pay claims.

QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

       We believe that we are principally exposed to three types of market risk:
interest rate risk, foreign currency risk and credit risk.

       Interest Rate Risk.  Our primary market risk exposure is to changes in
interest rates. Our fixed maturity portfolio is exposed to interest rate risk.
Fluctuations in interest rates have a direct impact on the market valuation of
these securities. As interest rates rise, the market value of our fixed maturity
portfolio falls, and the converse is also true. We expect to manage interest
rate risk through an active portfolio management strategy that involves the
selection, by our managers, of investments with appropriate characteristics,
such as duration, yield, currency and liquidity, that are tailored to the
anticipated cash outflow characteristics of our liabilities.

                                        43
<PAGE>

       As of September 30, 2002, assuming parallel shifts in interest rates, the
impact of an immediate 100 basis point increase in market interest rates on our
investment portfolio of $1.4 billion would have been an estimated decrease in
market value of 2.7% or approximately $39 million, and the impact on our
investment portfolio of an immediate 100 basis point decrease in market interest
rates would have been an estimated increase in market value of 2.3% or
approximately $33 million.

       Foreign Currency Risk.  We will attempt to manage our foreign currency
risk by seeking to match our liabilities under insurance and reinsurance
contracts that are payable in foreign currencies with investments that are
denominated in such currencies. Furthermore, we may use forward foreign currency
exchange contracts in an effort to hedge against movements in the value of
foreign currencies relative to the U.S. dollar. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specified
currency at a future date at a price set at the time of the contract. Foreign
currency exchange contracts will not eliminate fluctuations in the value of our
assets and liabilities denominated in foreign currencies, but rather allow us to
establish a rate of exchange for a future point in time. We do not expect to
enter into such contracts with respect to a material amount of our assets.

       Credit Risk.  We have exposure to credit risk primarily as a holder of
fixed maturity securities. Our risk management strategy and investment policy is
to invest in debt instruments of high credit quality issuers and to limit the
amount of credit exposure with respect to particular ratings categories and any
one issuer. We attempt to limit our credit exposure by purchasing fixed income
investments rated A-/A3 or higher. In addition, we have limited our exposure to
any single corporate issuer to 1% or less of our total portfolio.

CURRENCY

       Our functional currency is U.S. dollars for Endurance Bermuda and
Endurance U.S. and British Sterling for Endurance U.K. The reporting currency
for all entities is U.S. dollars. We maintain a portion of our investments and
liabilities in currencies other than the U.S. dollar. We have made a significant
investment in the capitalization of Endurance U.K. Endurance U.K. is subject to
the FSA 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. We may, from time to time,
experience losses resulting from fluctuations in the values of foreign
currencies, which could have a material adverse effect on our results of
operations.

EFFECTS OF INFLATION

       The effects of inflation could cause the severity of claims to rise in
the future. Our 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, we will be
required to increase reserves for losses and loss expenses with a corresponding
reduction in our earnings in the period in which the deficiency is identified.

RESERVES FOR LOSSES AND LOSS EXPENSES

       As of September 30, 2002, the Company had been notified of only a small
number of potential claims under its insurance policies and reinsurance
contracts. Of these notifications, management expects a limited number of the
claims to penetrate layers in which we provide coverage; however, case reserves
have been established for these expected losses. 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 currently a valid means for
estimating ultimate obligations.

       At the time each insurance policy or reinsurance contract is written, the
underwriter, generally working in conjunction with an actuary or a risk analyst,
estimates a target or expected loss ratio for the contract. The estimate may be
based on the prior experience of the insured or ceding company, current
                                        44
<PAGE>

exposure profiles, analogous exposures under similar contracts with other
insureds or ceding companies, modeled long-term expected losses and/or some
combination of these factors. These target loss ratios are utilized along with
other factors including industry experience and the judgment of our actuaries in
establishing loss ratios by line of business.

CEDED REINSURANCE

       Endurance Bermuda's ceded premiums consisted primarily of reinsurance
protection in conjunction with the LaSalle transaction and additional
reinsurance purchased in August 2002. Total premiums ceded under these contracts
were approximately $33 million for the nine months ended September 30, 2002. The
reinsurance agreements principally provide Endurance Bermuda with protection
related to certain identified catastrophes in its property and catastrophe
segments.

       The Company remains obligated for amounts ceded in the event that its
reinsurers or retrocessionaires do not meet their obligations. Accordingly, the
Company has evaluated the reinsurers and retrocessionaires that are providing
reinsurance and retrocessional protection and will continue to monitor the
stability of its reinsurers and retrocessionaires. At September 30, 2002, the
Company had not recorded any reinsurance recoverables.

INTANGIBLE ASSETS

       Goodwill and other intangibles that arise from business combinations are
accounted for in accordance with SFAS No. 141 "Business Combinations" and SFAS
No. 142 "Goodwill and Other Intangible Assets." These standards require that
identifiable intangible assets are amortized in accordance with their useful
lives and goodwill and intangible assets with indefinite useful lives should not
be amortized but should be tested for impairment at least annually. As a result
of its acquisition of the property catastrophe business of LaSalle during the
nine months ended September 30, 2002, the Company recorded goodwill of $0.9
million and other acquisition related intangibles of $25.7 million. The other
acquisition related intangibles are being amortized over periods of up to ten
years.

FOREIGN EXCHANGE

       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 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.

                                        45
<PAGE>

                              INDUSTRY BACKGROUND

INDUSTRY CONDITIONS AND TRENDS

       The property and casualty insurance and reinsurance industry has
historically been a cyclical business. During periods of excess underwriting
capacity, competition generally results in lower pricing and less favorable
policy terms and conditions for insurers and reinsurers. During periods of
diminished underwriting capacity, industry-wide pricing and policy terms and
conditions become more favorable for insurers and reinsurers. Underwriting
capacity, as defined by capital available to the industry, is affected by a
number of factors, including:

       -     loss experience for the industry in general, and for specific lines
             of business or risks, in particular;

       -     natural and man-made disasters, such as hurricanes, windstorms,
             earthquakes, floods, fires and acts of terrorism;

       -     court decisions expanding insurance coverage and granting of large
             awards;

       -     investment results including realized and unrealized gains and
             losses on investment portfolios and annual investment yields; and

       -     ratings and financial strength of competitors.

       In recent years, the insurance and reinsurance industry has gone from a
period of excess capacity to one of more constrained capacity. From 1994 until
1999, the market faced increasing excess capital capacity, producing
year-over-year rate decreases and coverage increases. Since 2000, an
accumulation of losses from asbestos liability, under-reserving, poor investment
performance and losses from the World Trade Center tragedy have significantly
reduced the industry's capital base.

       The events of September 11, 2001 altered the insurance and reinsurance
market landscape dramatically. While the full impact of the losses related to
these events is still unknown, a wide range of industry experts estimate
ultimate losses at approximately $40 billion. Prior to the World Trade Center
tragedy, the largest insured catastrophic event was Hurricane Andrew, with
approximately $20 billion of losses. Over the past twelve months, a number of
major property and casualty insurers and reinsurers have announced charges of
several hundred million dollars or more. The majority of these charges are
related to adverse developments, particularly for underpriced business written
from 1997 to 2001, and large asbestos claims losses.

            TEN LARGEST GLOBAL CATASTROPHIC EVENTS BY INSURED LOSSES
                                 (IN BILLIONS)
[BAR GRAPH]

<Table>
<S>                                                           <C>
World Trade Center                                                               40.20
Hurricane Andrew                                                                 19.60
Northbridge Earthquake                                                           16.30
Typhoon Mireille                                                                  7.10
Windstorm Daria                                                                   6.10
Windstorm Lothar                                                                  6.00
Hurricane Hugo                                                                    5.90
1987 European Storm and Floods                                                    4.60
Windstorm Vivian                                                                  4.20
Typhoon Bart                                                                      4.20
</Table>

       There were 31 downgrades of U.S. property and casualty insurers in 2001,
followed by 24 downgrades in 2002 by early November. Since the beginning of
2002, there have been 47 downgrades and only three upgrades among the 150
largest reinsurers.

                                        46
<PAGE>

       As a result of these capital reductions and ratings downgrades, a number
of traditional insurance and reinsurance competitors have exited key markets and
pricing has increased significantly across many lines of business and policy
terms and conditions have improved dramatically.

       Consequently, new capital has entered the insurance and reinsurance
industry to take advantage of favorable market conditions. However, by midyear
2002, the U.S. industry's supply of capital to support underwriting activity had
declined about 15% from a high of $334 billion at year-end 1999, despite the
vigorous capital-raising activity in the months that followed September 11,
2001.

THE BERMUDA INSURANCE MARKET

       Over the past 15 years, Bermuda has become one of the world's leading
insurance and reinsurance markets. Bermuda's favorable regulatory and tax
environment, which minimizes governmental involvement for those companies that
meet certain solvency and liquidity requirements, creates an attractive platform
for insurance and reinsurance companies.

       There are a number of other factors that have made Bermuda the venue of
choice for us and other new property and casualty companies over the last
several years, including:

       -     a highly reputable business center;

       -     excellent professional and other business services;

       -     a well-developed captive insurance industry;

       -     political and economic stability; and

       -     ease of access to global insurance markets.

       Notwithstanding the positive operating environment, a challenge faced by
Bermuda-domiciled companies is the limited number of trained underwriting and
professional staff in Bermuda. Many companies have addressed this issue by
importing appropriately trained employees into Bermuda. Endurance Bermuda has
successfully hired approximately 100 employees through September 30, 2002,
through both its recruiting efforts and as a result of the LaSalle transaction,
and believes it is adequately staffed.

       Most Bermuda-domiciled insurance and reinsurance companies have also
pursued business diversification and international expansion. Although most of
the Bermudian insurers were established as monoline specialist underwriters, in
order to achieve long-term growth and better risk exposure, virtually all of
these companies have diversified their operations, either across property and
liability lines, into new international markets, or through a combination of
both of these methods.

       Bermuda is now recognized as one of the leading reinsurance and insurance
markets, currently serving as the headquarters for an increasing number of
global reinsurance and insurance companies. Bermuda's strong industry position
solidified after the events of September 11, 2001, as approximately $13 billion
of capital flowed into Bermuda, which represented more than 50% of the new
capital raised. Much of these new proceeds went to a variety of Bermuda-based
start-up companies. At the end of 2001, over 1,600 international insurers were
registered in Bermuda, of which 18 were Class 4 insurers.

                                        47
<PAGE>

                                    BUSINESS

OVERVIEW

       Endurance Holdings is a holding company domiciled in Bermuda. Through our
operating subsidiaries based in Bermuda, the United Kingdom and the United
States, we focus on writing specialty lines of commercial property and casualty
insurance and reinsurance on a global basis. We define specialty lines as those
lines of insurance and reinsurance that require dedicated, specialized
underwriting skills and resources in order to be profitably underwritten. Our
portfolio of specialty lines of business is organized into the following
segments: property per risk treaty reinsurance, property catastrophe
reinsurance, casualty treaty reinsurance, property individual risk, casualty
individual risk and other specialty lines.

       We seek to create a portfolio of specialty lines which are profitable and
have limited correlation with one another. We believe that a well constructed
portfolio of diversified risks will produce less volatile results than each of
the individual lines of business independently and will provide a superior
risk-adjusted return on our capital. We identify and underwrite attractive
insurance and reinsurance business through our experienced underwriting staff
and apply a centralized quantitative framework of risk analysis across all of
our business segments. We produce our business through the leading worldwide
insurance and reinsurance brokers and intermediaries.

       We began operations on December 17, 2001 after Endurance Bermuda
completed a private placement of $1.2 billion of its equity securities. Initial
investors in Endurance Bermuda included Aon, Zurich, THL, TPG, Capital Z, Perry
Capital, Metro Center Investments Pte Ltd, GM, Lightyear Capital, Credit Suisse
First Boston, Golden Gate Capital, Reservoir Capital and TIAA-CREF.

       Since our founding and initial private placement, we have been able to
achieve significant success in the development of our business. Our
accomplishments include recruiting a highly experienced management team and
building a staff of over 100; forming and licensing insurance subsidiaries in
Bermuda, the United Kingdom and the United States; acquiring the property
catastrophe business of LaSalle; establishing a $300 million credit facility;
and repurchasing the equity interests in the Company owned by Zurich. For the
nine months ended September 30, 2002, we had $623 million in gross premiums
written and acquired and $63 million in net income. At September 30, 2002, we
had $1.9 billion in total assets and $1.2 billion in shareholders' equity.

       Current conditions in the global insurance and reinsurance markets
present an attractive opportunity for us to deploy our capital. Many global
property and casualty insurers and reinsurers are currently experiencing
significantly reduced capital resulting from several years of excessively
competitive pricing, expanding coverage terms, significant increases in losses
from asbestos liability, under-reserving, poor investment performance and losses
from the World Trade Center tragedy. This reduction in capacity has resulted in
considerable increases in pricing and in terms and conditions that are
significantly more favorable for insurers and reinsurers. We believe that the
additional capital provided through this offering, combined with our business
strategy, experienced management team and unencumbered balance sheet, will
enhance our ability to benefit from this market environment.

  Endurance U.K.

       Endurance U.K. was incorporated on April 10, 2002. On December 4, 2002,
Endurance U.K. was authorized by the FSA to begin writing certain lines of
insurance and reinsurance in the United Kingdom. Endurance U.K., which is
headquartered in London, would be able to operate throughout the European Union,
subject to compliance with certain notification requirements of the FSA and in
some cases, certain local regulatory requirements, and will focus on the
origination of property and casualty insurance and reinsurance from non-North
American markets. Endurance U.K. also serves as a representative office in
London to refer certain business which meets our underwriting criteria to
Endurance Bermuda. We have capitalized Endurance U.K. with L100 million of
initial capital. Endurance U.K. is headed by Mark Boucher.

                                        48
<PAGE>

  Endurance U.S.

       Endurance U.S. was incorporated on September 5, 2002. On December 18,
2002, Endurance U.S. received a license in the State of New York from the New
York Department to conduct business as a property and casualty reinsurer.
Certain reinsurance business, known as WORKING LAYER, is characterized by higher
frequency and lower severity of losses as compared to the type of reinsurance
business targeted by Endurance Bermuda. We believe that this business, which
requires a higher degree of client contact including underwriting, claims,
actuarial and accounting reviews, would be difficult to underwrite from a
Bermuda location. Endurance U.S. will initially focus on such working layer
business and will provide us with access to classes of reinsurance business and
types of reinsurance clients which we would not otherwise be able to effectively
access from Bermuda. We have initially capitalized Endurance U.S. with $335
million in capital. Endurance U.S. is headed by Steven W. Carlsen.

OUR COMPETITIVE STRENGTHS

       We believe certain characteristics distinguish us from our competitors,
including:

-     Extensive Specialized Underwriting and Risk Management Capabilities.  We
      have made significant initial investments in our technical capabilities,
      including hiring 38 experienced underwriters, an actuarial staff of seven,
      and a risk analysis and modeling staff of six. We extensively integrate
      our underwriting decisions with actuarial analysis, developing our own
      view as to the adequacy of the pricing in the insurance and reinsurance
      business which we underwrite.

-     Experienced Management Team.  Our senior management team averages over 20
      years of experience in the insurance and reinsurance industry. Our senior
      management, underwriting and technical professionals participate in our
      stock option plan that ties compensation to the achievement of goals
      aligned with those of our shareholders.

-     Strong Market Relationships.  The underwriting expertise and extensive
      industry relationships previously developed by our senior management team
      and underwriters have allowed us to quickly establish our presence in the
      global insurance and reinsurance markets. We have strong relationships
      with major insurance and reinsurance brokers, including: Aon, Marsh,
      Willis, Benfield and A.J. Gallagher. To date, we have written business
      with approximately 550 clients.

-     Bermuda-Based Operations.  Bermuda is our principal base of operations. As
      one of the leading centers of the global insurance industry, Bermuda
      provides us with ready access to clients who increasingly seek
      Bermuda-based capacity to meet their insurance and reinsurance needs.
      Bermuda also has a well developed network of insurance and reinsurance
      brokers, an experienced pool of employees with significant insurance
      expertise and a very responsive regulatory environment which allows for
      rapid innovation in insurance and reinsurance products.

-     Conservative Investment Policy.  We have a conservative investment policy
      aimed at minimizing the volatility of our investment results. At September
      30, 2002, 100% of our invested assets were held in cash equivalents and
      fixed maturity securities, 86% of which were rated AAA and 100% were rated
      A or better, with an average duration of 2.6 years.

-     Unencumbered Capital Base.  We have statutory capital and surplus of
      approximately $1.2 billion. As a newly formed company, we are unencumbered
      by any historical losses relating to asbestos liabilities, the World Trade
      Center tragedy and other historical liability exposures currently
      affecting many of our competitors. By choosing to form and license new
      subsidiaries rather than assuming unknown liabilities through the
      acquisition of existing licensed "shell" companies, we have no risk that
      loss reserve development relating to historical exposures prior to our
      formation will negatively impact our future financial results. We believe
      that our unencumbered capital will allow us to distinguish ourselves from
      many of our competitors and help to attract clients who are seeking long-
      term financial stability from their insurers and reinsurers.

                                        49
<PAGE>

BUSINESS STRATEGY

       Our goal is to generate a superior long-term return on capital by
leveraging our competitive strengths and executing our strategy. The key
elements of our strategy are:

-     Maintain a Portfolio of Profitable Specialty Lines.  We believe that there
      are significant opportunities in a number of lines of business in the
      current market environment. We participate in those specific specialty
      lines which we believe have the potential to offer the highest
      risk-adjusted return on capital and in which we believe we can establish a
      competitive advantage through our specialized teams of expert
      underwriters. We intend to use our ability to participate in multiple
      lines of business to deploy capital and resources to the most attractive
      business lines at the most opportune times.

-     Utilize Monoline Level of Expertise in Each Line of Business.  We have
      formed teams of highly experienced professionals to manage each of our
      specific lines of business. Each team is led by a senior executive with
      extensive experience in the distinct business line for which the team is
      responsible and is supported by highly experienced underwriting personnel
      who are specialists in their unique business line.

-     Apply Extensive Technical Analysis to Our Underwriting.  We manage our
      portfolio of risks through the utilization of catastrophe modeling and
      dynamic financial analysis techniques that provide a quantitative basis
      for the management of risk aggregation and correlation. We license a broad
      array of catastrophe modeling products available from AIR and RMS. We have
      also launched our own proprietary underwriting risk management system and
      are building a proprietary suite of individual contract, portfolio and
      market risk management and price monitoring tools around this system. We
      intend to proactively monitor market trends to look for competitive
      threats to the lines of business in which we are operating as well as
      analyze potential new lines that may provide attractive opportunities.

      We require significant amounts of data in our underwriting process. We
      avoid writing business for which we believe sufficient data is not
      available, and therefore, to date have written no qualifying quota shares
      and only a limited amount of retrocessional business. We also limit the
      use of retrocessional protection, relying upon our underwriting analysis
      for risk management purposes.

-     Maintain an Efficient Expense Structure.  We believe an efficient expense
      structure will allow us to produce more profitable results and more easily
      deploy our resources to those lines of business that become more
      attractive as market conditions change. Several factors contribute to our
      low cost structure, including our utilization of variable cost brokerage
      distribution, our presence in the Bermuda market which targets large
      insurance and reinsurance programs for clients, our current focus on high
      severity, low frequency lines which can be underwritten by relatively
      small teams, and our centralized risk management structure which limits
      redundant expenses and systems.

-     Proactively Manage Our Capital Base.  We actively manage our capital by
      allocating resources to underwriting opportunities which we believe will
      offer the highest risk-adjusted return on capital. Over the long-term, we
      will seek to return excess capital to our shareholders rather than use
      excess capital to underwrite business at unattractive pricing levels. We
      believe the acquisition of the LaSalle property catastrophe business and
      the repurchase of the Zurich equity stake in the Company demonstrates two
      different aspects of our proactive capital management.

BUSINESS SEGMENTS

       Our commitment to specialized underwriting requires market knowledge,
analytic capabilities and experience more typically found in monoline companies.
Accordingly, we have organized our company by business segment, under the
direction of managers for each line of business who are recognized leaders in
their respective fields and average 22 years of relevant experience. We support
these managers with

                                        50
<PAGE>

centralized and state of the art analytic expertise and technology. Our six
business segments and the related gross premiums written and acquired for the
nine months ended September 30, 2002 are as follows:

<Table>
<Caption>
                                                              GROSS PREMIUMS
                                                               WRITTEN AND
                                                                 ACQUIRED      % OF
BUSINESS SEGMENT                                              (IN MILLIONS)    TOTAL
----------------                                              --------------   -----
<S>                                                           <C>              <C>
Property Per Risk Treaty Reinsurance........................      $123.6        19.8%
Property Catastrophe Reinsurance............................       170.2        27.3
Casualty Treaty Reinsurance.................................       143.5        23.0
Property Individual Risk....................................        51.0         8.2
Casualty Individual Risk....................................        66.3        10.6
Other Specialty Lines.......................................        68.9        11.1
                                                                  ------       -----
Total.......................................................      $623.5       100.0%
                                                                  ======       =====
</Table>

These segments and their associated lines of business are described in greater
detail below.

       Property Per Risk Treaty Reinsurance.  Our Property Per Risk Treaty
Reinsurance business segment reinsures individual property risks of ceding
companies on a treaty basis. This segment is comprised of a highly diversified
portfolio of property per risk reinsurance contracts covering claims from
individual insurance policies issued by our ceding company clients and including
both personal lines and commercial exposures (principally covering buildings,
structures, equipment, contents and time element coverages). Loss exposures in
this segment include the perils of fire, explosion, collapse, riot, vandalism,
wind, tornado, flood and earthquake. This segment is comprised of proportional
and excess of loss REINSURANCE AGREEMENTS. Our current mix of business, as
measured by gross premiums written during the nine months ended September 30,
2002, is approximately 58% excess of loss and 42% proportional. Currently, over
90% of the exposures reinsured in this segment are in the United States,
although we expect this percentage to gradually decline as we expand our
activities in Europe and the United Kingdom through Endurance U.K.

       Because the reinsurance contracts written in this segment are exposed to
losses on an individual policy basis, we underwrite and price the agreements
based on anticipated claims frequency. We use actuarial techniques to examine
our ceding companies' underwriting results as well as the underwriting results
from the ceding companies with comparable books of business and pertinent
industry results. These experience analyses are compared against actuarial
exposure analyses to refine our pricing assumptions. Our pricing also takes into
account our variable and fixed expenses and our assessment of an appropriate
return on the capital required to support each individual contract relative to
our portfolio of risks.

       Reinsurance contracts that provide coverage through individual underlying
insurance policies may contain significant risk of accumulation of exposures,
both to natural and other perils. Our underwriting process explicitly recognizes
these exposures. Natural perils, such as windstorm, earthquake and flood, are
analyzed through our catastrophe modeling systems. Other perils, such as fire
and terrorism events, are considered on a contract-by-contract basis and
monitored for cumulative aggregate exposure. All of our excess of loss
agreements have occurrence limits and many have limited REINSTATEMENT rights.
Proportional contracts can be particularly prone to accumulations of exposure
and losses in catastrophic events. Most of our proportional contracts in effect
at September 30, 2002 were also subject to occurrence limits. The only
exceptions made to our occurrence limits requirements are a result of explicit
approval by executive management and have been based on complete and ongoing
disclosures by our ceding companies of the underlying policies. We do not
currently write any qualified QUOTA SHARE AGREEMENTS emanating from Lloyd's or
the London market.

       This business segment operates as a subscription market, with the
reinsurance intermediaries seeking participation for specific treaties among a
number of reinsurers. Those reinsurers that ultimately subscribe to any given
treaty participate at substantially the same pricing and terms and conditions.
Our

                                        51
<PAGE>

average ATTACHMENT POINT is approximately $30 million. Our maximum limits
capacity on any one program is $30 million on any one risk and our average
commitment has been approximately $4 million.

       Our Property Per Risk Treaty Reinsurance business is produced principally
by Aon, Benfield, Willis and Marsh. Our principal competitors in this segment
include Arch Capital Group Ltd. ("Arch"), Converium Holding AG ("Converium"),
GeneralCologne Re ("General Re"), Montpelier Re Holdings Ltd. ("Montpelier Re"),
Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft ("Munich Re"),
PartnerRe Ltd. ("PartnerRe"), Transatlantic Reinsurance Company ("Transatlantic
Re") and XL Capital Ltd ("XL").

       Property Catastrophe Reinsurance.  Our Property Catastrophe Reinsurance
business segment reinsures catastrophic perils for ceding companies on a treaty
basis. Our property catastrophe reinsurance contracts provide protection for
most catastrophic losses that are covered in the underlying insurance policies
written by our ceding company clients. The principal perils in our portfolio
include hurricane, typhoon, earthquake, flood, tornado, hail and fire. This
segment is comprised of reinsurance contracts which incur losses only when
events occur that impact more than one risk or insured. Coverage for other
perils may be negotiated on a case-by-case basis. Protection under property
catastrophe treaties is provided on an occurrence basis, allowing our ceding
company clients to combine losses that have been incurred in any single event
from multiple underlying policies. The multiple claimant nature of property
catastrophe reinsurance requires careful monitoring and control of cumulative
aggregate exposure.

       We have licensed catastrophe modeling software from RMS and AIR. These
software tools use exposure data provided by our ceding company clients to
simulate catastrophic losses. We have high standards for the quality and level
of detail of such exposure data and have an expressed preference for data at the
zip code or postal code level or finer. Data provided at more summary levels,
such as counties or CRESTA ZONES, is conservatively modeled and effectively
surcharged for increased uncertainty. Our commitment to detailed exposure data
precludes significant involvement as a retrocessionaire in the current market.
To date, less than 5% of our gross written premiums have been derived from other
reinsurers, with over 95% coming from the catastrophe programs of insurance
companies.

       Data output from both sets of software described above is incorporated in
a proprietary model for multiple purposes. First, the data output is used to
estimate the amount of reinsurance premium that is required to pay the long-term
expected losses under the proposed contracts. Second, the data output is used to
estimate correlation among the contracts we have written. The degree of
correlation is used to estimate the incremental capital required to support our
participation on each proposed contract. Finally, the data output is used to
monitor and control the Company's cumulative exposure to individual perils
across all of our businesses.

       Our pricing of property catastrophe reinsurance contracts is based on a
combination of modeled loss estimates, actual ceding company loss history,
surcharges for potential unmodeled exposures, fixed and variable expense
estimates and profit requirements. The profit requirements are based on
incremental capital usage estimates described above and the Company's required
return on consumed capital.

       Similar to the Property Per Risk Treaty Reinsurance segment, the Property
Catastrophe Reinsurance market operates on a subscription basis with all
subscribing reinsurers participating at substantially the same pricing and terms
and conditions. Our average attachment point is approximately $185 million.
Generally, our maximum capacity on any one program is $30 million per event.

       Our property catastrophe business is diversified geographically.
Approximately 67% of our property catastrophe premium is associated with
exposures in the United States and the remainder from over 20 other countries
around the world. Our principal exposures outside the United States are in the
United Kingdom, Europe, Australia, Canada and Japan. Our estimates of exposures
to the major perils in each of these territories are provided in the "Risk
Management" section below.

       Our Property Catastrophe Reinsurance business is produced primarily by
Aon, Marsh, Willis and Benfield. Our principal competitors in this segment
include ACE Limited ("ACE"), Arch, AXIS

                                        52
<PAGE>

Specialty Limited ("AXIS"), IPC Holdings Ltd. ("IPC"), Montpelier Re, PartnerRe,
Renaissance Re Holdings Ltd. ("Renaissance Re") and XL.

       The Property Per Risk Treaty Reinsurance and Property Catastrophe
Reinsurance segments are led by RobLee Womack, under the direction of Thomas
Bell. Mr. Womack has over 19 years of experience in the industry and leads an
underwriting team consisting of eight underwriters who work together with six
modelers and the seven members of our actuarial team.

       Casualty Treaty Reinsurance.  Our Casualty Treaty Reinsurance business
segment reinsures third party liability exposures from ceding companies on a
treaty basis. This segment is almost exclusively focused on exposures in the
United States and is virtually all written on an excess of loss basis. Our
excess of loss positions come most commonly from layered reinsurance structures
with underlying ceding company retentions, but we also make use of proportional
reinsurance contracts that are applied to portfolios of excess of loss insurance
policies. The exposures that we reinsure include automobile liability,
professional liability, directors' and officers' liability, umbrella liability
and workers' compensation. We focus on business that is exposed to severity
losses and not expected to produce high levels of claims frequency. The average
attachment point for our Casualty Treaty Reinsurance segment is just under $25
million.

       Our Casualty Treaty Reinsurance segment may be further separated into
three categories: treaties that are exposed to loss under individual underlying
insurance policies, treaties that are exposed to loss only through a combination
of claims from more than one underlying insurance policy (referred to as clash
reinsurance), and workers' compensation catastrophe reinsurance.

       Our workers' compensation catastrophe business is written only at levels
that would require multiple deaths or injuries to result in a loss. The treaties
include limitations on the maximum amount of coverage for any one person and our
attachment points are multiples of these stipulated maximum coverage limits.
There is a potential for events that trigger property catastrophe claims to also
result in injuries and deaths. Examples would include acts of terrorism, but
also events such as catastrophic earthquakes. We closely monitor the potential
for accumulation with our property businesses and are especially cautious about
terrorism exposures. Inclusion of any level of terrorism coverage requires
approval by executive management.

       Our customer base includes national, regional and specialty insurance
companies. Due to the potential for long claims payment patterns in the
underlying business, we target ceding companies with strong financial positions.
We look for sophisticated actuarial capabilities, the demonstrated ability to
monitor and react to shifts in pricing levels and coverage changes, experienced
claims management capabilities and substantial net retentions from our clients.
We also favor companies and management teams that have worked through prior
property and casualty insurance market cycles.

       The maximum capacity available for casualty treaty programs that are
exposed to loss by individual policy limits is $25 million, but we rarely
allocate capacity over $10 million. Our average capacity commitment in this
segment as of September 30, 2002 was $6.4 million per program.

       Our Casualty Treaty Reinsurance business is produced primarily by Aon,
Marsh, Willis and A.J. Gallagher. Our principal competitors in this segment are
American Re, Converium, General Re, Munich Re, Swiss Reinsurance Company ("Swiss
Re"), Transatlantic Re and XL.

       Our casualty treaty business requires significant involvement by our
actuarial team in conjunction with a highly experienced group of underwriters.
The segment is managed by Ronald Koch, who has over 20 years of casualty treaty
underwriting experience. Mr. Koch works with two additional underwriters who
average 20 years of experience with similar books of specialty casualty
business. The casualty treaty underwriting team works together with the seven
members of our actuarial team.

       Property Individual Risk.  Our Property Individual Risk business segment
is comprised of the insurance and facultative reinsurance of commercial
properties. The policies written in this segment provide coverage for one
insured for each policy. The types of risks insured are generally properties
with

                                        53
<PAGE>

sufficiently large values to require multiple insurers and reinsurers to
accommodate their insurance capacity needs.

       Our risks in this business segment are all well diversified across a
range of industries with no one industry exceeding 25%. These industries include
real estate, manufacturing, chemicals, financial, utilities, telecommunications,
construction and civil engineering, municipalities/institutional properties and
other industries.

       As of September 30, 2002, approximately half of the insured risks are
located in the United States and half in the rest of the world, including
multi-national exposures which include U.S. based risks. We expect the
proportion of business written outside of the United States to increase as we
expand our capabilities in Endurance U.K. Approximately 2/3 of the business in
this segment is written on an excess of loss basis and 1/3 is written on a
PROPORTIONAL BASIS. The proportional policies are typically written with large
DEDUCTIBLES or SELF-INSURED retentions.

       Our average attachment point overall is slightly over $140 million. We
offer gross limits capacity of up to $40 million on any one risk in the United
States and $30 million on any one risk outside of the United States. We limit
these lines to no more than $10 million on any one risk on risks located in
active catastrophe zones. We have arranged a reinsurance facility for risks
located in the United States that provides up to $10 million of proportional
reinsurance protection to us. We do not retain more than $30 million on any one
risk. To date, our average participation has been approximately $17 million on
any one risk.

       Our Property Individual Risk business is produced primarily by Marsh, Aon
and Jardine Lloyd Thompson. Our competitors in this segment include a large
number of insurance and reinsurance companies. Among our most frequent
competitors are ACE, Allianz AG ("Allianz"), Allied World Assurance Company Ltd.
("AWAC"), Arch, FM Global, Montpelier Re, Munich Re, Swiss Re, XL and Zurich.

       Our Property Individual Risk segment is under the direction of Louis
Adanio. Mr. Adanio leads a dedicated team of six underwriters and four support
staff. The underwriters all have experience as primary insurance company
underwriters and average over 20 years of experience. The underwriting team is
supported by our catastrophe modeling team in order to perform comprehensive
analyses of our cumulative catastrophe peril exposure.

       Casualty Individual Risk.  Our Casualty Individual Risk business segment
is comprised of the insurance and facultative reinsurance of third party
liability exposures. This segment is comprised of three lines of business:
Excess Casualty Insurance, Professional Lines Insurance and Healthcare. For the
nine months ended September 30, 2002, these lines of business represented
approximately 33%, 7% and 60% of the gross written premiums for this segment,
respectively.

       The Excess Casualty Insurance line of business provides third party
liability insurance for a wide range of industry groups. Our clients are
typically Fortune 1000 companies with sophisticated risk management practices
who generally retain large portions of their own risk and purchase large
insurance limits. Our target clients within this group are in strong financial
positions, have formal, well-developed risk management programs and proactive
claims detection and management procedures. As of September 30, 2002,
approximately 8% of our insured risks in this line of business were solely
located in the United States and the remainder represented worldwide exposures,
including the United States.

       Our minimum attachment point for the Excess Casualty Insurance line of
business is $25 million and our average attachment point is approximately $230
million. In all cases, we carefully review and approve our policy forms and
endorsements to ensure we are fully comfortable with the scope of coverage we
provide. Our maximum line in this category is $25 million and our average line
is approximately $24 million.

       The business in the Excess Casualty Insurance line of business is
produced primarily by Marsh, Aon and Jardine Lloyd Thompson. Our principal
competitors in this line of business include ACE, Arch,

                                        54
<PAGE>

AWAC, Kemper Insurance Companies ("Kemper"), Lloyd's of London ("Lloyd's"),
Starr Excess Liability Insurance Company, Ltd ("Starr Excess"), XL and Zurich.

       David Cabral leads the underwriting team for our Excess Casualty
Insurance business. He has four underwriting colleagues, all based in Bermuda,
who average 15 years of underwriting experience. The underwriting team is
supported by the seven members of our actuarial team.

       Our Professional Lines Insurance line of business includes a limited
range of products: directors' and officers' liability insurance, errors and
omissions insurance and employment practices liability insurance. Our clients
include both for-profit and non-profit entities. We target clients with strong,
stable financial positions, paying particular attention to liquidity, solvency
margins and profitability. As of September 30, 2002, approximately 25% of our
insured risks in this line of business were located within the United States,
with the remainder representing worldwide risks, including the United States.

       We require a minimum attachment point of $25 million and our average
attachment point has been approximately $250 million. We have maximum limits
capacity of up to $25 million but only selectively commit more than $10 million
on any one program. As of September 30, 2002, our average program participation
was approximately $10 million. Business in this segment is written almost
exclusively on a CLAIMS-MADE BASIS and all of the business is written on an
excess of loss basis.

       Our Professional Lines Insurance business is produced primarily by Aon,
Jardine Lloyd Thompson and Marsh. Our principal competitors in this line of
business include ACE, Arch, AWAC, The Chubb Corporation, Lloyd's, Starr Excess,
XL and Zurich.

       Our Professional Lines Insurance line of business is also led by David
Cabral. Mr. Cabral works with two additional underwriters dedicated to this line
of business. His colleagues average over 15 years of experience in this field.

       Our Healthcare business is focused on one narrow niche within the medical
professional liability market: hospital malpractice insurance. Within this
market, we target large institutional healthcare providers such as hospital
groups, university teaching hospitals and integrated healthcare delivery
systems. We do not work with smaller entities having 250 beds or less, nor do we
seek risks that are principally from long-term-care facilities. We do not insure
stand-alone individual physicians, physician groups, or other healthcare
professionals. We estimate that the large institutional healthcare niche
currently represents approximately $500 million in annual premiums. As of
September 30, 2002, all of our healthcare insureds were based in the United
States.

       All of the business in our Healthcare line of business is written on an
excess of loss basis. Currently, our average attachment point is approximately
$35 million. Nearly all of this business is written on a claims-made basis
although we can consider occurrence coverage after review with and approval by
executive management. We do not write any multi-year policies, or programs with
profit sharing or swing-rating plans. Our average program participation is
approximately $22 million.

       Our principal underwriting considerations from this line of business are
based on evaluations of risk management policies and procedures, historical
claims activity, current exposures and operating jurisdictions. Every account is
evaluated in conjunction with our actuarial team. Pricing is determined based on
account-specific experience and exposure ratings. We incorporate the insight
that we have gained from a proprietary database of over 100,000 claims.

       Our Healthcare business is produced primarily by Marsh, Aon, Jardine
Lloyd Thompson and A.J. Gallagher. Our principal competitors in this line of
business are American International Group, Inc. ("AIG"), CNA Financial
Corporation, Employers Reinsurance Corporation ("Employers Re") and Zurich.

       Our Healthcare line of business is led by Judy Hart, who has over 30
years of experience, and one senior underwriter. The two underwriters are
supported by our seven person actuarial team.

                                        55
<PAGE>

       Other Specialty Lines.  Our Other Specialty Lines business is comprised
of the insurance and reinsurance of unique opportunities, including Aerospace,
Self Insured Risks and a limited number of other treaty reinsurance programs
such as surety, marine, energy, personal accident, terrorism and others.

       Our Aerospace line of business is comprised of aviation and space
business. The aviation business includes hull, aircraft liability and aircraft
products coverages. Currently, approximately 20% of the exposures insured in
this line of business are in the United States with the remaining amount being
distributed throughout the world, including the United States. We write these
exposures both as insurance and reinsurance, with the reinsurance written both
in the form of facultative reinsurance and treaty reinsurance. In all cases, we
track our exposures by original insured in order to monitor our maximum
exposures by major airline and by major manufacturer. Our maximum commitments
are limited to up to 3% of the hull and liability programs of the major
airlines, up to 13% of the regional airlines, up to 3% of the airframe and
engine manufacturers and up to 20% of the component part manufacturers. We
currently do not write hull war risk, primary general aviation business or
workers' compensation for this category. Our average attachment point is $25
million. Our average commitment has been approximately $6 million per program.

       Our expertise in the aviation category stems from the more than 30 years
of experience of our Aerospace team leader, Daniel Izard, and an extensive
database of historical aviation claims and program structures. Individual
account decisions are based on a combination of qualitative evaluations of the
risk management programs of the original insureds and quantitative examinations
of our clients' track records and the records of peer and comparable operations.

       The space business includes satellite launch and in-orbit coverage. We
have chosen to write space business through industry recognized leaders, and
currently support three organizations on a treaty reinsurance basis only.

       Our Aerospace business is produced primarily by Aon, Marsh and Willis.
Our principal competitors in this line of business are Converium, Hannover
Ruckversicherungs-Aktiengesellschaft and Lloyd's.

       Our Self Insured Risks line of business provides traditional property and
casualty insurance products to entities that are able to bear a significant
portion of their own risk. These entities include government organizations,
education institutions, non-profit organizations, groups of homogeneous risks
and large, sophisticated corporations. The coverages we provide include general
liability, automobile liability, workers' compensation and PROPERTY INSURANCE.
All of the coverage in this line of business is written on an excess of loss
basis. As of September 30, 2002, our average attachment point was approximately
$28 million. We offer limits capacity of up to $25 million, while our average
program participation has been approximately $15 million. Approximately 80% of
the insured risks are located in the United States, with the remainder
multinational risks.

       Our Self Insured Risks business is produced primarily by A.J. Gallagher,
Aon and Marsh. Our principal competitors in this line of business are ACE, AIG,
Kemper, General Re and Munich Re.

       Our Self Insured Risks line of business is led by Ralph Serio. Mr. Serio
works with one additional underwriter who has over 20 years of experience.

       Special Accounts comprise a limited number of other reinsurance programs
underwritten directly by our executive management. Business within this category
includes surety, marine, energy, personal accident, terrorism, nuclear, credit
and political risk. Each of the approximately 20 existing programs has been
underwritten by Thomas Bell, Steven Carlsen or Kenneth LeStrange.

       Approximately 65% of our Special Accounts business is written on an
excess of loss basis and the remaining 35% is written on a proportional basis.
The average attachment point is approximately $40 million with our average
program participation at approximately $6 million. Approximately 20% of the
insured risks are located in the United States and 80% on a worldwide basis
including the United States.

       Our Special Accounts business is produced primarily by Aon, Willis and
Benfield. Our principal competitors in this line of business are Arch, AXIS and
Lloyd's.

                                        56
<PAGE>

DISTRIBUTION

       We are a BROKER-MARKET PARTICIPANT and conduct business almost
exclusively through insurance and reinsurance brokers around the world. The
brokerage distribution channel provides us with access to an efficient, variable
cost, and global distribution system without the significant time and expense
which would be incurred in creating wholly owned distribution networks.

       Aon is our largest distributor of our reinsurance lines while Marsh is
our largest distributor of our insurance lines. A breakdown of our distribution
by broker is provided in the table below.

<Table>
<Caption>
                                                                 PERCENTAGE OF GROSS
                                                                  PREMIUMS WRITTEN
                                                              FOR THE NINE MONTHS ENDED
BROKER                                                          SEPTEMBER 30, 2002(1)
------                                                        -------------------------
<S>                                                           <C>
Aon.........................................................             42.6%
Marsh.......................................................             28.1
Willis......................................................              9.4
Benfield....................................................              6.0
A.J. Gallagher..............................................              5.5
All Other...................................................              8.4
                                                                        -----
     Total..................................................            100.0%
</Table>

------------

(1) Excludes gross premiums acquired from LaSalle.

CLAIMS MANAGEMENT

       We have experienced a relatively low number of reported claims due to our
recent formation. Notwithstanding the lack of significant claims activity to
date, we have a well developed process in place for identifying, tracking and
settling potential claims. The Claims Department is headed by William Fawcett,
who has over 15 years of loss adjusting, claims management and litigation
experience. The responsibilities of the claims department include reviewing loss
reports, monitoring claims handling activities of clients, requesting additional
information where appropriate, establishing initial CASE RESERVES and approving
payment of individual claims. We have established authority levels for all
individuals involved in the reserving and settlement of claims.

       When we receive notification of a potential claim, a member of our staff
logs the potential claim into our systems. An initial review is conducted by the
underwriter and underwriting manager responsible for the program in coordination
with our claims department. Once the validity of the given claim is established,
responsibility for management of the claim is transferred to our claims
department. As the claim develops, the claims department is empowered to draw on
those resources, both internal and external, it deems appropriate to settle the
claim appropriately. To date, the Company has worked to establish a network of
external legal and claims experts to augment our own in-house team. This has
included individuals with hospital malpractice insurance expertise as well as
various skilled independent claims professionals.

       In addition to managing reported claims and conferring with ceding
companies on claims matters, the claims department will conduct periodic audits
of specific claims and the overall claims procedures of our clients at the
offices of ceding companies. Through these audits, we will be able to evaluate
ceding companies' claims-handling practices, including the organization of their
claims departments, their fact-finding and investigation techniques, their loss
notifications, the adequacy of their reserves, their negotiation and settlement
practices and their adherence to claims-handling guidelines.

CEDED REINSURANCE

       With the exception of property and property catastrophe coverage, we
retain all of our direct and assumed underwriting exposure on a NET BASIS.

                                        57
<PAGE>

       Reinsurance premiums ceded for the nine months ended September 30, 2002
were approximately $33 million. We purchased this reinsurance to manage exposure
to catastrophic losses in the Property Per Risk Treaty Reinsurance, the Property
Catastrophe Reinsurance and Property Individual Risk business segments.

       Going forward, we intend to reduce our purchase of retrocessional
protection, relying more heavily on our internal risk management and portfolio
management processes to control our exposures. However, we will monitor the
reinsurance market and, if the purchase of reinsurance transactions would be
financially attractive to us, we would consider entering into such transactions.

RESERVE FOR LOSSES AND LOSS EXPENSES

       We are required by applicable insurance laws and regulations and U.S.
GAAP to establish reserves for losses and loss expenses that arise from our
products. These reserves are balance sheet liabilities representing estimates of
future amounts required to pay losses and loss expenses for insured or reinsured
claims which have occurred at or before the balance sheet date, whether already
known to us or not yet reported. It is our policy to establish these losses and
loss reserves prudently after reflecting all information known to us as of the
date they are recorded.

       Loss reserves fall into two categories: case reserves for reported losses
and loss expenses associated with a specific reported insured claim and reserves
for incurred but not reported, or IBNR, losses and loss expenses. These two
categories of loss reserve are established as follows:

       -     Upon receipt of a notice of claim from an insured, broker or ceding
             company, we establish a case reserve for the estimated amount of
             the ultimate settlement. Case reserves are usually based upon the
             amount of reserves reported and may subsequently be supplemented or
             reduced as deemed necessary by our claims department.

       -     We also estimate and establish reserves for loss amounts incurred
             but not yet reported, including expected development of reported
             claims. These IBNR reserves will include estimated legal and other
             loss expenses. We calculate IBNR reserves by using generally
             accepted actuarial techniques. We utilize actuarial tools that rely
             on historical pricing information and statistical models as well as
             our pricing analyses. We revise these reserves for losses and loss
             expenses as additional information becomes available and as claims
             are reported and paid.

       Loss reserves represent our best estimate, at a given point in time, of
the ultimate settlement and administration cost of claims incurred, and it is
possible that the ultimate liability may exceed or be less than such estimates.
The process of estimating loss reserves requires significant judgment due to a
number of variables. These variables are affected by both internal and external
events such as changes in claims handling procedures, inflation, judicial trends
and legislative changes. Many of these items are not directly quantifiable,
particularly on a prospective basis. Additionally, there may be significant
reporting lags between the occurrence of the insured event and the time it is
actually reported to the Company.

       Several aspects of the Company's casualty insurance and reinsurance
operations further complicate the actuarial reserving techniques for loss
reserves as compared to other insurance and reinsurance operations. Among these
aspects are the differences in policy forms from more traditional forms, the
lack of complete historical data for losses of the same type intended to be
covered by the policies and contracts and the expectation that losses in excess
of the Company's attachment levels will be characterized by low frequency and
high severity, limiting the utility of claims experience of other insureds for
similar claims.

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
reporting of a loss to the Company and the settlement of the Company's liability
may be several years. During this period additional facts and trends will be
revealed. As these factors become apparent, case reserves will be adjusted,
sometimes requiring an increase in the overall reserves of the Company, and at
other times requiring a reallocation of incurred but not reported reserves to
specific case reserves.
                                        58
<PAGE>

       Reserves for losses and loss expenses are based in part upon the
estimation of losses resulting from catastrophic events. Estimation by the
Company of losses resulting from catastrophic events based upon its own
historical claim experience is inherently difficult because of the Company's
short operating history and the possible severity of property catastrophe
claims. Therefore, the Company utilizes commercially available models, as well
as historical reinsurance industry property catastrophe claims experience, for
purposes of evaluating future trends and providing an estimate of ultimate
claims costs.

       Under U.S. GAAP, we are not permitted to establish loss reserves until
the occurrence of an actual loss event. Once such an event occurs, we establish
reserves based upon estimates of total LOSSES INCURRED by the ceding insurers as
a result of the event and our estimate of the portion of such loss we have
reinsured. As a result, only loss reserves applicable to losses incurred up to
the reporting date may be set aside, with no allowance for the provision of a
contingency reserve to account for expected future losses. Losses arising from
future events will be estimated and recognized at the time the loss is incurred
and could be substantial.

       To assist us in establishing appropriate reserves for losses and loss
expense, we analyze a significant amount of insurance industry information with
respect to the pricing environment and loss settlement patterns. In combination
with our individual pricing analyses, this industry information is used to guide
our loss and loss expense estimates. These estimates are reviewed regularly, and
such adjustments, if any, are reflected in earnings in the periods in which they
are determined. Our losses and loss expense reserves are reviewed annually by
our outside actuarial specialists.

       While management believes that it has made a reasonable estimate of
ultimate losses, the ultimate claims experience may not be as reliably predicted
as may be the case with other insurance and reinsurance operations, and there
can be no assurance that losses and loss expenses will not exceed the total
reserves.

UNDERWRITING AND RISK MANAGEMENT

       Internal underwriting controls are exercised through Kenneth J.
LeStrange, our Chief Executive Officer. Underwriting authority is delegated to
the managers of our lines of business and to underwriters in accordance with
prudent practice and an understanding of each individual's capabilities.
Detailed letters of underwriting authority are issued to each of our
underwriters. These letters contain our operating guidelines, a description of
the analytic process to be followed, referral requirements broken down by
sources of business, terms and conditions, situations and the limits capacity
and annual premium for any one contract authority grants. Our profitability
guidelines are attached to each such letter as an exhibit and are stated in
terms of maximum combined ratio targets, excluding our general and
administrative expenses, by line of business. Our profitability guidelines are
regularly reviewed to reflect changes in market conditions, interest rates,
capital structure and market-expected returns.

       We have a disciplined approach to underwriting and risk management that
relies heavily upon the collective underwriting expertise of our management and
staff. This expertise is in turn guided by the following underwriting
principles:

       -     We will underwrite and accept only those risks we know and
             understand;

       -     We will perform our own independent pricing or risk review on all
             risks we accept;

       -     We will make consistent use of peer review -- no risk will be
             accepted without being reviewed and agreed to by at least two
             qualified individuals;

       -     We will accept only those risks that are expected to earn a level
             of profit commensurate with the risk they present; and

       -     We will limit our accepted business to be consistent with our
             corporate risk objectives.

       Before we review any program proposal, we consider the appropriateness of
the client, including the quality of its management and its risk management
strategy. In addition, we require each program to

                                        59
<PAGE>

include significant information on the nature of the perils to be included and
detailed aggregate information as to the location or locations of the risks
covered. We further request information on the client's loss history for the
perils being reinsured, together with relevant underwriting considerations. If a
program meets the preceding underwriting criteria, we then evaluate the proposal
in terms of its risk/reward profile to assess the adequacy of the proposed
pricing and its potential impact on our overall return on capital as well as our
corporate risk objectives.

       It is our corporate objective to limit the risk of a significant loss to
the following levels:

       -     We seek to limit the POTENTIAL ECONOMIC LOSS from a single
             one-in-100-year catastrophe event to no more than 10% of our total
             statutory capital and surplus after the recognition of all
             retrocessional protections that may exist, as well as appropriate
             premiums and reinstatement premiums received by the Company.

       -     We seek to limit the potential economic loss from a one-in-100-year
             accumulation of events to no more than 20% of our total statutory
             capital and surplus after the recognition of all retrocessional
             protections that may exist, as well as appropriate premiums and
             reinstatement premiums received by the Company.

       -     As of September 30, 2002, our potential economic loss from a single
             one-in-100 year catastrophe event for our Property Catastrophe
             Reinsurance business segment was $138 million, and our potential
             economic loss from a one-in-100-year accumulation of events for our
             Property Catastrophe Reinsurance business segment was $259 million.

       -     As of September 30, 2002, our PROBABLE MAXIMUM LOSS from a single
             one-in-100-year catastrophe event for our Property Catastrophe
             Reinsurance business segment from our largest exposures was $215
             million for Atlantic hurricane, $238 million for European wind, and
             $154 million for U.S. earthquake.

       To achieve the above objectives, we utilize a variety of proprietary and
commercially available tools to quantify and monitor the various risks we accept
as a company.

       Our proprietary systems include those for modeling risks associated with
property catastrophe, hospital professional liability, and workers' compensation
business, various casualty and specialty pricing models as well as our prototype
portfolio risk model. These systems allow us to monitor our pricing and risk on
a contract by contract basis across the Company's lines of business.

       We have fully integrated our internal actuarial staff into the
underwriting and decision making process. We use in-depth actuarial and risk
analysis to evaluate and approve all contracts prior to any authorization. In
addition to internal actuaries and risk professionals, we make use of outside
consultants as necessary to develop the appropriate analysis for pricing. We
require significant amounts of data from our clients and turn down business in
which we feel the data provided to us is insufficient for us to make an
appropriate analysis.

       To monitor the catastrophe and correlation risk of our direct property
and treaty property business, we have subscribed to and utilize three separate
natural catastrophe modeling tools (ALM and DLM licensed by RMS and CATRADER
licensed by AIR). We take an active role in the evaluation of these commercial
catastrophe pricing models, providing feedback to the modeling companies to
improve the efficiencies of these models. We also supplement the model output in
certain territories with the results of our proprietary models. We use modeling
not just for the underwriting of individual risks but also to optimize the total
return and risk of our underwriting portfolio.

       Separate from our natural catastrophe exposed businesses, we underwrite
and accept casualty and specialty insurance and reinsurance business. We apply
the same standards with respect to actuarial and risk analysis to these
businesses using commercial data and models licensed from the Insurance Services
Office, Inc. ("ISO"), the National Council on Compensation Insurance, Inc.
("NCCI"), the Reinsurance Association of America ("RAA"), A.M. Best, Airclaims
Ltd., Bloomberg, and various professional service firms. As with our natural
catastrophe exposed businesses, we seek to identify those casualty and specialty
                                        60
<PAGE>

exposures that are most likely to be simultaneously influenced by significant
events. These exposures are then jointly tracked to ensure that we do not
develop an excessive accumulation of exposure to that particular type of event.

       While we are working to develop a realistic event based approach to apply
to our casualty and specialty business, we are also dedicating significant
resources to developing our various pricing and price monitoring tools. It is
management's belief that the single greatest risk associated with the casualty
and specialty lines of business is pricing risk -- the risk that one misjudges
the actuarially appropriate price of a contract. Recent history has shown that
both reinsurers and insurers are highly prone to this error and as a consequence
much of our actuarial resources are dedicated to this issue.

       In addition to the above technical and analytical practices, our
underwriters use a variety of means, including specific contract terms, to
manage the Company's exposure to loss. Substantially all business written
contains aggregate limits in the contract, with limited reinstatements permitted
to restore the original limit under the contract after the occurrence limit has
been depleted by losses incurred on that contract. Additionally, underwriters
use appropriate exclusions, terms and conditions to further eliminate particular
risks or exposures that our underwriting team deems to be significant.
Accordingly, our Bermuda underwriting location provides us with a particular
advantage in this regard because there are no limitations upon our use of
coverage restrictions.

INVESTMENTS

       We follow a conservative investment strategy designed to emphasize the
preservation of our invested assets and provide sufficient liquidity for the
prompt payment of claims. In determining our investment decisions, we consider
the impact of various catastrophic events, particularly those to which our
insurance and reinsurance portfolio may be exposed, on our invested assets to
protect our financial position. As of September 30, 2002, our portfolio consists
of high investment grade rated, liquid, fixed maturity securities of short to
medium term duration. We have no investments in equity securities, less than
investment grade securities, real estate, or other classes of alternative
investments.

       As of September 30, 2002, our aggregate invested assets totaled
approximately $1.4 billion. Invested assets include cash and cash equivalents
managed by our investment managers. The portfolio is 100% fixed maturity and is
primarily managed by BlackRock, Inc. ("BlackRock") and Wellington Management
Company ("Wellington"). The average credit quality of our investments is
AAA/Aaa, with no investments in securities rated below A-/A3 as determined by
S&P and Moody's Investor Services ("Moody's") respectively. Short-term
instruments must be rated a minimum of A-1/P-1. The target duration is 3.0 years
and the portfolio has an income versus total return orientation. At September
30, 2002, the average duration of our invested assets was 2.6 years. There have
been no credit losses to date. At September 30, 2002, there were approximately
$49 million in unrealized gains in the portfolio.

       The following table sets forth the types of securities in our fixed
maturity portfolio, excluding cash equivalents, and their fair values and
amortized costs as of September 30, 2002 (in thousands):

<Table>
<Caption>
                                              AMORTIZED    UNREALIZED   UNREALIZED
TYPE OF INVESTMENT                              COSTS        GAINS        LOSSES     FAIR VALUE
------------------                            ----------   ----------   ----------   ----------
<S>                                           <C>          <C>          <C>          <C>
U.S. government and agencies................    $395,023    $15,732        $ (6)     $  410,749
Corporate securities........................     191,437     15,589          --         207,026
Asset-backed securities.....................     162,917      5,397          (1)        168,313
Mortgage-backed securities..................     522,674     11,933         (36)        534,571
                                              ----------    -------        ----      ----------
Total.......................................  $1,272,051    $48,651        $(43)     $1,320,659
                                              ==========    =======        ====      ==========
</Table>

       U.S. Government and Agencies.  U.S. government and agency securities are
comprised of bonds issued by the U.S. Treasury, the Federal Home Loan Bank, the
Federal Home Loan Mortgage Corporation, and the Federal National Mortgage
Association ("Fannie Mae").

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<PAGE>

       Corporate Securities.  Corporate securities are comprised of bonds issued
by corporations and foreign governmental entities rated A-/A3 or higher and are
diversified across a wide range of issuers and industries. The principal risk of
corporate securities is the potential loss of income and potential realized and
unrealized principal losses due to insolvencies or deteriorating credit. The
largest corporate credit in the Company's portfolio represented 0.3% of total
invested assets at September 30, 2002. We actively monitor our corporate credit
exposures and have had no realized credit related losses to date. Our investment
guidelines call for the sale of any bond which becomes rated less than the lower
of A- or A3 from S&P or Moody's.

       Asset-Backed Securities.  Asset-backed securities are purchased both to
diversify the overall risks of our fixed maturity portfolio and to provide
attractive returns. Our asset-backed securities are diversified both by type of
asset and by issuer and are comprised of AAA-rated bonds backed by pools of
automobile loan receivables and credit card receivables originated by a variety
of financial institutions.

       The principal risks in holding asset-backed securities are structural,
credit and capital market risks. Structural risks include the security's
priority in the issuer's capital structure, the adequacy of and ability to
realize proceeds from the collateral and the potential for prepayments. Credit
risks include consumer or corporate credits such as credit card holders and
corporate obligors. Capital market risks include the general level of interest
rates and the liquidity for these securities in the market place.

       Mortgage-Backed Securities.  Mortgage-backed securities are purchased to
diversify our portfolio risk characteristics from primarily corporate credit
risk to a mix of credit risk and cash flow risk. The majority of the
mortgage-backed securities in our investment portfolio have relatively low cash
flow variability.

       The principal risks inherent in holding mortgage-backed securities are
prepayment and extension risks, which will affect the timing of when cash flow
will be received. Our active monitoring of our mortgage-backed securities
mitigates exposure to losses from cash flow risk associated with interest rate
fluctuations. Our mortgage-backed securities are principally comprised of
AAA-rated pools of residential mortgages originated by Fannie Mae and the
Government National Mortgage Association.

       The investment ratings (provided by major rating agencies) for fixed
maturity securities held as of September 30, 2002 and the percentage of our
invested assets they represented at such date were as follows (in thousands):

<Table>
<Caption>
RATINGS                                                       FAIR VALUE   PERCENTAGE
-------                                                       ----------   ----------
<S>                                                           <C>          <C>
U.S. government and government agencies.....................  $  410,749      31.1%
AAA/Aaa.....................................................     715,957      54.2%
AA/Aa.......................................................      53,281       4.0%
A/A.........................................................     140,672      10.7%
                                                              ----------     -----
Total.......................................................  $1,320,659     100.0%
                                                              ==========     =====
</Table>

The maturity distribution for fixed maturity securities held as of September 30,
2002 was as follows (in thousands):

<Table>
<Caption>
                                                              AMORTIZED
MATURITY                                                        COSTS      FAIR VALUE
--------                                                      ----------   ----------
<S>                                                           <C>          <C>
Due within one year.........................................  $   --       $   --
Due after one year through five years.......................     422,368      440,716
Due after five years through ten years......................     118,950      129,989
Due after ten years.........................................      45,142       47,070
Mortgage-backed securities..................................     522,674      534,571
Asset-backed securities.....................................     162,917      168,313
                                                              ----------   ----------
Total.......................................................  $1,272,051   $1,320,659
                                                              ==========   ==========
</Table>

                                        62
<PAGE>

Our investment returns for the nine months ended September 30, 2002 were as
follows (in thousands):

<Table>
<S>                                                           <C>
Net investment income.......................................  $29,355
Net realized gains on sales of investments..................    3,688
Net increase in unrealized gains............................   48,608
                                                              -------
Total net investment return.................................  $81,651
                                                              =======
Total return(1).............................................    6.63%
</Table>

------------

(1) Total return for our investment portfolio is calculated using beginning and
    ending market values adjusted for external cash flows and includes
    unrealized gains and losses.

       Our investment committee establishes investment guidelines and supervises
our investment activity. The investment committee regularly monitors our overall
investment results, reviews compliance with our investment objectives and
guidelines, and ultimately reports our overall investment results to the board
of directors. Our investment guidelines specify minimum criteria on the overall
credit quality and liquidity characteristics of the portfolio. They include
limitations on the size of certain holdings as well as restrictions on
purchasing certain types of securities or investing in certain industries.
Currently our investment guidelines restrict the purchase of financial futures,
options, swaps, and other derivatives for investment purposes, subject to
approval of our investment committee and our board of directors. Our investment
managers may be instructed to invest some of the investment portfolio in
currencies other than U.S. dollars based upon the business we have written, the
currency in which our loss reserves are denominated on our books or regulatory
requirements.

       We have engaged BlackRock and Wellington to provide investment advisory
and management services. We have agreed to pay investment management fees based
on the month-end market values held under their respective custody. The fees,
which vary depending on the amount of assets under management, are included in
net investment income. These agreements may be terminated by either party upon
30 days written notice. In the nine months ended September 30, 2002, fees of
$0.6 million were earned by BlackRock and Wellington.

RATINGS

       Ratings have become an increasingly important factor in establishing the
competitive position of insurance and reinsurance companies. A.M. Best assigned
to each of Endurance Bermuda and Endurance U.K. a financial strength rating of
"A-" (Excellent), which is the fourth highest of fifteen rating levels. The
objective of A.M. Best's rating system is to provide an opinion of an insurer's
or reinsurer's financial strength and ability to meet ongoing obligations to its
policyholders. These ratings reflect A.M. Best's opinion of Endurance Bermuda's
and Endurance U.K.'s initial capitalization, management and sponsorship, and is
not an evaluation directed to investors in our ordinary shares and is not a
recommendation to buy, sell or hold our ordinary shares. These ratings are
subject to periodic review by, and may be revised downward or revoked at the
sole discretion of A.M. Best.

       Our other insurance subsidiary, Endurance U.S., has not yet received a
rating from any rating agency.

COMPETITION

       The insurance and reinsurance industries are mature and highly
competitive. Insurance and reinsurance companies compete on the basis of many
factors, including premium charges, general reputation and perceived financial
strength, the terms and conditions of the products offered, ratings assigned by
independent rating agencies, speed of claims payments and reputation and
experience in the particular risk to be underwritten.

                                        63
<PAGE>

       We expect to compete directly with numerous other parties, including
established global insurance and reinsurance companies, other start-up insurance
and reinsurance entities, as well as potential capital markets and
securitization structures aimed at managing catastrophe and other risks.

       Many of these entities have significantly larger amounts of capital and
more employees than the Company.

EMPLOYEES

       As of December 2, 2002, we had 104 full-time employees. 87 of these
employees are employed by Endurance Bermuda. We believe that our employee
relations are satisfactory. None of our employees are subject to collective
bargaining agreements.

PROPERTIES

       We currently lease office space in Hamilton, Bermuda at two locations.
One property of approximately 12,547 square feet is governed by a three-year
sub-lease that extends until September 29, 2005 and the other space, comprising
approximately 8,995 square feet, operates under a month to month extension of a
six-year lease that extends until January 31, 2004.

       Endurance U.S. Holdings Corp. leases temporary space in Tarrytown, New
York for a term ending on February 1, 2003. Endurance U.S. Holdings Corp. has
entered into a tentative agreement for the lease of office space located in
White Plains, New York.

       Endurance Worldwide Holdings Limited leases office space in London,
England under two leases, one that expires on August 26, 2003 and a second that
expires on November 7, 2003.

LEGAL PROCEEDINGS

       We are not currently aware of any pending or threatened material
litigation. In the normal course of business, we may become involved in various
claims and legal proceedings.

                                        64
<PAGE>

                               REGULATORY MATTERS

GENERAL

       The business of insurance and reinsurance is regulated in most countries,
although the degree and type of regulation varies significantly from one
jurisdiction to another. Reinsurers are generally subject to less direct
regulation than primary insurers. In Bermuda, we operate under relatively less
intensive regulatory regimes. However, in the United States and in the United
Kingdom licensed insurers and reinsurers must comply with financial supervision
standards comparable to those governing primary insurers. Accordingly, Endurance
U.S. will be subject to extensive financial regulation under applicable statutes
once it is licensed in the U.S. Endurance U.K. is already licensed in the U.K.
and therefore subject to U.K. regulation.

       We are aware of new legislative changes that may impact the worldwide
demand for insurance and reinsurance. In response to the tightening of supply in
certain insurance and reinsurance markets resulting from, among other things,
the World Trade Center tragedy, the Terrorism Risk Insurance Act of 2002 was
enacted to ensure the availability of insurance coverage for terrorist acts in
the United States. This law establishes a federal assistance program through the
end of 2005 to help the commercial property and casualty insurance industry
cover claims related to future terrorism related losses and regulates the terms
of insurance relating to terrorism coverage. This law could adversely affect our
business by increasing underwriting capacity for our competitors as well as by
requiring that coverage for terrorist acts be offered by insurers. We are in the
process of evaluating this legislation and have not yet determined how it will
affect our future operations. We are currently unable to predict the extent to
which the foregoing new initiative may affect the demand for our products or the
risks which may be available for us to consider underwriting.

BERMUDA

       The Insurance Act 1978 of Bermuda and related regulations, as amended
(the "Insurance Act"), regulates the insurance business of Endurance Bermuda and
provides that no person may carry on any insurance business in or from within
Bermuda unless registered as an insurer by the BMA under the Insurance Act.
Endurance Bermuda has been registered as a Class 4 insurer by the BMA; however,
as a holding company, Endurance Holdings is not subject to Bermuda insurance
regulations. Insurance as well as reinsurance is regulated under the Insurance
Act. The BMA, in deciding whether to grant registration, has broad discretion to
act as it thinks fit in the public interest. The BMA is required by the
Insurance Act to determine whether the applicant is a fit and proper body to be
engaged in the insurance business and, in particular, whether it has, or has
available to it, adequate knowledge and expertise to operate an insurance
business. The continued registration of an applicant as an insurer is subject to
it complying with the terms of its registration and such other conditions as the
BMA may impose from time to time.

       An Insurance Advisory Committee appointed by the Bermuda Minister of
Finance advises the BMA on matters connected with the discharge of the BMA's
functions. Sub-committees of the Insurance Advisory Committee supervise and
review the law and practice of insurance in Bermuda, including reviews of
accounting and administrative procedures. The day-to-day supervision of insurers
is the responsibility of the BMA.

       The Insurance Act also imposes on Bermuda insurance companies solvency
and liquidity standards and auditing and reporting requirements and grants the
BMA powers to supervise, investigate, require information and the production of
documents and intervene in the affairs of insurance companies. Certain
significant aspects of the Bermuda insurance regulatory framework are set forth
below.

  CLASSIFICATION OF INSURERS

       The Insurance Act distinguishes between insurers carrying on long-term
business and insurers carrying on general business. There are four
classifications of insurers carrying on general business, with Class 4 insurers
subject to the strictest regulation. Endurance Bermuda, which is incorporated to
carry on
                                        65
<PAGE>

general insurance and reinsurance business, is registered as a Class 4 insurer
in Bermuda and is regulated as such under the Insurance Act. Endurance Bermuda
is not licensed to carry on long-term business.

  CANCELLATION OF INSURER'S REGISTRATION

       An insurer's registration may be canceled by the Supervisor of Insurance
of the BMA on certain grounds specified in the Insurance Act, including failure
of the insurer to comply with its obligations under the Insurance Act or if, in
the opinion of the BMA after consultation with the Insurance Advisory Committee,
the insurer has not been carrying on business in accordance with sound insurance
principles.

  PRINCIPAL REPRESENTATIVE

       An insurer is required to maintain a principal office in Bermuda and to
appoint and maintain a principal representative in Bermuda. For the purpose of
the Insurance Act, Endurance Bermuda's principal office is its executive offices
in Hamilton, Bermuda, and Endurance Bermuda's principal representative will be
James Kroner. Without a reason acceptable to the BMA, an insurer may not
terminate the appointment of its principal representative, and the principal
representative may not cease to act as such, unless 30 days' notice in writing
to BMA is given of the intention to do so. It is the duty of the principal
representative, within 30 days of reaching the view that there is a likelihood
that the insurer will become insolvent or that a reportable "event" has, to the
principal representative's knowledge, occurred or is believed to have occurred,
to make a report in writing to the BMA setting forth all the particulars of the
case that are available to the principal representative. For example, the
failure by the insurer to comply substantially with a condition imposed upon the
insurer by the BMA relating to a solvency margin or a liquidity or other ratio
would be a reportable "event."

  INDEPENDENT APPROVED AUDITOR

       Every registered insurer must appoint an independent auditor who will
audit and report annually on the statutory financial statements and the
statutory financial return of the insurer, both of which, in the case of
Endurance Bermuda, are required to be filed annually with the BMA. Endurance
Bermuda's independent auditor must be approved by the BMA and may be the same
person or firm that audits Endurance Holdings' consolidated financial statements
and reports for presentation to its shareholders.

  LOSS RESERVE SPECIALIST

       As a registered Class 4 insurer, Endurance Bermuda is required to submit
an opinion of its approved loss reserve specialist with its statutory financial
return in respect of its losses and loss expenses provisions. The loss reserve
specialist, who will normally be a qualified casualty actuary, must be approved
by the BMA. David Cash, a Fellow of the Casualty Actuaries Society, our Chief
Actuary and our Chief Risk Officer, has been approved to act as Endurance
Bermuda's loss reserve specialist.

  STATUTORY FINANCIAL STATEMENTS

       An insurer must prepare annual statutory financial statements. The
Insurance Act prescribes rules for the preparation and substance of these
statutory financial statements (which include, in statutory form, a balance
sheet, an income statement, a statement of capital and surplus and notes
thereto). The insurer is required to give detailed information and analyses
regarding premiums, claims, reinsurance and investments. The statutory financial
statements are not prepared in accordance with U.S. GAAP and are distinct from
the financial statements prepared for presentation to the insurer's shareholders
under the Companies Act, which financial statements, in the case of the Company,
will be prepared in accordance with U.S. GAAP. As a general business insurer,
Endurance Bermuda is required to submit the annual statutory financial
statements as part of the annual statutory financial return. The statutory
financial statements and the statutory financial return do not form part of the
public records maintained by BMA. Since Endurance Bermuda was capitalized on
December 14, 2001 and had only a two-week operating history for the calendar
year ended December 31, 2001, it obtained approval from the BMA to adopt a

                                        66
<PAGE>

thirteen month fiscal year for statutory reporting purposes for its first year.
Accordingly, Endurance Bermuda's first official insurance filing with the
Bermuda insurance regulators will be for the period beginning November 30, 2001
and ending December 31, 2002, and therefore, it did not close its books for
insurance regulatory purposes on December 31, 2001.

  ANNUAL STATUTORY FINANCIAL RETURN

       Endurance Bermuda is required to file with the BMA a statutory financial
return no later than four months after its financial year end (unless
specifically extended upon application to the BMA). The statutory financial
return for a Class 4 insurer includes, among other matters, a report of the
approved independent auditor on the statutory financial statements of the
insurer, solvency certificates, the statutory financial statements, the opinion
of the loss reserve specialist and a schedule of reinsurance ceded. The solvency
certificates must be signed by the principal representative and at least two
directors of the insurer certifying that the minimum solvency margin has been
met and whether the insurer complied with the conditions attached to its
certificate of registration. The independent approved auditor is required to
state whether, in its opinion, it was reasonable for the directors to make these
certifications. If an insurer's accounts have been audited for any purpose other
than compliance with the Insurance Act, a statement to that effect must be filed
with the statutory financial return.

  MINIMUM SOLVENCY MARGIN AND RESTRICTIONS ON DIVIDENDS AND DISTRIBUTIONS

       Under the Insurance Act, the value of the general business assets of a
Class 4 insurer, such as Endurance Bermuda, must exceed the amount of its
general business liabilities by an amount greater than the prescribed minimum
solvency margin.

       Endurance Bermuda:

                1.     is required, with respect to its general business, to
                       maintain a minimum solvency margin equal to the greatest
                       of:

                     a.     $100,000,000;

                     b.     50% of net premiums written (being gross premiums
                            written less any premiums ceded by Endurance
                            Bermuda, but Endurance Bermuda may not deduct more
                            than 25% of gross premiums when computing net
                            premiums written); and

                     c.     15% of net losses and loss expense reserves;

                2.     is prohibited from declaring or paying any dividends
                       during any financial year if it is in breach of its
                       minimum solvency margin or minimum liquidity ratio or if
                       the declaration or payment of such dividends would cause
                       it to fail to meet such margin or ratio (and if it has
                       failed to meet its minimum solvency margin or minimum
                       liquidity ratio on the last day of any financial year,
                       Endurance Bermuda will be prohibited, without the
                       approval of the BMA, from declaring or paying any
                       dividends during the next financial year);

                3.     is prohibited from declaring or paying in any financial
                       year dividends of more than 25% of its total statutory
                       capital and surplus (as shown on its previous financial
                       year's statutory balance sheet) unless it files with the
                       BMA (at least 7 days before payment of such dividends) an
                       affidavit stating that it will continue to meet the
                       required margins;

                4.     is prohibited, without the approval of the BMA, from
                       reducing by 15% or more its total statutory capital as
                       set out in its previous year's financial statements, and
                       any application for such approval must include an
                       affidavit stating that it will continue to meet the
                       required margins; and

                                        67
<PAGE>

                5.     is required, at any time it fails to meet its solvency
                       margin, within 30 days (45 days where total statutory
                       capital and surplus falls to $75 million or less) after
                       becoming aware of that failure or having reason to
                       believe that such failure has occurred, to file with the
                       BMA a written report containing certain information.

       Additionally, under the Companies Act, Endurance Holdings and Endurance
Bermuda may only declare or pay a dividend if Endurance Holdings or Endurance
Bermuda, as the case may be, has no reasonable grounds for believing that it is,
or would after the payment be, unable to pay its liabilities as they become due,
or if the realizable value of its assets would not be less than the aggregate of
its liabilities and its issued share capital and share premium accounts.

  MINIMUM LIQUIDITY RATIO

       The Insurance Act provides a minimum liquidity ratio for general business
insurers, like Endurance Bermuda. An insurer engaged in general business is
required to maintain the value of its relevant assets at not less than 75% of
the amount of its relevant liabilities. Relevant assets include, but are not
limited to, cash and time deposits, quoted investments, unquoted bonds and
debentures, first liens on real estate, investment income due and accrued,
accounts and premiums receivable and reinsurance balances receivable. There are
certain categories of assets which, unless specifically permitted by the BMA, do
not automatically qualify as relevant assets, such as unquoted equity
securities, investments in and advances to affiliates and real estate and
collateral loans. The relevant liabilities are total general business insurance
reserves and total other liabilities less deferred income tax and sundry
liabilities (by interpretation, those not specifically defined).

  SUPERVISION, INVESTIGATION AND INTERVENTION

       The BMA may appoint an inspector with extensive powers to investigate the
affairs of Endurance Bermuda if the BMA believes that such an investigation is
in the best interests of its policyholders or persons who may become
policyholders. In order to verify or supplement information otherwise provided
to the BMA, the BMA may direct Endurance Bermuda to produce documents or
information relating to matters connected with its business. If it appears to
the BMA that there is a risk of Endurance Bermuda becoming insolvent, or that
Endurance Bermuda is in breach of the Insurance Act or any conditions imposed
upon its registration, the BMA may, among other things, direct Endurance Bermuda
(i) not to take on any new insurance business, (ii) not to vary any insurance
contract if the effect would be to increase its liabilities, (iii) not to make
certain investments, (iv) to liquidate certain investments, (v) to maintain in,
or transfer to the custody of a specified bank, certain assets, (vi) not to
declare or pay any dividends or other distributions or to restrict the making of
such payments and/or (vii) to limit Endurance Bermuda's premium income. The BMA
intends to meet with each Class 4 insurance company on a voluntary basis, every
two years.

  DISCLOSURE OF INFORMATION

       In addition to powers under the Insurance Act to investigate the affairs
of an insurer, the BMA may require certain information from an insurer (or
certain other persons) to be produced to them. Further, the BMA has been given
powers to assist other regulatory authorities, including foreign insurance
regulatory authorities, with their investigations involving insurance and
reinsurance companies in Bermuda but subject to restrictions. For example, the
BMA must be satisfied that the assistance being requested is in connection with
the discharge of regulatory responsibilities of the foreign regulatory
authority. Further, the BMA must consider whether cooperation is in the public
interest. The grounds for disclosure are limited and the Insurance Act provides
sanctions for breach of the statutory duty of confidentiality.

  CERTAIN OTHER BERMUDA LAW CONSIDERATIONS

       Endurance Holdings and Endurance Bermuda will each also need to comply
with the provisions of the Companies Act regulating the payment of dividends and
making of distributions from contributed

                                        68
<PAGE>

surplus. A company is prohibited from declaring or paying a dividend, or making
a distribution out of contributed surplus, if there are reasonable grounds for
believing that: (a) the company is, or would after the payment be, unable to pay
its liabilities as they become due; or (b) the realizable value of the company's
assets would thereby be less than the aggregate of its liabilities and its
issued share capital and share premium accounts.

       Although Endurance Bermuda is incorporated in Bermuda, it is classified
as a non-resident of Bermuda for exchange control purposes by the BMA. Pursuant
to its non-resident status, Endurance Bermuda may engage in transactions in
currencies other than Bermuda dollars and there are no restrictions on its
ability to transfer funds (other than funds denominated in Bermuda dollars) in
and out of Bermuda or to pay dividends to United States residents who are
holders of its ordinary shares.

       Under Bermuda law, exempted companies are companies formed for the
purpose of conducting business outside Bermuda from a principal place of
business in Bermuda. As "exempted" companies, Endurance Holdings and Endurance
Bermuda may not, without the express authorization of the Bermuda legislature or
under a license or consent granted by the Minister of Finance, participate in
certain business transactions, including: (1) the acquisition or holding of land
in Bermuda (except that held by way of lease or tenancy agreement which is
required for its business and held for a term not exceeding 50 years, or which
is used to provide accommodation or recreational facilities for its officers and
employees and held with the consent of the Bermuda Minister of Finance, for a
term not exceeding 21 years); (2) the taking of mortgages on land in Bermuda to
secure an amount in excess of $50,000; or (3) the carrying on of business of any
kind for which it is not licensed in Bermuda, except in certain limited
circumstances such as doing business with another exempted undertaking in
furtherance of Endurance Holdings' business or Endurance Bermuda's business (as
the case may be) carried on outside Bermuda. Endurance Bermuda is a licensed
insurer in Bermuda, and so may carry on activities from Bermuda that are related
to and in support of its insurance business.

       Ordinary shares may be offered or sold in Bermuda only in compliance with
the provisions of the Investment Business Act of 1998 of Bermuda which regulates
the sale of securities in Bermuda. In addition, the BMA must approve all
issuances and transfers of shares of a Bermuda exempted company. Before the
offering contemplated by this prospectus, we expect the BMA will have issued
their permission for the issue and free transferability of the ordinary shares
being offered pursuant to this prospectus, as long as the shares are listed on
the NYSE, to and among persons who are non-residents of Bermuda for exchange
control purposes. In addition, we will deliver to and file a copy of this
prospectus with the Registrar of Companies in Bermuda in accordance with Bermuda
law. The BMA and the Registrar of Companies accept no responsibility for the
financial soundness of any proposal or for the correctness of any of the
statements made or opinions expressed in this prospectus.

       The Bermuda government actively encourages foreign investment in
"exempted" entities like Endurance Holdings and Endurance Bermuda that are based
in Bermuda, but do not operate in competition with local businesses. As well as
having no restrictions on the degree of foreign ownership, Endurance Holdings
and Endurance Bermuda are not currently subject to taxes computed on profits or
income or computed on any capital asset, gain or appreciation, or any tax in the
nature of estate duty or inheritance tax or to any foreign exchange controls in
Bermuda. See "Material Tax Considerations -- Certain Bermuda Tax
Considerations."

       Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may
not engage in any gainful occupation in Bermuda without an appropriate
governmental work permit. Work permits may be granted or extended by the Bermuda
government upon showing that, after proper public advertisement in most cases,
no Bermudian (or spouse of a Bermudian) is available who meets the minimum
standard requirements for the advertised position. The Bermuda government
recently announced a new policy limiting the duration of work permits to six
years, with certain exemptions for key employees. All of our Bermuda-based
professional employees who require work permits have been granted permits by the
Bermuda government. The terms of these permits range from three to five years
depending on the individual.

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<PAGE>

U.K. REGULATION

  GENERAL

       On December 1, 2001, the FSA assumed its full powers and responsibilities
as the single statutory regulator responsible for regulating the financial
services industry in respect of the carrying on of "regulated activities"
(including deposit taking, insurance, investment management and most other
financial services business by way of business in the U.K.), with the purpose of
maintaining confidence in the U.K. financial system, providing public
understanding of the system, securing the proper degree of protection for
consumers and helping to reduce financial crime. It is a criminal offense for
any person to carry on a regulated activity in the U.K. unless that person is
authorized by the FSA and has been granted permission to carry on that regulated
activity or falls under an exemption.

       Insurance business (which includes reinsurance business) is authorized
and supervised by the FSA. Insurance business in the United Kingdom is divided
between two main categories: long-term insurance (which is primarily
investment-related) and general insurance. It is not possible for an insurance
company to be authorized in both long-term and general insurance business. These
two categories are both divided into "classes" (for example: permanent health
and pension fund management are two classes of long-term insurance; damage to
property and motor vehicle liability are two classes of general insurance).
Under FSMA, effecting or carrying out contracts of insurance, within a class of
general or long-term insurance, by way of business in the United Kingdom,
constitutes a regulated activity requiring individual authorization. An
authorized insurance company must have permission for each class of insurance
business it intends to write.

       Endurance U.K. has received authorization from the FSA to effect and
carry out in the United Kingdom contracts of insurance in all classes of general
business (limited in the case of credit and suretyship to reinsurance only)
except sickness, legal expenses and assistance business. As an authorized
insurer in the United Kingdom, Endurance U.K. would be able to operate
throughout the E.U., subject to certain regulatory requirements of the FSA and
in some cases, certain local regulatory requirements. An insurance company with
FSA authorization to write insurance business in the United Kingdom can seek
consent from the FSA to allow it to provide cross-border services in other
member states of the E.U. As an alternative, FSA consent may be obtained to
establish a branch office within another member state.

       As an FSA authorized insurer, the insurance and reinsurance businesses of
Endurance U.K. will be subject to close supervision by the FSA. The FSA is
currently seeking to strengthen its requirements for senior management
arrangements, systems and controls of insurance and reinsurance companies under
its jurisdiction and intends to place an increased emphasis on risk
identification and management in relation to the prudential regulation of
insurance and reinsurance business in the United Kingdom. There are a number of
proposed changes to the FSA's rules that will affect insurance and reinsurance
companies authorized in the U.K. For example, the FSA is currently in
consultation on a number of proposals, including the regulation of the sale of
general insurance, insurance mediation and proposals aimed at ensuring adequate
diversification of an insurer's or reinsurer's exposures to any credit risks of
its reinsurers. Changes in the scope of the FSA's regulation may have an adverse
impact on the business of Endurance U.K.

  SUPERVISION

       The FSA carries out the prudential supervision of insurance companies
through a variety of methods, including the collection of information from
statistical returns, review of accountants' reports, visits to insurance
companies and regular formal interviews.

       The FSA has adopted a risk-based approach to the supervision of insurance
companies. Under this approach the FSA performs a formal risk assessment of
insurance companies or groups carrying on business in the U.K. periodically,
which varies in length according to the risk profile of the insurer. The FSA
performs the risk assessment by analyzing information which it receives during
the normal course of its supervision, such as regular prudential returns on the
financial position of the insurance company, or

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<PAGE>

which it acquires through a series of meetings with senior management of the
insurance company. After each risk assessment, the FSA will inform the insurer
of its views on the insurer's risk profile. This will include details of any
remedial action that the FSA requires and the likely consequences if this action
is not taken.

  SOLVENCY REQUIREMENTS

       The Interim Prudential Sourcebook for Insurers requires that insurance
companies maintain a margin of solvency at all times in respect of any general
insurance undertaken by the insurance company, the calculation of which in any
particular case depends on the type and amount of insurance business a company
writes. The method of calculation of the solvency margin is set out in the
Interim Prudential Sourcebook for Insurers, and for these purposes, all
insurer's assets and liabilities are subject to specific valuation rules which
are set out in the Interim Prudential Sourcebook for Insurers. Failure to
maintain the required solvency margin is one of the grounds on which wide powers
of intervention conferred upon the FSA may be exercised.

       Each insurance company writing property, credit insurance business,
aviation, marine, business interruption or nuclear insurance or reinsurance
business is required by the Interim Prudential Sourcebook for Insurers to
maintain an equalization reserve in respect of business written in the financial
years ending on or after December 23, 1996 calculated in accordance with the
provisions of the Interim Prudential Sourcebook for Insurers where the amount of
premiums for such classes exceed the minimum threshold set forth in the
provisions.

       These solvency requirements are likely to be amended when the Interim
Prudential Sourcebook for Insurers is replaced by the proposed Integrated
Prudential Sourcebook.

       In addition, an insurer (other than a pure reinsurer) that is part of a
group, is required to perform and submit to the FSA a solvency margin
calculation return in respect of its ultimate parent undertaking, in accordance
with the FSA's rules. This return is not part of an insurer's own solvency
return and hence will not be publicly available. Although there is no
requirement for the parent undertaking solvency calculation to show a positive
result, the FSA is required to take action where it considers that the solvency
of the insurance company is or may be jeopardized due to the group solvency
position. Further, an insurer is required to report in its annual returns to the
FSA all material related party transactions (e.g., intra group reinsurance,
whose value is more than 5% of the insurer's general insurance business amount).

  RESTRICTIONS ON DIVIDEND PAYMENTS

       U.K. company law prohibits Endurance U.K. from declaring a dividend to
its shareholders unless it has "profits available for distribution." The
determination of whether a company has profits available for distribution is
based on its accumulated realized profits less its accumulated realized losses.
While the United Kingdom insurance regulatory laws impose no statutory
restrictions on a general insurer's ability to declare a dividend, the FSA
strictly controls the maintenance of each insurance company's solvency margin
within its jurisdiction. The FSA's rules require Endurance U.K., in its early
years of trading, to notify the FSA of any proposed or actual payment of a
dividend that is greater than forecast in the business plans submitted by
Endurance U.K. with its application for authorization. Any such payment or
proposal could result in regulatory intervention. In addition, the FSA requires
authorized insurance companies to notify the FSA in advance of any significant
dividend payment.

  REPORTING REQUIREMENTS

       U.K. insurance companies must prepare their financial statements under
the Companies Act of 1985 (as amended), which requires the filing with Companies
House of audited financial statements and related reports. In addition, U.K.
insurance companies are required to file with the FSA regulatory returns, which
include a revenue account, a profit and loss account and a balance sheet in
prescribed forms. Under the Interim Prudential Sourcebook for Insurers, audited
regulatory returns must be filed with the FSA within two months and 15 days (or
three months where the delivery of the return is made electronically).
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<PAGE>

  SUPERVISION OF MANAGEMENT

       The FSA closely supervises the management of insurance companies through
the approved persons regime, by which any appointment of persons to perform
certain specified "controlled functions" within a regulated entity, must be
approved by the FSA.

  CHANGE OF CONTROL

       FSMA regulates the acquisition of "control" of any U.K. insurance company
authorized under FSMA. Any company or individual that (together with its or his
associates) directly or indirectly acquires 10% or more of the shares in a U.K.
authorized insurance company or its parent company, or is entitled to exercise
or control the exercise of 10% or more of the voting power in such authorized
insurance company or its parent company, would be considered to have acquired
"control" for the purposes of the relevant legislation, as would a person who
had significant influence over the management of such authorized insurance
company or its parent company by virtue of his shareholding or voting power in
either. A purchaser of 10% or more of the ordinary shares would therefore be
considered to have acquired "control" of Endurance U.K.

       Under FSMA, any person proposing to acquire "control" over a U.K.
authorized insurance company must give prior notification to the FSA of his
intention to do so. The FSA would then have three months to consider that
person's application to acquire "control." In considering whether to approve
such application, the FSA must be satisfied that both the acquirer is a fit and
proper person to have such "control" and that the interests of consumers would
not be threatened by such acquisition of "control." Failure to make the relevant
prior application could result in action being taken against the Company by the
FSA.

  INTERVENTION AND ENFORCEMENT

       The FSA has extensive powers to intervene in the affairs of an authorized
person, culminating in the ultimate sanction of the removal of authorization to
carry on a regulated activity. FSMA imposes on the FSA statutory obligations to
monitor compliance with the requirements imposed by FSMA, and to enforce the
provisions of FSMA related rules made by the FSA. The FSA has power, among other
things, to enforce -- and take disciplinary measures in respect of -- breaches
of both the Interim Prudential Sourcebook for Insurers and breaches of the
conduct of business rules generally applicable to authorized persons.

       The FSA also has the power to prosecute criminal offenses arising under
FSMA, and to prosecute insider dealing under Part V of the Criminal Justice Act
of 1993, and breaches of money laundering regulations. The FSA's stated policy
is to pursue criminal prosecution in all appropriate cases.

U.S. REGULATION

       Endurance U.S. was organized on September 5, 2002. On December 4, 2002,
Endurance Bermuda contributed $335 million in cash and invested assets to
Endurance U.S. Holdings Corp., which in turn, subsequently contributed such
amount as statutory surplus of Endurance U.S. On December 18, 2002, Endurance
U.S. received a license to write certain lines of insurance and reinsurance
business from the New York Department.

 U.S. INSURANCE HOLDING COMPANY REGULATION OF ENDURANCE HOLDINGS

       Endurance Holdings, as the indirect parent of Endurance U.S., and
Endurance U.S. Holdings Corp., as the direct parent of Endurance U.S., are
subject to the insurance holding company laws of New York, where Endurance U.S.
is organized and domiciled. These laws generally require the insurance holding
company and each insurance company directly or indirectly owned by the holding
company to register with the New York Department and to furnish annually
financial and other information about the operations of companies within the
holding company system. Generally, all material transactions among

                                        72
<PAGE>

companies in the holding company system affecting Endurance U.S., including
sales, loans, reinsurance agreements, service agreements and dividend payments,
must be fair and, if material or of a specified category, require prior notice
and approval or non-disapproval by the New York Superintendent.

  CHANGES OF CONTROL

       These laws may discourage potential acquisition proposals and may delay,
deter or prevent a change of control of Endurance Holdings, including through
transactions, and in particular unsolicited transactions, that some or all of
the shareholders of Endurance Holdings might consider to be desirable.

       Before a person can acquire control of a domestic insurer or reinsurer,
prior written approval must be obtained from the insurance commissioner of the
state where the domestic insurer is domiciled. Prior to granting approval of an
application to acquire control of a domestic insurer, the state insurance
commissioner where the insurer is domiciled will consider such factors as the
financial strength of the applicant, the integrity and management of the
applicant's board of directors and executive officers, the acquiror's plans for
the future operations of the domestic insurer and any anti-competitive results
that may arise from the consummation of the acquisition of control. Generally,
state statutes provide that "control" over a domestic insurer is presumed to
exist if any person, directly or indirectly, owns, controls, holds with the
power to vote, or holds proxies representing, ten percent or more of the voting
securities of the domestic insurer. Because a person acquiring ten percent or
more of Endurance Holdings' ordinary shares would indirectly acquire the same
percentage of Endurance U.S.'s common stock, the U.S. insurance change of
control laws will likely apply to such a transaction.

  STATE INSURANCE REGULATION OF ENDURANCE U.S.

       The terms and conditions of reinsurance agreements generally are not
subject to regulation by any U.S. state insurance department with respect to
rates or policy terms. This contrasts with primary insurance agreements, the
rates and policy terms of which are generally closely regulated by state
insurance departments. As a practical matter, however, the rates charged by
primary insurers do have an effect on the rates that can be charged by
reinsurers.

       State insurance authorities have broad regulatory powers with respect to
various aspects of the reinsurance business, including: licensing to transact
business, admittance of assets to statutory surplus, regulating unfair trade and
claims practices, establishing reserve requirements and solvency standards, and
regulating investments and dividends. State insurance laws and regulations
require Endurance U.S. to file financial statements with insurance departments
everywhere it will be licensed or authorized or accredited to conduct insurance
business; and the operations of Endurance U.S. are subject to examination by
those departments at any time. Endurance U.S. will prepare statutory financial
statements in accordance with STATUTORY ACCOUNTING PRACTICES and procedures
prescribed or permitted by these departments. State insurance departments also
conduct periodic examinations of the books and records, financial reporting,
policy filings and market conduct of insurance companies domiciled in their
states, generally once every three to five years. Examinations are generally
carried out in cooperation with the insurance departments of other states under
guidelines promulgated by the NAIC.

  NEW YORK STATE DIVIDEND LIMITATIONS

       Under the New York Insurance Law, the ability of Endurance U.S. to
declare or pay any dividend to us which, together with all dividends declared or
distributed by it during the next preceding twelve months, exceeds the lesser
of:

       1.     10% of Endurance U.S.'s surplus to policyholders as shown on its
              latest statement on file with the New York Superintendent; or

       2.     100% of Endurance U.S.'s adjusted net investment income during
              that period

will be subject to the prior approval of the New York Superintendent.

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<PAGE>

       The extraordinary dividend limitation imposed by the New York Insurance
Law is based on the statutory financial results of Endurance U.S. determined by
using statutory accounting practices which differ in certain respects from
accounting principles used in financial statements prepared in conformity with
U.S. GAAP. The significant differences relate to DEFERRED ACQUISITION EXPENSES,
deferred income taxes, required investment reserves, reserve calculation
assumptions and surplus notes. The Company has agreed with the New York
Department to not take a dividend from Endurance U.S. for two years after its
license is issued without prior regulatory approval.

  NEW YORK STATE RISK-BASED CAPITAL REGULATIONS

       The New York Insurance Law requires that New York insurers report their
risk-based capital ("RBC") based on a formula calculated by applying factors to
various asset, premium and reserve items. The formula takes into account the
risk characteristics of the insurer, including asset risk, insurance risk,
interest rate risk and business risk. The New York Department uses the formula
only as an early warning regulatory tool to identify possibly inadequately
capitalized insurers for purposes of initiating regulatory action, and not as a
means to rank insurers generally. The New York Insurance Law imposes broad
confidentiality requirements on those engaged in the insurance business
(including insurers, agents, brokers and others) and on the New York Department
as to the use and publication of RBC data. The New York Superintendent has
explicit regulatory authority to require various actions by, or take various
actions against, insurers whose total adjusted capital does not exceed certain
RBC levels.

  STATUTORY ACCOUNTING PRINCIPLES

       Statutory accounting, or "SAP," is a basis of accounting developed to
assist insurance regulators in monitoring and regulating the solvency of
insurance companies. It is primarily concerned with measuring an insurer's
surplus to policyholders. Accordingly, statutory accounting focuses on valuing
assets and liabilities of insurers at financial reporting dates in accordance
with appropriate insurance law and regulatory provisions applicable in each
insurer's domiciliary state.

       U.S. GAAP is concerned with a company's solvency, but it is also
concerned with other financial measurements, such as income and cash flows.
Accordingly, U.S. GAAP gives more consideration to appropriate matching of
revenue and expenses and accounting for management's stewardship of assets than
does SAP. As a direct result, different assets and liabilities and different
amounts of assets and liabilities will be reflected in financial statements
prepared in accordance with U.S. GAAP as opposed to SAP.

       Statutory accounting practices established by the NAIC and adopted, in
part, by the New York Department, determine, among other things, the amount of
statutory surplus and statutory net income of our U.S. insurance subsidiary and
thus determine, in part, the amount of funds they have available to pay
dividends to us.

  OPERATIONS OF ENDURANCE U.K. AND ENDURANCE BERMUDA

       Endurance U.K. and Endurance Bermuda are not admitted to do business in
the United States. However, the insurance laws of each state of the United
States and of many other countries regulate or prohibit the sale of insurance
and reinsurance within their jurisdictions by non-domestic insurers and
reinsurers such as Endurance U.K. and Endurance Bermuda, which are not admitted
to do business within such jurisdictions. We do not intend that Endurance
Bermuda or Endurance U.K. maintain an office or solicit, advertise, settle
claims or conduct other insurance activities in any jurisdiction other than
Bermuda -- or, in the case of Endurance U.K., London -- where the conduct of
such activities would require Endurance U.K. and Endurance Bermuda to be so
admitted.

       In addition to the regulatory requirements imposed by the jurisdictions
in which they are licensed, reinsurers' business operations are affected by
regulatory requirements in various states of the United States governing "credit
for reinsurance" which are imposed on their ceding companies. In general, a
ceding company which obtains reinsurance from a reinsurer that is licensed,
accredited or approved by the jurisdiction or state in which the reinsurer files
statutory financial statements is permitted to reflect in its
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<PAGE>

statutory financial statements a credit in an aggregate amount equal to the
liability for unearned premiums (which are that portion of premiums written
which applies to the unexpired portion of the policy period) and loss reserves
and loss expense reserves ceded to the reinsurer. Endurance U.K. and Endurance
Bermuda are not licensed, accredited or approved in any state in the U.S. The
great majority of states, however, permit a credit to statutory surplus
resulting from reinsurance obtained from a non-licensed or non-accredited
reinsurer to be offset to the extent that the reinsurer provides a letter of
credit or other acceptable security arrangement. A few states do not allow
credit for reinsurance ceded to non-licensed reinsurers except in certain
limited circumstances and others impose additional requirements that make it
difficult to become accredited.

       We do not believe that Endurance U.K. and Endurance Bermuda are in
violation of insurance laws of any jurisdiction in the U.S. There can be no
assurance, however, that inquiries or challenges to Endurance U.K.'s or
Endurance Bermuda's reinsurance activities will not be raised in the future.

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<PAGE>

                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

       Set forth below are the names, ages and positions of the directors and
executive officers of Endurance Holdings as of the date hereof. All of our
directors hold office until the next annual meeting of our shareholders and
until their successors are duly elected and qualified. Executive officers serve
at the request of the board of directors.

<Table>
<Caption>
NAME                                   AGE   OFFICE
----                                   ---   ------
<S>                                    <C>   <C>
Kenneth J. LeStrange(1)..............  45    Chairman of the Board of Directors,
                                             President, Chief Executive Officer and Director
Steven W. Carlsen....................  45    President, Endurance Reinsurance Corporation of America
James R. Kroner(2)...................  41    Chief Financial Officer and Director
David S. Cash........................  37    Chief Actuary/Chief Risk Officer
Thomas Bell..........................  47    Executive Vice President, Reinsurance Operations
William H. Bolinder(4)...............  59    Director
David L. Cole(3).....................  55    Director
Jonathan J. Coslet(4)................  38    Director
Anthony J. DiNovi(4).................  40    Director
Bryon Ehrhart(1).....................  38    Director
Charles Froland(2)...................  54    Director
Richard Perry(3).....................  47    Director
Robert A. Spass(3)...................  46    Director
Richard J. Sterne(2).................  56    Director
</Table>

------------
(1) Denotes Class I Director with term expiring in 2003.
(2) Denotes Class II Director with term expiring in 2004.
(3) Denotes Class III Director with term expiring in 2005.
(4) Denotes Class IV Director with term expiring in 2006.

       Set forth below is certain information concerning our directors and
executive officers as of the date of this prospectus. At least three independent
directors will serve on our Audit Committee. No later than      months after we
are listed on the NYSE, our board of directors will appoint      additional
directors that will satisfy the requirements for independent directors contained
in the rules governing companies listed on the NYSE.

       Kenneth J. LeStrange has been our Chairman, President and Chief Executive
Officer since the Company's formation. Mr. LeStrange has over twenty-four years
of experience in property and casualty underwriting. He has significant
experience as a treaty and facultative underwriter and manager of treaty
underwriting operations at Swiss Reinsurance Company and American Re
Corporation. He began his underwriting career with Hartford Insurance Group and
held several underwriting management positions at Swiss Re. During his tenure at
American Re from 1984 to December 1997, he served as Executive Vice President of
American Re and as President of its alternative market subsidiary from 1984 to
December 1997, Am Re Managers, Inc. In December 1997, he joined Aon Corporation
as Chairman and CEO of its alternative market operations and was later named
Chairman and CEO of Aon's retail brokerage operations for the Americas. Mr.
LeStrange remained with Aon until he joined us in 2001.

       Steven W. Carlsen became the President of Endurance U.S. in November
2002. From the Company's formation until assuming this new position, Mr. Carlsen
was the Company's Chief Underwriting Officer. Mr. Carlsen began his career as a
property facultative underwriter in 1979 and later as a treaty account executive
for Swiss Reinsurance Company. He joined NAC Re in 1986, ultimately heading
their Property and Miscellaneous Treaty Department (which includes aviation,
marine, surety and

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<PAGE>

finite business). He managed NAC Re's retrocessions and was involved in the
formation of their U.K. company. In 1994, Mr. Carlsen left NAC Re to join CAT
Limited as their Chief Underwriter-North America and in 1997 was co-founder of
CAT Limited's finite insurer, Enterprise Re. From 1999 until he joined us in
2001, Mr. Carlsen worked with three of Morgan Stanley Private Equity's insurance
ventures, including Response Insurance and Homesite Insurance in the United
States and The Underwriter Insurance Company Ltd. in the United Kingdom. He is a
director of the Underwriter Insurance Company Ltd.

       James R. Kroner has been our Chief Financial Officer and director since
December 2002, and has been our Chief Investment Officer since December 2001.
Mr. Kroner joined us from the private equity firm, Fox Paine & Co. LLC, where he
was a Managing Director since February 2000. From 1998 to 2000, Mr. Kroner
served as a Managing Director and co-head of insurance investment banking in the
Americas at JP Morgan & Co. Incorporated. From 1997 to 1998, he was a Managing
Director and head of the insurance mergers and acquisitions practice at Salomon
Smith Barney. Prior to 1997 Mr. Kroner served as Senior Vice President,
Treasurer, and a member of the executive committee of American Re Corporation.
He is a member of the board of directors of ACMI Circon Corporation and Maxxim
Medical, Inc.

       David S. Cash has been our Chief Actuary/Chief Risk Officer since
December 2001. Mr. Cash joined us from Centre Solutions Ltd. in Bermuda where he
was a Vice President focused on structured finance and insurance programs since
1996. Mr. Cash was a member of the board of directors Centre Life
Finance -- Centre Solutions' senior settlement financing company. From 1993 to
1996, Mr. Cash was Vice President and Underwriter at Zurich Re Centre. Prior to
Zurich Re, Mr. Cash served as a consulting actuary at Tillinghast-Towers Perrin
in New York. Mr. Cash received an Msc. in mathematics from Oxford University,
which he attended as a Rhodes Scholar. Mr. Cash is a Fellow of the Casualty
Actuarial Society and a Member of the American Academy of Actuaries and is a
native of Bermuda.

       Thomas Bell has been our Executive Vice President, Reinsurance Operations
since December 2001. Prior to joining the Company, Mr. Bell spent a total of 21
years at American Re Corporation beginning in 1978, where he was most recently
Senior Vice President responsible for the Regional Middle Markets Marketing
Group. During this time, he also held various posts within American Re, ranging
from property, casualty and ocean marine treaty and facultative underwriter to
Senior Vice President and Eastern Region Manager. From 1984 to 1986, he served
as a property underwriter at North American Re Insurance Company and with the
Hartford Insurance Company in various underwriting capacities from 1973 to 1978.

       William H. Bolinder has been a director since December 2001. Mr. Bolinder
is a retired Senior Executive of Zurich Financial Services Group. He was a
member of the Group Management Board and head of the Business Development
Division Corporate and Commercial for Zurich Financial Services Group. He has
been head of the business division North America (excluding US Personal Lines)
and Latin America as well as the Corporate Customer Division of Zurich Financial
Services Group since 1998. In 1994 he was elected to the Group Executive Board
at Zurich Financial Services Group's home office and became responsible for
managing the Zurich Financial Services Group companies in the United States and
Canada as well as Corporate/Industrial Insurance, Zurich International (Group)
and Risk Engineering. Mr. Bolinder joined Zurich American Insurance Company, USA
in 1986 as Chief Operating Officer and became Chief Executive Officer in 1987.

       David L. Cole has been a director since December 2001. He has served as
Chairman, President and Chief Executive Officer of Virginia Surety Company,
Inc., Aon Corporation's principal property and casualty company serving the U.S.
domestic market since March 1995. Mr. Cole also has served as Chairman of Aon
Warranty Group, which was formed to develop and take advantage of Aon's position
in the consumer extended warranty business on a global basis. In that capacity,
Mr. Cole has been responsible for Aon's expansion into foreign markets,
including Asia, Australia, Europe and South America. Mr. Cole joined Aon
Corporation in 1976 and held numerous executive positions until 1989. From 1989
to 1994, Mr. Cole served as President of Ryan Insurance Group Europe and London
General

                                        77
<PAGE>

Insurance Company, Ltd., Aon Corporation's principal property and casualty
company serving the European market.

       Jonathan J. Coslet has been a director since December 2001. Mr. Coslet
joined Texas Pacific Group in 1993. He is now a Senior Partner responsible for
the Texas Pacific Group's generalist and healthcare investment activities. Mr.
Coslet is also a member of Texas Pacific Group's Investment Committee and
Management Committee. Prior to joining the Texas Pacific Group, Mr. Coslet was
in the Investment Banking department of Donaldson, Lufkin & Jenrette,
specializing in leveraged acquisitions and high yield finance from 1991-1993.
Mr. Coslet serves on the board of directors of Oxford Health Plans, Inc.,
Magellan Health Services, Inc., PETCO Animal Supplies, Inc. and Brite Now
Dental.

       Anthony J. DiNovi has been a director since December 2001. Mr. DiNovi is
a Managing Director of Thomas H. Lee Advisors, LLC, the general partner of
Thomas H. Lee Partners, L.P. Mr. DiNovi joined THL in 1988. Prior to joining
THL, Mr. DiNovi was in the corporate finance departments of Goldman, Sachs & Co.
and Wertheim Schroder & Co., Inc. Mr. DiNovi is currently a director of Eye Care
Centers of America, Inc., FairPoint Communications, Inc., Fisher Scientific
International, Inc., US LEC Corp., National Waterworks, Inc., Vertis, Inc. and
various private corporations.

       Bryon Ehrhart has been a director since December 2001. Mr. Ehrhart is an
Executive Vice President of Aon Re Inc., Aon's reinsurance brokerage operations
in the United States. Mr. Ehrhart is also the President of Aon Re Services,
Inc., a division of Aon Re Inc. that provides actuarial, financial advisory, tax
planning, catastrophe modeling and other services to clients of Aon Re Inc. He
is also a Managing Director of Aon Capital Markets, a division of Aon Securities
Corporation that specializes in risk transfer securitizations and contingent
capital products. Prior to joining Aon in 1994, Mr. Ehrhart practiced for eight
years in public accounting at the firm Coopers & Lybrand, and left the firm as a
senior manager.

       Charles Froland has been a director since December 2001. Mr. Froland has
been responsible for all of General Motors Investment Management Corporation's
internally and externally managed domestic and international private market
equity and debt securities since 1998. His prior responsibility at the General
Motors Asset Management was managing director of North American Fixed Income
Investments. Before joining General Motors Asset Management in 1995, Mr. Froland
was a managing director with Stanford University Management Company.

       Richard Perry has been a director since December 2001. Mr. Perry founded
Perry Capital in 1988 and since then the firm has grown to $4.5 billion under
management. Prior to 1988, Mr. Perry developed and implemented investment
strategies in the equity trading area of Goldman, Sachs & Co. He was also an
adjunct associate professor at the Stern School of Business at New York
University. He serves as chairman of the board of directors of IOS BRANDS
(formerly FTD Corporation) and FTD.COM, and a member of the boards of trustees
of the Allen Stevenson School, Milton Academy, and Facing History and Ourselves.

       Robert A. Spass has been a director since December 2001. Mr. Spass is
Chairman of the board of directors of Capital Z Partners, Ltd., the general
partner of Capital Z, and Capital Z Management, LLC, the management company of
Capital Z, and co-founded Capital Z in 1998. Prior to 1998, Mr. Spass was the
Managing Partner and co-founder of Insurance Partners, L.P. Mr. Spass also was
President and CEO of International Insurance Advisors, Inc., the management
company of International Insurance Investors, L.P. Prior to joining
International Insurance Investors, Mr. Spass was a Director of Investment
Banking at Salomon Brothers with responsibility for corporate finance
relationships with the insurance industry. He currently serves on the board of
directors of U.S.I. Holdings Corporation, Universal American Financial Corp.,
British Marine Holdings, Ceros Group, Inc., LendingTree, Inc., Highlands
Insurance Group, Inc. and Aames Financial Corporation.

       Richard J. Sterne has been a director since November 2002. Mr. Sterne has
been a managing director of Lightyear Capital, LLC since January 2001. From 1999
until joining Lightyear, he was a managing director at PaineWebber Incorporated
in the Principal Transactions Group, responsible for the

                                        78
<PAGE>

firm's proprietary investments. From 1995 until joining PaineWebber, Mr. Sterne
was the chairman and Chief Executive Officer of Links Securities, Inc.

COMMITTEES OF THE BOARD OF DIRECTORS

       The standing committees of the board of directors are:

       Audit Committee.  The Audit Committee is comprised of Messrs. Bolinder,
Cole, Spass and Sterne and is chaired by Mr. Spass. The Audit Committee:

              (1) reviews the audit plans and findings of the independent
                  auditors and will review the audit plans and findings of our
                  internal audit and risk review staff, and the results of
                  regulatory examinations and tracks management's corrective
                  actions plans where necessary;

              (2) reviews our accounting policies and controls, compliance
                  programs, and significant tax and legal matters;

              (3) recommends to the board the annual appointment of independent
                  auditors; and

              (4) reviews our risk management processes.

       Compensation Committee.  The Compensation Committee is comprised of
Messrs. Coslet, DiNovi, Ehrhart, Froland and Spass and is chaired by Mr. DiNovi.
This committee oversees our compensation and benefit policies, including
administration of annual bonus awards and long-term incentive plans.

       Underwriting Committee.  The Underwriting Committee is comprised of
Messrs. Bolinder, Cole and Coslet and is chaired by Mr. Bolinder. This committee
oversees our underwriting policies and approves any exceptions thereto.

       Nominating Committee.  The Nominating Committee is comprised of Messrs.
Coslet, DiNovi and Ehrhart, and nominates candidates for positions on the board
of directors.

       Investment Committee.  The Investment Committee is comprised of Messrs.
DiNovi, Ehrhart, Coslet and Perry and is chaired by Mr. Perry. This committee
establishes investment guidelines and supervises our investment activity. The
Investment Committee regularly monitors our overall investment results, reviews
compliance with our investment objectives and guidelines, and ultimately reports
the overall investment results to our board of directors. These guidelines
specify minimum criteria on the overall credit quality and liquidity
characteristics of the Company's portfolio. They include limitations on the size
of certain holdings as well as restrictions on purchasing certain types of
securities or investing in certain industries.

BOARD AND BOARD COMMITTEE DESIGNATIONS UNDER THE SHAREHOLDERS AGREEMENT

       Pursuant to the terms of our shareholders agreement, certain of our
current investors have designated the following persons to the Nominating
Committee of the board of directors who have subsequently been elected as
directors and to committees of our board:

       -     David Cole, a member of our board of directors and a member of both
             the Audit Committee and the Underwriting Committee of our board of
             directors, is the Chairman, President and Chief Executive Officer
             of Combined Specialty Insurance Co., an affiliate of Aon;

       -     Jonathan Coslet, a member of our board of directors and of the
             Compensation, Nominating and Underwriting Committees of our board
             of directors, is a senior partner of TPG;

       -     Anthony J. DiNovi, a member of our board of directors, chairman of
             the Compensation Committee of our board of directors and a member
             of the Nominating Committee and Investment Committee, is a managing
             director of Thomas H. Lee Advisors, LLC, the general partner of
             THL;

                                        79
<PAGE>

       -     Bryon Ehrhart, a member of our board of directors and a member of
             the Nominating Committee, Compensation Committee and the Investment
             Committee of our board of directors, is the Executive Vice
             President of Aon Re Inc. and President of Aon Re Services, Inc.,
             each of which are affiliates of Aon;

       -     Charles Froland, a member of our board of directors and of the
             Compensation and Investment Committees of our board of directors,
             is Managing Director of GM Asset Management;

       -     Richard Perry, a member of our board of directors and the chairman
             of the Investment Committee of our board of directors, is the
             President and Chief Executive Officer of Perry Capital;

       -     Robert A. Spass, a member of our board of directors and chairman of
             the Audit Committee and a member of the Compensation Committee of
             our board of directors, is Chairman of the Board of Directors of
             Capital Z Partners, Ltd., the general partner of Capital Z; and

       -     Richard J. Sterne, a member of our board of directors and of the
             Audit Committee of our board of directors, is a managing director
             of Lightyear Capital, LLC.

       Another of our current investors, Metro Center Investments Pte Ltd., has
similar rights to designate one director to our board of directors and to
certain committees but to date has not exercised this right.

OTHER SENIOR MANAGEMENT

<Table>
<Caption>
OTHER SENIOR MANAGEMENT                     AGE                AREAS OF RESPONSIBILITY
-----------------------                     ---                -----------------------
<S>                                         <C>   <C>
Louis Adanio..............................   48   Property Individual Risk
Thomas Bell...............................   47   Treaty Reinsurance Operations
Mark Boucher..............................   43   Chief Executive Officer of Endurance U.K.
David Cabral..............................   39   Excess Casualty Insurance; Professional Lines
                                                  Insurance
William Fawcett...........................   39   Claims
Judy Hart.................................   58   Healthcare
Daniel Izard..............................   58   Aerospace
Ronald Koch...............................   53   Casualty Treaty Reinsurance
Ralph Serio...............................   50   Self Insured Risks
RobLee Womack, Jr. .......................   42   Property Per Risk Treaty Reinsurance; Property
                                                  Catastrophe
</Table>

       Louis Adanio -- Executive Vice President, Property Individual Risk
Underwriting.  Mr. Adanio joined the Company in December 2001 from Cambridge
Risk Technical Underwriters, a Managing General Agent focused on large and
technical commercial property risks, where he served as President and Chief
Underwriting Officer from 2000 until joining us. From 1984 to 2000, Mr. Adanio
had a 16-year career at SCOR Reinsurance Company, where he served as Senior Vice
President and as a member of the Board of Directors. Prior to SCOR, Mr. Adanio
was a practicing engineer and construction manager for commercial/industrial
construction projects.

       Mark Boucher -- Chief Executive Officer of Endurance U.K. Mr. Boucher is
head of Endurance U.K. He joined us in January 2002. He has over 20 years of
commercial insurance experience. From 1998 to January 2002, he was head of Royal
& SunAlliance's London based commercial insurance operations, which had written
premiums in excess of $1 billion and had 1,300 employees. Prior to that, Mr.
Boucher was Chief Operating Officer of Alexander Howden, where he served for 13
years.

       David V. Cabral -- Executive Vice President, Excess Casualty Insurance
and Professional Lines Insurance.  Prior to joining the Company in March 2002,
Mr. Cabral was Vice President, FinPro at Marsh USA, Inc., responsible for
management, program design, marketing and coordinating daily servicing of
clients since April 2001. Before Marsh, Mr. Cabral was National Sales and
Marketing Director,

                                        80
<PAGE>

Diversified Risk at Fireman's Fund Insurance Company where he assisted with the
creation of offshore captive facilities and developing e-commerce initiatives.
He also held management positions at Starr Excess Liability Insurance Co., Aon
Corporation and Marsh & McLennan Companies, Inc. Mr. Cabral is a native of
Bermuda.

       William F. Fawcett -- Senior Vice President, Head of Claims.  Prior to
joining us in December 2002, Mr. Fawcett was Managing Director, Deputy General
Counsel and Head of Claims for Swiss Reinsurance Corporation in Zurich which he
joined in April 2001. From 1994 to April 2001 Mr. Fawcett served in various
claims and legal positions at the St. Paul Insurance Company, including Group
Counsel. He began his private sector career as an attorney in the law firms of
Anderson, Parkinson, Weinberg & Miller and Bromley, Brown & Walsh. Mr. Fawcett
served in the United States Marine Corps, including service as Assistant Command
Judge Advocate during Desert Storm.

       Judy M. Hart -- Executive Vice President, Hospital Liability
Operations.  Ms. Hart joined us in April 2002. She spent the past four years as
Vice President, Marketing Leader Healthcare Segment with Employers Reinsurance
Corporation. She was a member of the healthcare leadership executive committee
and was responsible for strategic planning and execution of healthcare
strategies across Employers, The Medical Protective Company and IRI Healthcare.
Prior to Employers Re, she spent most of her career at Alexander & Alexander
Services Inc. ("A&A") where she was a Managing Director. Ms. Hart had a
leadership role in the development of an A&A National Healthcare Practice and
was responsible for setting healthcare strategies.

       Daniel Izard -- Executive Vice President, Aerospace.  Mr. Izard joined
the Company in July 2002. From 2000 to July 2002, Mr. Izard was a consultant
focused on aviation insurance matters. From 1974 to 2000, Mr. Izard was with
Associated Aviation Underwriters, Inc. ("AAU"), a managing general underwriter
focused on the global aviation market, where he served as President & CEO for 15
years. At AAU, Mr. Izard led the activities of one the world's leading aviation
specialist underwriters. Mr. Izard joined AAU in 1974 and held numerous
positions including, Vice President and Director of Reinsurance Purchasing,
Senior Vice President and Director of National Accounts, and Executive Vice
President and Chief Operating Officer. Mr. Izard is currently a trustee of
Embry-Riddle Aeronautical University and a member of the Board of Advisors of
Duncan Aviation, Inc.

       Ronald Koch -- Senior Vice President, Casualty Treaty Reinsurance.  Mr.
Koch joined us in December 2001. He was an underwriting consultant at Gerling
Global Financial Products, Inc. from April 2001 to September 2001. Prior to
that, he was 2nd Vice President, Casualty Treaty Underwriting at Employers
Reinsurance Corporation, where he managed a $200 million book of casualty treaty
business consisting of higher hazard working layer and excess business. Mr. Koch
also spent 18 years at Swiss Reinsurance Company, where he undertook a range of
duties, including Vice President, Casualty Treaty. He began his career in the
commercial casualty underwriting department of Home Insurance.

       Ralph Serio -- Executive Vice President, Self Insured Risks.  Mr. Serio
joined us in February 2002. From 1998 to 2001 he was the President and Chief
Operating Officer of Custom Risk Solutions LLC. Prior to Custom Risk Solutions,
he was corporate Senior Vice President of American Re Corporation and Executive
Vice President of its alternative market subsidiary, Am-Re Managers, Inc. for
five years. He led American Alternatives Insurance Company, American Re's
admitted carrier and its E&S lines carrier, Princeton Excess and Surplus Lines
Insurance Company, where he served as Chief Operating Officer for both
companies. He was also responsible for managing American Alternative Managers,
Inc. ("AAMI"), American Re's captive management company.

       RobLee Womack, Jr. -- Senior Vice President, Property Per Risk Treaty
Reinsurance and Property Catastrophe.  Mr. Womack joined us in February 2002.
From 1998 to 2002, Mr. Womack was a Senior Vice President at Lehman Re Ltd.,
where he was responsible for producing and underwriting a worldwide catastrophe
portfolio suitable for capital market solutions. In 1993, Mr. Womack relocated
to Bermuda as Senior Vice President at CNA Bermuda Services. Mr. Womack spent
ten years of his career at CNA Insurance Company. He began with CNA as Assistant
Vice President responsible for accounts, targeting working layer and catastrophe
business. He was also in charge of new product development and
                                        81
<PAGE>

production. He was instrumental with the startup of LaSalle Re Limited, where he
was in charge of model development, system analysis and marketing and yearly
projections.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 COMPENSATION OF DIRECTORS

       Directors do not receive any compensation for their services as directors
but are reimbursed for out of pocket expenses incurred in connection with their
services to the Company.

 EXECUTIVE COMPENSATION

       Because Endurance Bermuda commenced operations on December 17, 2001, we
did not pay any executive officer compensation in excess of $100,000 during the
period from November 30, 2001 (inception) through December 31, 2001. Our Chief
Executive Officer, Kenneth J. LeStrange, was employed by us from December 14,
2001, the date of the private placement of Endurance Bermuda's securities, and
received no compensation from us during 2001.

 EMPLOYMENT AGREEMENTS

       Kenneth J. LeStrange.  Endurance Bermuda entered into an employment
agreement with Mr. LeStrange that commenced as of December 14, 2001 and extended
through December 14, 2002 (the "Original Agreement"). It is contemplated by the
Original Agreement that we will enter into a subsequent employment agreement
with Mr. LeStrange (the "Current Agreement," and, together with the Original
Agreement, the "Agreements") which will commence as of December 14, 2002. The
Current Agreement will be substantially similar to the Original Agreement,
except that it will not contain the signing bonus, option grant, relocation
allowance or ordinary share purchase requirements discussed below. We believe
that the Compensation Committee of the board of directors will meet in January
2003 to discuss and consider the Current Agreement. The following description,
insofar as it applies to the Current Agreement, reflects the terms of such
agreement as we expect will be considered by the Compensation Committee in
January 2003.

       Under the Agreements, Mr. LeStrange serves as our Chairman, President and
Chief Executive Officer. The Agreements provide that Mr. LeStrange will receive
an annual base salary of $900,000 and an annual incentive bonus not to exceed
150% of his salary. The Original Agreement also provided for a $2,500,000
signing bonus. The amount of the signing bonus was determined after taking into
account Mr. LeStrange's options and shares of his former employer, Aon, which he
forfeited upon joining the Company. In addition, we are required to provide
medical and dental coverage for Mr. LeStrange and his eligible dependents, a
suitable pension plan under Bermuda law, as well as participation in any other
employee benefit plan made generally available to our executives. The Agreements
also entitle Mr. LeStrange to travel in a private aircraft or receive
reimbursement for first class air accommodations in connection with required
business travel and participate in an air travel club. Mr. LeStrange is entitled
to receive reimbursement for reasonable relocation expenses, other reasonable
expenses incurred during the course of his employment, a housing allowance of up
to $200,000 per annum plus the reasonable cost of maintenance of the house, a
tax gross-up for any United States income taxes he incurs by virtue of the
housing allowance or private aircraft travel, and reimbursement for memberships
in a country club.

       As a condition of employment, Mr. LeStrange was required under the
Original Agreement to purchase 100,000 ordinary shares for a total price of
$2,000,000. Such shares are subject to restrictions on transfer or other
disposition. Mr. LeStrange will forfeit these shares in the event that prior to
December 14, 2006, he is terminated for serious misconduct, voluntarily
terminates his employment or does not agree to enter into a renewal employment
agreement. In addition, on an agreed date prior to December 14, 2003, we are
required to offer Mr. LeStrange the opportunity to purchase 50,000 ordinary
shares for an aggregate purchase price of $1,000,000.

                                        82
<PAGE>

       Mr. LeStrange is also entitled to participate in the Company's stock
option plan. Under the terms of the Original Agreement, Mr. LeStrange has been
granted nonqualified stock options to purchase 1,094,092 ordinary shares of the
Company at a price of $20 per share. Mr. LeStrange may exercise these options in
their entirety on December 14, 2006. If, at the end of the Current Agreement or
any subsequent employment agreement, Mr. LeStrange is not offered further
employment, his options will be treated as having become vested with respect to
20% of the ordinary shares covered thereby on December 14, 2001, and with
respect to an additional 20% on each anniversary thereof preceding his
termination of employment. Such vested options will remain exercisable for 90
days following such termination. If, prior to December 14, 2006, Mr. LeStrange
is offered but does not agree to a new employment agreement, all of his options
will terminate. If, on or after December 14, 2006, Mr. LeStrange is offered but
does not agree to a new employment agreement, he will be entitled to exercise
his options in their entirety for 90 days following his termination of
employment.

       If Mr. LeStrange's employment ceases as a result of his death or
disability, the Current Agreement automatically terminates, and Mr. LeStrange
(or in the case of Mr. LeStrange's death, his heirs, executors and
administrators) is entitled to: (i) any accrued base salary; (ii) the
continuation of any health, medical and pension benefits in accordance with
their terms; (iii) payment of base salary in accordance with our executive
payroll policy through December 14, 2006; and (iv) full vesting of his stock
options and the right to exercise them through December 14, 2007.

       If we terminate the Current Agreement as a result of serious misconduct,
all of our obligations cease, and Mr. LeStrange will be entitled to receive
accrued salary and other ancillary benefits. If we terminate the Current
Agreement as a result of repeated misconduct, Mr. LeStrange is entitled to
receive accrued salary, $450,000 during the period commencing on Mr. LeStrange's
termination of employment and ending six months thereafter, and other ancillary
benefits. In addition, Mr. LeStrange's options will be treated as having become
vested with respect to 20% of the ordinary shares covered thereby on December
14, 2001, and with respect to an additional 20% on each anniversary thereof
preceding his termination of employment. Such vested options will remain
exercisable for 90 days following such termination.

       Finally, if Mr. LeStrange voluntarily terminates his employment, he is
entitled to accrued base salary, the continuation of any health, medical and
pension benefits in accordance with the terms of the applicable plans and
programs, and his options will terminate.

       Mr. LeStrange is also subject to non-competition provisions during the
term of the agreement, a one-year post-employment covenant not to solicit
employees or customers, and ongoing confidentiality and inventions requirements.

       Mr. LeStrange is entitled to be indemnified from any claim, loss, damage
or expense arising from the performance of his duties as an officer or director
to the extent permitted by law and Endurance Holdings' bye-laws.

STOCK OPTIONS

       The following table summarizes Mr. LeStrange's options to purchase
ordinary shares as of December 31, 2001:

  Option Grants in Last Fiscal Year

<Table>
<Caption>
                                             PERCENTAGE OF
                        NUMBER OF ORDINARY       TOTAL                                      GRANT DATE
                        SHARES UNDERLYING       OPTIONS       EXERCISE                       PRESENT
                             OPTIONS          GRANTED(1)     BASE PRICE   EXPIRATION DATE     VALUE
                        ------------------   -------------   ----------   ---------------   ----------
<S>                     <C>                  <C>             <C>          <C>               <C>
Kenneth J.
  LeStrange...........      1,094,092             41%          $20.00     August 7, 2012      $5.59
</Table>

---------------

(1) Represents the total number of options the Company contractually committed
    to grant as of December 31, 2001.

                                        83
<PAGE>

  2001 Aggregated Option Exercises and Year-end Option Values

<Table>
<Caption>
                                                              NUMBER OF SHARES UNDERLYING
                                                                UNEXERCISED OPTIONS AT
                                                                   DECEMBER 31, 2001
                                                             -----------------------------
                                                             EXERCISABLE     UNEXERCISABLE
                                                             -----------     -------------
<S>                                                          <C>             <C>
Kenneth J. LeStrange.......................................     None           1,094,092(1)
</Table>

---------------

(1) Represents the total number of options the Company contractually committed
    to grant as of December 31, 2001.

       2002 Stock Option Plan.  On August 7, 2002 our board of directors
adopted, subject to approval by our shareholders, the Endurance Specialty
Holdings Ltd. 2002 Stock Option Plan (the "2002 Option Plan"). Our employees and
officers, as well as employees and officers of our subsidiaries, in each case,
who are selected by the Compensation Committee of our board of directors or its
designee, are eligible to participate in the 2002 Option Plan. The purpose of
the 2002 Option Plan is to provide a means through which we and our
subsidiaries, as applicable, may attract able persons to enter and remain in our
and our subsidiaries' employ, and to provide a means whereby those employees
upon whom the responsibilities of our successful administration and management
rest, and whose present and potential contributions to our welfare are of
importance, can acquire and maintain share ownership, thereby strengthening
their commitment to our welfare and that of our subsidiaries, and promoting an
identity of interests between our shareholders and those employees. The 2002
Option Plan authorizes the issuance of options covering up to 3,646,975 shares,
subject to adjustment in certain circumstances. As of September 30, 2002,
options to purchase 3,287,290 shares had been granted.

       Options may be either "Incentive Stock Options" as that term is defined
in Section 422 of the Code, or options which do not qualify as Incentive Stock
Options ("Non-Qualified Stock Options"). An Incentive Stock Option must expire
within ten years from the date it is granted (five years in the case of options
granted to holders of more than 10% of our shares). Incentive Stock Options are
not exercisable until one year after the date of grant. The exercise price of an
Incentive Stock Option must be at least equal to the fair market value of the
shares on the date such Incentive Stock Option is granted (110% of fair market
value in the case of options granted to holders of more than 10% of our shares)
and must be paid in cash or in shares valued at their then fair market value. In
addition, we may grant Non-Qualified Stock options, the exercise price of which
may be below, equal to or above the fair market value of our shares on the date
of grant.

       In addition to Incentive Stock Options and Non-Qualified Stock Options,
we may grant reload options in the event a participant, while in our employ,
exercises an option by the delivery of shares which the participant has held for
a period of at least six months, or in the event a participant's tax withholding
obligations upon the exercise of options are satisfied by the participant's
delivery of shares or by our withholding shares. Such reload options entitle the
participant to purchase that number of shares equal to the number of shares so
delivered to, or withheld by, us, provided that the total number of shares
covered by reload options may not exceed the number of shares subject to the
original option. The exercise price per share subject to reload options will be
the fair market value of a share on the date such reload option is granted, and
the duration or reload options will be no longer than ten years from the date of
grant of the underlying option to which the grant of the reload option relates.
Other specific terms and conditions applicable to reload options will be
determined by the Compensation Committee.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

       Our Compensation Committee designs and approves all compensation
policies. Our policies are designed with the goal of maximizing shareholder
value over the long term. The committee believes that this goal is best realized
by utilizing a compensation program which serves to attract and retain superior
executive talent by providing management with performance-based incentives and
closely aligning the financial interests of management with those of our
shareholders. The level of compensation is based on numerous factors, including
achievement of underwriting results and financial objectives established by our
Compensation Committee and our board of directors. Incentive awards provide for
the granting to our executive officers, and certain other principal employees,
of various types of incentive awards, some of which may be stock based.

                                        84
<PAGE>

                             PRINCIPAL SHAREHOLDERS

       The following table sets forth information as of September 30, 2002
regarding beneficial ownership of our common shares and the applicable voting
rights attached to such share ownership in accordance with our bye-laws by:

           - each person known by us to beneficially own on an economic basis 5%
             or more of our outstanding common shares;

           - each of our directors;

           - each of our executive officers; and

           - all of our directors and executive officers as a group.

<Table>
<Caption>
                                                  BENEFICIAL OWNERSHIP OF    BENEFICIAL OWNERSHIP OF
                                                  PRINCIPAL SHAREHOLDERS     PRINCIPAL SHAREHOLDERS
                                                 PRIOR TO THE OFFERING(1)     AFTER THE OFFERING(1)
                                                 -------------------------   -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(2)            NUMBER      PERCENTAGE     NUMBER     PERCENTAGE
---------------------------------------          -----------   -----------   ---------   -----------
<S>                                              <C>           <C>           <C>         <C>
Aon Corporation(3).............................  15,459,200       26.2%
Capital Z Financial Services Fund II,
  L.P.(4)......................................   6,299,600       11.0%
Perry Partners, L.P.(5)........................   5,000,000        9.1%
Thomas H. Lee entities(6)......................  10,547,045       19.0%
Texas Pacific Group(7).........................  10,547,045       19.0%
Kenneth J. LeStrange(8)........................     100,000       *
Thomas Bell(9).................................      58,352       *
Steve W. Carlsen(9)............................      87,527       *
David S. Cash(9)...............................      58,352       *
James R. Kroner(9).............................      72,939       *
William H. Bolinder............................          --
David L. Cole(10)..............................          --
Jonathan J. Coslet(11).........................          --
Anthony J. DiNovi(12)..........................          --
Bryon Ehrhart(13)..............................      50,000       *
Charles Froland(14)............................          --
Richard Perry(15)..............................          --
Robert A. Spass(16)............................          --
Richard J. Sterne(17)..........................          --
All directors and executive officers as a
  group........................................     427,170       *
</Table>

------------

 *   Less than 1%.

(1)  Includes the outstanding ordinary shares and assumes full conversion into
     ordinary shares of all outstanding class A shares and the exercise of all
     warrants outstanding for ordinary shares and class A shares as well as the
     exercise of all options vested at September 30, 2002.

     The proposed amended and restated bye-laws of Endurance Holdings generally
     provide that any shareholder owning, directly, indirectly or by
     attribution, more than 9.5% of our ordinary shares will have the voting
     rights attached to such ordinary shares reduced so that it may not exercise
     more than 9.5% of the total voting rights. See "Description of Share
     Capital -- Voting Adjustments"

(2)  Unless otherwise stated, the address for each beneficial owner is c/o
     Endurance Specialty Holdings Ltd., Crown House, 4 Par-La-Ville Road,
     Hamilton HM 08, Bermuda.

                                        85
<PAGE>

(3)  Includes 2,170,000 ordinary shares and warrants exercisable for 785,035
     ordinary shares held by Combined Insurance Company of America; 75,000
     ordinary shares and warrants exercisable for 27,065 ordinary shares held by
     Combined Life Assurance Company of Europe Limited; 115,000 ordinary shares
     and warrants exercisable for 41,495 ordinary shares held by London General
     Insurance Company; 150,000 ordinary shares and warrants exercisable for
     54,125 ordinary shares held by Resource Life Insurance Company; 100,000
     ordinary shares and warrants exercisable for 36,085 ordinary shares held by
     Sterling Life Insurance Company, Inc.; and 8,750,000 ordinary shares and
     warrants exercisable for 3,157,395 ordinary shares held by Virginia Surety
     Company, Inc. The address of the beneficial owner is 1000 North Milwaukee
     Avenue, Sixth Floor, Glenview, Illinois 60025.

(4)  Includes 4,223,500 ordinary shares and warrants exercisable for 2,049,600
     ordinary shares held by Capital Z Financial Services Fund II, LP and 26,500
     ordinary shares held by Capital Z Financial Services Private Fund II, LP.
     The address of the beneficial owner is 54 Thompson Street, New York, New
     York 10012.

(5)  Includes 176,700 ordinary shares held by Perry European Fund, L.P.; 823,300
     ordinary shares held by Perry European Fund, Ltd.; 2,824,000 ordinary
     shares held by Perry Partners International, Inc.; and 1,176,000 ordinary
     shares held by Perry Partners, L.P. The address of the beneficial owner is
     599 Lexington Avenue, 36th Floor, New York, New York 10022.

(6)  Includes 7,708,020 ordinary shares and warrants exercisable for 421,665
     class A shares held by Thomas H. Lee (Alternative) Fund V, L.P.; 1,999,920
     ordinary shares and warrants exercisable for 109,405 class A shares held by
     Thomas H. Lee (Alternative) Parallel Fund V, L.P.; 106,210 ordinary shares
     and warrants exercisable for 5,810 class A shares held by Thomas H. Lee
     (Alternative) Cayman Fund V, L.P. 15,340 ordinary shares and warrants
     exercisable for 840 class A shares held by State Street Bank and Trust
     Company as Trustee under the 1997 Thomas H. Lee Nominee Trust; 12,350
     ordinary shares and warrants exercisable for 675 class A shares held by
     Thomas H. Lee Investors Limited Partnership; 51,750 ordinary shares and
     warrants exercisable for 2,825 class A shares held by Putnam Investments
     Employees' Securities Co. I LLC; 46,205 ordinary shares and warrants
     exercisable for 2,530 class A shares held by Putnam Investments Employees'
     Securities II LLC; and 60,205 ordinary shares and warrants exercisable for
     3,295 class A shares held by Putnam Investments Holdings, LLC. The address
     for the Thomas H. Lee (Alternative) Fund V, L.P., Thomas H. Lee
     (Alternative) Parallel Fund V, L.P. and Thomas H. Lee (Alternative) Cayman
     Fund V, L.P. is c/o Walkers, Walker House, Mary Street, George Town, Grand
     Cayman, Cayman Islands. The address for the 1997 Thomas H. Lee Nominee
     Trust and Thomas H. Lee Investors Limited Partnership is 75 State Street,
     Boston, Massachusetts 02109. The address for Putnam Investments Employees'
     Securities Company I, LLC, Putnam Investments Employees' Securities Company
     II, LLC and Putnam Investments Holdings LLC is One Post Office Square,
     Boston, Massachusetts 02109.

(7)  Includes 157,210 class A shares and warrants exercisable for 11,465 class A
     shares held by TPG Dutch Parallel III, C.V.; 781,605 class A shares and
     warrants exercisable for 42,420 class A shares held by TPG Endurance
     Investments (Cayman), L.P.; and 9,061,185 ordinary shares and warrants
     exercisable for 493,160 ordinary shares held by TPG Endurance Partners
     (Cayman), L.P. The address of the beneficial owner is 301 Commerce Street,
     Suite 3300, Fort Worth, Texas 76102.

(8)  The Company has granted Mr. LeStrange options to purchase 1,094,092
     ordinary shares. As of September 30, 2002, none of these options had
     vested. See "Compensation of Directors and Executive Officers -- Employment
     Agreements."

(9)  Represents vested options exercisable for ordinary shares as of September
     30, 2002. No additional options granted to these individuals vest within
     the 60 day period following September 30, 2002.

(10) Mr. Cole, one of our Directors, is the Chairman, President and Chief
     Executive Officer of Combined Specialty Insurance Co., an affiliate of Aon.
     Mr. Cole disclaims beneficial ownership of any of the common shares owned
     by Aon.

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<PAGE>

(11) Mr. Coslet, one of our directors, is a senior partner of TPG. Mr. Coslet
     disclaims beneficial ownership of any of the common shares owned by TPG.

(12) Mr. DiNovi, one of our directors, is a managing director of Thomas H. Lee
     Advisors, LLC, the general partner of THL. Mr. DiNovi disclaims beneficial
     ownership of any of the common shares owned by THL.

(13) Mr. Ehrhart, one of our directors, is the Executive Vice President of Aon
     Re Inc. and President of Aon Re Services, Inc., each of which are
     affiliates of Aon. Mr. Ehrhart disclaims beneficial ownership of any of the
     common shares owned by Aon. Mr. Ehrhart has been granted an option by Aon
     to purchase 50,000 ordinary shares owned by Aon.

(14) Includes 851,940 common shares held by First Plaza Group Trust and
     1,148,060 common shares held by GM Capital Partners I, L.P. Mr. Froland,
     one of our directors, is a Managing Director of GM Asset Management. Mr.
     Froland disclaims beneficial ownership of any of the common shares owned by
     the GM entities.

(15) Mr. Perry, one of our directors, is the President and Chief Executive
     Officer of Perry Capital. Mr. Perry disclaims beneficial ownership of any
     of the common shares owned by Perry.

(16) Mr. Spass, one of our directors, is a partner at Capital Z Financial
     Services, an affiliate of Capital Z. Mr. Spass disclaims beneficial
     ownership of any of the common shares owned by Capital Z.

(17) Includes 2,500,000 common shares held by LY-Endurance, LLC. Mr. Sterne, one
     of our directors, is a managing director of Lightyear Capital, LLC, an
     affiliate of LY-Endurance. Mr. Sterne disclaims beneficial ownership of any
     of the common shares owned by LY-Endurance.

                                        87
<PAGE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS AND RELATIONSHIPS WITH INITIAL INVESTORS

       Aon and Zurich participated in our initial private placement, investing
$200 million and $100 million, respectively. In addition, Aon was granted
warrants to purchase 4,099,200 ordinary shares and Zurich was granted warrants
to purchase 2,049,600 ordinary shares. On September 27, 2002, we repurchased
Zurich's interests in the Company. See "Description of Share
Capital -- Warrants."

       The Company is party to agreements with various affiliates of Aon and
Zurich as follows:

       Underwriting Activities.  In the normal course of business, the Company
       enters into reinsurance contracts with various subsidiaries of Aon and
       Zurich. Such contracts resulted in gross premiums written of $65.0
       million, losses and loss expenses of $7.5 million and acquisition
       expenses of $3.2 million for the nine months ended September 30, 2002.
       During the nine months ended September 30, 2002, affiliates of Aon
       produced 42.6% of the Company's gross premiums written. Gross premiums
       written excludes $88.6 million of gross premiums acquired from LaSalle.

       Analytical Services.  The Company utilized certain analytical services
       and licensed technology from an affiliate of Aon during the period ended
       September 30, 2002. Fees incurred of $109,000 pursuant to the agreement
       were included in general and administrative expenses.

       Financial Accounting and Administrative Services.  An affiliate of Aon
       performed certain financial accounting and administrative services for
       the Company during the period ended September 30, 2002. Fees incurred of
       $289,000 pursuant to the agreement were included in general and
       administrative expenses.

       Investment Management Services.  The Company utilized the services of a
       wholly-owned subsidiary of Zurich to perform portions of its short-term
       investment and cash management functions and provide investment
       accounting services. Under the terms of the investment management
       agreement, which is subject to the Company's investment guidelines and
       other restrictions, the Company pays a fee based on the value of its cash
       and investment portfolio. The Company expensed related investment
       management and accounting fees of $227,000 during the nine months ended
       September 30, 2002. The Company expensed related investment management
       and accounting fees of $22,000 during the period ended December 31, 2001.

       Office Services.  The Company rented office space and received limited
       administrative services from various Bermuda based subsidiaries of Zurich
       until April 5, 2002. Rent and office services fees for the nine months
       ended September 30, 2002 of $419,000 were paid and the expense is
       recorded in general and administrative expenses. Rent and office services
       fees of $40,000 were expensed during the period ended December 31, 2001.

TRANSACTIONS AND RELATIONSHIPS WITH UNDERWRITERS

       DLJ Growth Capital Overseas Partners, C.V. and Donaldson, Lufkin &
Jenrette Securities Corporation, affiliates of Credit Suisse First Boston
Corporation, one of the underwriters in this offering, invested $18.9 million
and $6.1 million, respectively, in our initial private placement.

       JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc., one of
the underwriters in this offering, participates and acts as the administrative
agent and/or a lender in our revolving credit facility and term loan facility.
J.P. Morgan Securities Inc. served as sole advisor, sole lead manager and sole
book manager in both facilities. Under these facilities, we have a revolving
credit line with a $108 million borrowing limit and have borrowed a three-year
term loan of $192 million.

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<PAGE>

                          DESCRIPTION OF SHARE CAPITAL

       Prior to the completion of this offering, we intend to amend and restate
the bye-laws of Endurance Holdings. Our board of directors has approved the
submission of these proposed amended and restated bye-laws to a vote of our
existing shareholders. The following summary of our proposed amended and
restated bye-laws is qualified in its entirety by the provisions of such
bye-laws, copies of which will be filed as exhibits to the registration
statement of which this prospectus is a part once they have been approved by our
existing shareholders. As of September 30, 2002, there were 55 record holders of
our ordinary shares, 2 record holders of our class A shares, 8 record holders of
warrants currently exercisable for ordinary shares and 10 record holders of
warrants currently exercisable for class A shares.

       Endurance Holdings has authorized share capital of 120,000,000 shares,
par value $1.00 per share, of which 54,061,185 ordinary shares and 938,815 class
A shares had been issued as of September 30, 2002 after giving effect to the
share premium issuance in December 2002. In this prospectus, references to
common shares refer to both the ordinary shares and the class A shares.
Immediately after completion of this offering,        ordinary shares (
ordinary shares if the underwriters exercise their over-allotment option in
full) and 938,815 class A shares will be outstanding. The following summary of
our share capital is qualified in its entirety by reference to our memorandum of
association and bye-laws, the shareholders agreement, the registration rights
agreement and the warrants, copies of which will be filed as an exhibit to the
registration statement.

         ORDINARY SHARES

       In general, subject to the adjustments regarding voting set forth in
"-- Voting Adjustments" below, holders of our ordinary shares have one vote for
each ordinary share held by them and are entitled to vote, on a non-cumulative
basis, at all meetings of shareholders. Holders of our ordinary shares are
entitled to receive dividends as may be lawfully declared from time to time by
our board of directors. Holders of our ordinary shares have no preemptive,
redemption, conversion or sinking fund rights. In the event of our liquidation,
dissolution or winding-up, the holders of our ordinary shares are entitled to
share equally and ratably in our assets, if any remain after the payment of all
our debts and liabilities and the liquidation preference of any outstanding
preferred shares.

       Pursuant to our shareholders agreement, certain of our shareholders have
certain rights with respect to the nomination of directors for election by all
shareholders of Endurance Holdings. See "Shareholders Agreement."

         CLASS A SHARES

       Holders of our class A shares have the same rights as the holders of
ordinary shares, except that they have no right to vote on any matters put
before the shareholders of Endurance Holdings. The holders of class A shares may
convert their class A shares into ordinary shares at any time, provided that
certain voting percentage limits are not breached and that adverse tax
consequences to Endurance Holdings do not result from such conversion.

         VOTING ADJUSTMENTS

       In general, and except as provided below, shareholders have one vote for
each ordinary share held by them and are entitled to vote, on a non-cumulative
basis, at all meetings of shareholders. If, and so long as, the "controlled
shares" (as defined below) of any person would otherwise represent more than
9.5% of the voting power of all of the shares entitled to vote generally at a
meeting of shareholders, then the votes conferred by the shares of such person's
"control group" (as defined below) shall be reduced by whatever amount is
necessary so that after any such reduction the votes conferred by the controlled
shares of such person shall not exceed such 9.5% limitation. The reduction in
votes is generally to be applied proportionately among all shareholders who are
members of the first shareholder's "control group". "Controlled shares" in
reference to any person means all ordinary shares that a person is deemed to own
directly, indirectly (within the meaning of Section 958(a) of the Code) or, in
the case of a U.S. person
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<PAGE>

(as defined in our bye-laws), constructively (within the meaning of Section
958(b) of the Code). "Control group" means, with respect to any person, all
shares directly owned by such person and all shares directly owned by each other
shareholder any of whose shares are included in the controlled shares of such
person.

       In addition, if, and so long as, the shares held directly by any "related
group" would otherwise exceed the 9.5% limitation, then the votes conferred by
the shares held directly by members of such "related group" shall be reduced by
whatever amount is necessary so that after any such reduction the votes
conferred by the shares held directly by such related group shall not exceed the
9.5% limitation. The reduction in votes is generally to be applied
proportionately among all directly held shares of such related group. "Related
group" means a group of shareholders that are investment vehicles and are under
common control or management.

       For purposes of applying these provisions, shareholders will be entitled
to direct that our board (i) treat them (and certain affiliates) as U.S.
persons, and/or (ii) treat them (and certain related shareholders) as one person
for purposes of determining a shareholder's control group.

       The amount of any reduction of votes that occurs by operation of the
above limitations will generally be allocated proportionately among all other
shareholders of Endurance Holdings. Consequently, under these provisions certain
shareholders may have their voting rights limited to less than one vote per
share, while other shareholders may have voting rights in excess of one vote per
share.

       In addition, our board may adjust a shareholder's voting rights to the
extent that the board reasonably determines in good faith that it is necessary
to do so to avoid adverse tax consequences or materially adverse legal or
regulatory treatment to us, any subsidiary or any shareholder or its affiliates.
This adjustment may result in a shareholder having voting rights in excess of
one vote per share. Therefore, a shareholder's voting rights might increase
above 5% of the aggregate voting power of the outstanding ordinary shares,
thereby possibly resulting in the shareholder becoming a reporting person
subject to Schedule 13D or 13G filing requirements under the Exchange Act. In
addition, the reallocation of your votes could result in you becoming subject to
filing requirements under Section 16 of the Exchange Act. The bye-laws of
Endurance Holdings also provide that shareholders will be notified of their
voting interests prior to any vote to be taken by the shareholders.

       We also have the authority under our bye-laws to request information from
any shareholder for the purpose of determining whether a shareholder's voting
rights are to be reallocated pursuant to the bye-laws. If, after a reasonable
cure period, a shareholder fails to respond to our request for information or
submits incomplete or inaccurate information in response to a request by us,
Endurance Holdings, in its reasonable discretion, may reduce or eliminate the
shareholder's voting rights.

         SHAREHOLDERS AGREEMENT

       General.  We entered into a shareholders agreement with all of our
existing shareholders at the time of the exchange offer in July of 2002. Except
for specific provisions described below which survive termination under certain
conditions, the shareholders agreement will generally terminate upon the
earliest of (i) this initial public offering, (ii) consent among us and holders
of 75% of the aggregate number of our shares outstanding held by parties to the
agreement at the time or (iii) our liquidation or dissolution.

       The shareholders agreement, together with the bye-laws, define the rights
and obligations of existing shareholders party to the shareholders agreement
with respect to our corporate governance, the transfer of our ordinary shares
and related matters. The shareholders agreement may be amended only with our
consent and the consent of the holders of at least 66 2/3% of the ordinary
shares held by shareholders and warrant holders who are parties to that
agreement. Amendments require the prior written consent of each shareholder or
warrant holder who is a party to the shareholders agreement if such amendment or
waiver would (i) rescind, alter, amend or waive any of the provisions governing
the requirements for amending or waiving the agreement, (ii) provide a benefit
to the consenting shareholders and/or warrant holders not shared on a
proportionate basis with all shareholders and/or warrant holders at

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<PAGE>

that time or (iii) operate to the detriment of the shareholders and/or warrant
holders that do not consent relative to the shareholders and/or warrant holders
that do consent.

       Composition of Board and Board Committees.  Pursuant to the shareholders
agreement, affiliates of Aon, THL, TPG, GM, Lightyear Capital, Capital Z, Perry
Capital and Metro Center Investments Pte Ltd. have the right to designate,
through the Nominating Committee of the board of directors, nine of the twelve
members of our board of directors. In addition, the shareholders agreement
requires the establishment of a nominating committee of our board of directors
comprised of three directors, with each of Aon, THL and TPG having the right to
designate one member of this committee. The shareholders agreement also sets the
size of the underwriting committee of the board of directors at three, with THL
and TPG having the right to designate two of these members. Finally, the
shareholders agreement also requires the establishment of an audit committee and
a compensation committee, each of which must have at least one member designated
by each of Aon, Capital Z, THL and TPG, provided that Aon and Capital Z cannot
designate a majority of the members of these committees. See
"Management -- Board and Board Committee Designations."

         REGISTRATION RIGHTS AGREEMENT

       We entered into a registration rights agreement in conjunction with our
exchange offer in July of 2002 with all of our existing shareholders at the
time. Pursuant to the terms of this agreement, after the consummation of this
offering, shareholders that collectively hold at least 10% of the securities
eligible for registration rights outstanding as of the date of the agreement
will have the rights to require us, subject to specified exceptions, on five
occasions, to register under the Securities Act any common shares owned by such
shareholders. Under certain circumstances, after the consummation of this
offering, if we propose to register the sale of any of our securities under the
Securities Act, shareholders who are a party to the registration rights
agreement and so request will have the right to participate proportionately in
such sale.

       If the managing underwriters advise us that, in their opinion, the number
of securities requested to be included in an offering pursuant to the
shareholders agreement exceeds the number which can be sold without adversely
affecting the marketability of the offering and within a price range acceptable
to the holders of a majority of the securities requesting registration, we will
first include those securities requested to be included, that in the opinion of
the underwriters, can be sold without adversely affecting the marketability of
the offering, pro rata among the holders thereof on the basis of the amount of
securities owned by each holder. Under certain circumstances, we may postpone
the filing or the effectiveness of a registration statement if we reasonably
believe that, in the absence of such postponement, we would be required under
state or federal securities laws to disclose any material non-public
information.

       The registration rights agreement also provides, that as required by the
managing underwriters, neither we, nor the existing shareholders party to that
agreement, will offer, sell, or otherwise dispose of any ordinary shares or
other securities convertible or exchangeable for ordinary shares for 180 days
after the effective date of the registration statement for this offering or, in
the case of all other offerings, 90 days following the date of the corresponding
underwriting agreement.

         BYE-LAWS

       In addition to the provisions of the bye-laws described above under
"-- Voting Adjustments," the following summarizes some of the other important
provisions of the proposed amended and restated bye-laws of Endurance Holdings.

       Our Board of Directors and Corporate Action.  Endurance Holdings'
bye-laws provide that the board of directors shall consist of not less than two
nor more than 20 directors, as determined by the shareholders at an annual
general meeting of the shareholders, divided into four approximately equal
classes. Pursuant to the shareholders agreement, our board of directors consists
of 12 directors. The board of directors has three Class I directors whose
initial term expires at our next annual meeting, three Class II directors whose
initial term expires at the annual shareholders' meeting in the year following
our next annual shareholders' meeting, three Class III directors whose initial
term expires at the annual
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<PAGE>

shareholder meeting in the second year following our next annual meeting and
three Class IV directors whose initial term expires at the annual shareholders'
meeting in the third year following our next annual shareholders' meeting. After
the initial terms of these directors, the term of each class of directors
elected shall be four years. Directors may only be removed prior to the
expiration of such director's term at a special meeting of shareholders called
for that purpose. The appointment or removal of a director requires the simple
majority of votes cast, in person or by proxy, at the general meeting at which
the proposal is put forth.

       A special meeting of shareholders may be convened by Endurance Holdings'
board of directors or the President of Endurance Holdings. Pursuant to the
Companies Act a special meeting of shareholders may also be convened at the
request of shareholders holding at the date of the deposit of the request not
less than 10% of the paid up voting share capital of Endurance Holdings.

       Generally, the affirmative vote of a majority of the directors present at
any meeting at which a quorum is present shall be required to authorize
corporate action. Corporate action may also be taken by a unanimous written
resolution of the board of directors without a meeting. Unless otherwise fixed
at a different number, a majority of the directors in office shall constitute a
quorum, but in no event may a quorum consist of less than two directors.

       Shareholder Action.  At any general meeting, four or more persons present
in person or by proxy and representing more than 50% of our shareholders'
aggregate voting power shall constitute a quorum for the transaction of
business. In general, any action that we may take by resolution in a general
meeting may, without a meeting, be taken by a resolution in writing signed by
all of the shareholders entitled to attend such meeting and vote on the
resolution. In general, any question proposed for the consideration of the
shareholders at any general meeting shall be decided by the affirmative votes of
a majority of the votes cast in accordance with the bye-laws.

       Acquisition of Ordinary Shares by Endurance Holdings.  Endurance
Holdings' bye-laws provide that we have the option, but not the obligation, to
require a shareholder to sell its ordinary shares for their fair market value to
us, to other shareholders or to third parties if we determine, based on the
written advice of legal counsel, that failure to exercise our option would
result in adverse tax consequences to us or certain U.S. Persons as to which the
shares held by such shareholder constitute controlled shares. Our right to
require a shareholder to sell its ordinary shares to us will be limited to the
purchase of a number of ordinary shares that will permit avoidance of those
adverse tax consequences.

       Transfer Restrictions.  Endurance Holdings' directors may decline to
register the transfer of any ordinary shares if the transfer is in favor of five
persons or more jointly, the shares have not been fully paid or the transferor
fails to comply with all applicable laws and regulations governing the transfer.
No shareholder may transfer any non-publicly traded ordinary shares unless the
transfer is approved by a majority of either the board of directors or the
appropriately delegated committee, and the transferring shareholder complies
with various other requirements, including providing the directors 30 days'
written notice, obtaining an agreement by the proposed transferee to be bound by
the terms of the shareholders agreement, obtaining a letter certifying that the
transfer may be effected without registration and that the transferee will
adhere to all applicable laws and rules. Unless such a transfer will result in
adverse tax consequences to either Endurance Holdings, its subsidiaries or
certain of its shareholders, the directors may not unreasonably withhold their
consent to any transfer.

       Tax Liability Resulting from Acts of Shareholders.  Our bye-laws provide
certain protections against adverse tax consequences to us resulting from laws
that apply to our shareholders. If a shareholder's death or non-payment of any
tax or duty payable by the shareholder, or any other act or thing involving the
shareholder, causes any adverse tax consequences to us, (i) the shareholder or
its executor or administrator is required to indemnify us against any tax
liability that we incur as a result, (ii) we will have a lien on any dividends
or any other distributions payable to the shareholder by us to the extent of the
tax liability, and (iii) if any amounts not covered by our lien on dividends and
distributions are owed to us by the shareholder as a result of our tax
liability, we have the right to refuse to register any transfer of the
shareholder's shares.
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<PAGE>

       Certain Subsidiaries.  Endurance Holdings' bye-laws require that the
boards of directors of Endurance Holdings' non-U.S. subsidiaries be comprised of
the persons who have been elected as director designees by the shareholders of
Endurance Holdings. A majority of the director designees for each of Endurance
Holdings' non-U.S. subsidiaries must be directors of Endurance Holdings.

       Endurance Holdings' shareholders will elect separate slates of director
designees for each of our non-U.S. subsidiaries. Under Endurance Holdings'
bye-laws, Endurance Holdings must vote shares it holds in its non-U.S.
subsidiaries to elect the slates of director designees as the directors of these
non-U.S. subsidiaries. Accordingly, the only persons eligible to be elected as
directors of Endurance Holdings' non-U.S. subsidiaries are those persons who
first have been elected by the shareholders of Endurance Holdings (including new
shareholders who buy ordinary shares being offered by this prospectus) as
director designees in accordance with our bye-laws (including after giving
effect to any limitation on voting rights). The bye-law provisions addressing
the removal of directors of Endurance Holdings' non-U.S. subsidiaries also
obligate Endurance Holdings to vote shares it holds in these non-U.S.
subsidiaries in favor of removal of any director designees in accordance with a
resolution duly adopted by the shareholders of Endurance Holdings.

         WARRANTS

       The following table shows the number of warrants outstanding to purchase
ordinary shares and class A shares at September 30, 2002:

<Table>
<Caption>
                           WARRANTS TO      PERCENTAGE OF
                             ACQUIRE           COMMON
WARRANT HOLDER           COMMON SHARES(1)     SHARES(2)     EXERCISE PRICE      EXPIRATION
--------------           ----------------   -------------   --------------   -----------------
<S>                      <C>                <C>             <C>              <C>
Aon(3).................     4,099,200             6.6%          $20.00       December 14, 2011
Capital Z(4)...........     2,049,600             3.3%           20.00       December 14, 2011
TPG(5).................       547,045             0.9%           20.00       December 14, 2001
Thomas H. Lee
  entities(6)..........       547,045             0.9%           20.00       December 14, 2001
                            ---------           -----
     Total.............     7,242,890            11.7%
</Table>

------------

(1) Includes warrants exercisable for ordinary shares and warrants exercisable
    for class A shares as of September 30, 2002.

(2) Percentages are based upon 55,000,000 common shares outstanding as of
    September 30, 2002 plus 7,242,890 common shares issuable upon exercise of
    outstanding warrants, not including the exercise of options to purchase
    ordinary shares. If all outstanding warrants were immediately exercised for
    cash, Aon, TPG, Thomas H. Lee entities and Capital Z would own, on an
    economic basis, 24.8%, 16.9%, 16.9% and 10.1% of common shares outstanding,
    respectively (     %,      %,      % and      % of common shares,
    respectively, following the offering, assuming the over-allotment option is
    not exercised and the warrant holders make no additional purchases).

(3) Includes warrants exercisable for 783,035 ordinary shares held by Combined
    Insurance Company of America; warrants exercisable for 27,065 ordinary
    shares held by Combined Life Assurance Company of Europe Limited; warrants
    exercisable for 41,495 ordinary shares held by London General Insurance
    Company Limited; warrants exercisable for 54,125 ordinary shares held by
    Resource Life Insurance Company; warrants exercisable for 36,085 ordinary
    shares held by Sterling Life Insurance Company; and warrants exercisable for
    3,157,395 ordinary shares held by Virginia Surety Company, Inc.

(4) Includes warrants exercisable for 2,049,600 ordinary shares held by Capital
    Z Investments, LLC.

(5) Includes warrants exercisable for 493,160 ordinary shares held by TPG
    Endurance Partners (Cayman), L.P. Includes warrants exercisable for 11,465
    class A shares held by TPG Dutch Parallel III, C.V.; and warrants
    exercisable for 42,420 class A shares held by TPG Endurance Investments
    (Cayman), L.P.

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<PAGE>

(6) Includes warrants exercisable for 421,665 class A shares held by Thomas H.
    Lee (Alternative) Fund V, L.P.; warrants exercisable for 109,405 class A
    shares held by Thomas H. Lee (Alternative) Parallel Fund V, L.P.; warrants
    exercisable for 5,810 class A shares held by Thomas H. Lee (Alternative)
    Cayman Fund V, L.P.; warrants exercisable for 2,530 class A shares held by
    State Street Bank and Trust Company as Trustee under the 1997 Thomas H. Lee
    Nominee Trust; warrants exercisable for 675 class A shares held by Thomas H.
    Lee Investors Limited Partnership; and warrants exercisable for 2,825 class
    A shares held by Putnam Investments Employees' Securities Company I LLC.

       The holders of warrants for ordinary shares may exercise their warrants
in whole or in part for ordinary shares or, under certain circumstances, for
class A shares. The holders of class A warrants may exercise their warrants in
whole or in part for class A shares only. Warrant holders also have the option
to exercise their warrants on a cashless basis, in which case the warrant holder
will receive a reduced number of ordinary shares or class A shares, as
applicable, which have an aggregate fair value equal to the total exercise price
of the warrant shares being purchased upon conversion. The exercise price and
number of shares issuable upon exercise of each warrant will be subject to
adjustment in respect of events that may have a dilutive effect on its
underlying share ownership interest. The registration rights agreement contains
registration rights for warrant holders similar to those applicable to holders
of our common shares. See "-- Registration Rights Agreement."

       ANTI-TAKEOVER PROVISIONS

       Endurance Holdings' bye-laws contain provisions that may entrench
directors and make it more difficult for shareholders to replace directors even
if the shareholders consider it beneficial to do so. In addition, these
provisions could delay or prevent a change of control that a shareholder might
consider favorable. For example, these provisions may prevent a shareholder from
receiving the benefit from any premium over the market price of our ordinary
shares offered by a bidder in a potential takeover. Even in the absence of an
attempt to effect a change in management or a takeover attempt, these provisions
may adversely affect the prevailing market price of our ordinary shares if they
are viewed as discouraging changes in management and takeover attempts in the
future.

    For example, our bye-laws contain the following provisions that could have
such an effect:

    -     election of our directors is staggered, meaning that the members of
          only one of four classes of our directors are elected each year;

    -     the total voting power of any shareholder owning more than 9.5% of our
          ordinary shares will be reduced to 9.5% of the total voting power of
          our ordinary shares;

    -     our directors may, in their discretion, decline to record the transfer
          of any ordinary shares on our share register, unless the instrument of
          transfer is in favor of less than five persons jointly or if they are
          not satisfied that all required regulation approvals for such transfer
          have been obtained; and

    -     we have the option, but not the obligation, to require a shareholder
          to sell the shareholder's ordinary shares to us, to another
          shareholder or to third parties at fair market value if we determine,
          based on the advice of legal counsel, that failure to exercise such
          option would result in adverse tax consequences to us or certain U.S.
          Persons as to which the shares held by such shareholder constitute
          controlled shares.

       INSURANCE REGULATIONS CONCERNING CHANGE OF CONTROL

       Many insurance regulatory laws intended primarily for the protection of
policyholders contain provisions that require advance approval by insurance
authorities of any proposed acquisition of an insurance company that is
domiciled or, in some cases, having such substantial business that it is deemed
to be commercially domiciled in that jurisdiction. See "Regulatory
Matters -- U.K. Regulation -- Change of Control," and "Regulatory
Matters -- U.S. Regulation -- Change of Control."
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       DIFFERENCES IN CORPORATE LAW

       You should be aware that the Companies Act, which applies to us, differs
in certain material respects from laws generally applicable to United States
corporations and their shareholders. In order to highlight these differences,
set forth below is a summary of certain significant provisions of the Companies
Act (including modifications adopted pursuant to our bye-laws) applicable to us
which differ in certain respects from provisions of the State of Delaware
corporate law. Because the following statements are summaries, they do not
address all aspects of Bermuda law that may be relevant to us and our
shareholders.

       Duties of Directors.  Under Bermuda law, at common law, members of a
board of directors owe a fiduciary due to the company to act in good faith in
their dealings with or on behalf of the company and exercise their powers and
fulfill the duties of their office honestly. This duty has the following
essential elements:

       -     a duty to act in good faith in the best interests of the company;

       -     a duty not to make a personal profit from opportunities that arise
             from the office of director;

       -     a duty to avoid conflicts of interest; and

       -     a duty to exercise powers for the purpose for which such powers
             were intended. The Companies Act imposes a duty on directors and
             officers of a Bermuda company:

       -     to act honestly and in good faith with a view to the best interests
             of the company; and

       -     to exercise the care, diligence and skill that a reasonably prudent
             person would exercise in comparable circumstances.

       In addition, the Companies Act imposes various duties on officers of a
company with respect to certain matters of management and administration of the
company.

       The Companies Act provides that in any proceedings for negligence,
default, breach of duty or breach of trust against any officer, if it appears to
a court that such officer is or may be liable in respect of the negligence,
default, breach of duty or breach of trust, but that he has acted honestly and
reasonably, and that, having regard to all the circumstances of the case,
including those connected with his appointment, he ought fairly to be excused
for the negligence, default, breach of duty or breach of trust, that court may
relieve him, either wholly or partly, from any liability on such terms as the
court may think fit. This provision has been interpreted to apply only to
actions brought by or on behalf of the company against such officers. Endurance
Holdings' bye-laws, however, provide that shareholders waive all claims or
rights of action that they might have, individually or in the right of Endurance
Holdings, against any director or officer of Endurance Holdings for any act or
failure to act in the performance of such director's or officer's duties, except
this waiver does not extend to any claims or rights of action that would render
the waiver void pursuant to the Companies Act, that arise out of fraud or
dishonesty on the part of such director or officer or with respect to the
recovery of any gain, personal profit or advantage to which the officer or
director is not legally entitled.

       Under Delaware law, the business and affairs of a corporation are managed
by or under the direction of its board of directors. In exercising their powers,
directors are charged with a fiduciary duty of care to protect the interests of
the corporation and a fiduciary duty of loyalty to act in the best interests of
its stockholders.

       The duty of care requires that directors act in an informed and
deliberative manner and inform themselves, prior to making a business decision,
of all material information reasonably available to them. The duty of care also
requires that directors exercise care in overseeing and investigating the
conduct of corporate employees. The duty of loyalty may be summarized as the
duty to act in good faith, not out of self-interest, and in a manner which the
director reasonably believes to be in the best interests of the stockholders.

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       A party challenging the propriety of a decision of a board of directors
bears the burden of rebutting the applicability of the presumptions afforded to
directors by the "business judgment rule." If the presumption is not rebutted,
the business judgment rule attaches to protect the directors and their
decisions, and their business judgments will not be second guessed. Where,
however, the presumption is rebutted, the directors bear the burden of
demonstrating the entire fairness of the relevant transaction. Notwithstanding
the foregoing, Delaware courts subject directors' conduct to enhanced scrutiny
in respect of defensive actions taken in response to a threat to corporate
control and approval of a transaction resulting in a sale of control of the
corporation.

       Interested Directors.  Under Bermuda law and Endurance Holdings'
bye-laws, any transaction entered into by us in which a director has an interest
is not voidable by us nor can such director be accountable to us for any benefit
realized pursuant to such transaction provided the nature of the interest is
disclosed at the first opportunity at a meeting of directors, or in writing to
the directors. In addition, Endurance Holdings' bye-laws allow a director to be
taken into account in determining whether a quorum is present and to vote on a
transaction in which he has an interest, but the resolution will fail unless it
is approved by a majority of the disinterested directors voting on the
resolution. Under Delaware law, such transaction would not be voidable if (1)
the material facts as to such interested director's relationship or interests
are disclosed or are known to the board of directors and the board in good faith
authorizes the transaction by the affirmative vote of a majority of the
disinterested directors, (2) such material facts are disclosed or are known to
the stockholders entitled to vote on such transaction and the transaction is
specifically approved in good faith by vote of the majority of shares entitled
to vote thereon or (3) the transaction is fair as to the corporation as of the
time it is authorized, approved or ratified. Under Delaware law, such interested
director could be held liable for a transaction in which such director derived
an improper personal benefit.

       Voting Rights and Quorum Requirements.  Under Bermuda law, the voting
rights of our shareholders are regulated by our bye-laws and, in certain
circumstances, the Companies Act. Under our bye-laws, at any general meeting,
four or more persons present in person or by proxy and representing more than
50% of our shareholders' aggregate voting power shall constitute a quorum for
the transaction of business. In general, any action that we may take by
resolution in a general meeting may, without a meeting, be taken by a resolution
in writing signed by all of the shareholders entitled to attend such meeting and
vote on the resolution. In general, any question proposed for the consideration
of the shareholders at any general meeting shall be decided by the affirmative
votes of a majority of the votes cast in accordance with the bye-laws.

       Any individual who is a shareholder of Endurance Holdings and who is
present at a meeting may vote in person, as may any corporate shareholder which
is present by a duly authorized representative. Our bye-laws also permit votes
by proxy, provided the instrument appointing the proxy, together with evidence
of its due execution, is satisfactory to our board of directors.

       In order to avoid adverse tax consequences to us and our shareholders,
our bye-laws provide generally that any shareholder owning, directly, indirectly
or, in the case of any U.S. Person by attribution, more than 9.5% of our
ordinary shares will have the voting rights attached to such ordinary shares
reduced so that it may not exercise more than 9.5% of the total voting rights.
The reduction in votes is generally to be applied proportionately among all
shareholders who are members of the first shareholder's "control group". A
"control group" means, with respect to any person, all shares directly owned by
such person and all shares directly owned by each other shareholder any of whose
shares are included in the controlled shares of such person. "Controlled shares"
means all ordinary shares that a person is deemed to own directly, indirectly
(within the meaning of Section 958(a) of the Code), or, in the case of a U.S.
person, constructively (within the meaning of Section 958(b) of the Code). A
similar limitation is to be applied to shares held directly by members of a
"related group." A "related group" means a group of shareholders that are
investment vehicles and are under common control and management. Any reduction
in votes is generally allocated proportionately among members of the
shareholder's "control group" or "related group", as the case may be. The amount
of any reduction of votes that occurs by operation of the above limitations will
generally be reallocated proportionately among all other shareholders of
Endurance
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Holdings who were not members of these groups so long as such reallocation does
not cause any person to become a 9.5% shareholder.

       Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could
have the effect of reducing the votes of certain shareholders who would not
otherwise be subject to the 9.5% limitation by virtue of their direct share
ownership. The bye-laws of Endurance Holdings also provide that shareholders
will be notified of their voting interests prior to any vote to be taken by the
shareholders. See "-- Voting Adjustments."

       Under Delaware law, unless otherwise provided in the company's
certificate of incorporation, each stockholder is entitled to one vote for each
share of stock held by the stockholder. Delaware law provides that a majority of
the shares entitled to vote, present in person or represented by proxy,
constitutes a quorum at a meeting of stockholders. In matters other than the
election of directors, with the exception of special voting requirements related
to extraordinary transactions, the affirmative vote of a majority of shares
present in person or represented by proxy at the meeting and entitled to vote is
required for stockholder action, and the affirmative vote of a plurality of
shares is required for the election of directors.

       Dividends.  Bermuda law does not permit payment of dividends or
distributions of contributed surplus by a company if there are reasonable
grounds for believing that the company, after the payment is made, would be
unable to pay its liabilities as they become due, or the realizable value of the
company's assets would be less, as a result of the payment, than the aggregate
of its liabilities and its issued share capital and share premium accounts. The
excess of the consideration paid on issue of shares over the aggregate par value
of such shares must (except in certain limited circumstances) be credited to a
share premium account. Share premium may be distributed in certain limited
circumstances, for example to pay up for unissued shares which may be
distributed to shareholders in proportion to their holdings, but is otherwise
subject to limitation. In addition, Endurance Bermuda's ability to pay dividends
is subject to Bermuda insurance laws and regulatory constraints. See "Regulatory
Matters -- Bermuda -- Minimum Solvency Margin and Restrictions on Dividends and
Distributions."

       Under Delaware law, subject to any restrictions contained in the
company's certificate of incorporation, a company may pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and for the preceding fiscal year. Delaware law
also provides that dividends may not be paid out of net profits if, after the
payment of the dividend, capital is less than the capital represented by the
outstanding stock of all classes having a preference upon the distribution of
assets.

       Amalgamations, Mergers and Similar Arrangements.  We may acquire the
business of another Bermuda exempted company or a company incorporated outside
Bermuda when conducting such business would benefit the Company and would be
conducive to attaining the Company's objectives contained within its memorandum
of association. We may, with the approval of a majority of votes cast at a
general meeting of our shareholders at which a quorum is present, amalgamate
with another Bermuda company or with a body incorporated outside Bermuda. In the
case of an amalgamation, a shareholder may apply to a Bermuda court for a proper
valuation of such shareholder's shares if such shareholder is not satisfied that
fair value has been paid for such shares. The court ordinarily would not
disapprove the transaction on that ground absent evidence of fraud or bad faith.

       Under Delaware law, with certain exceptions, a merger, consolidation or
sale of all or substantially all the assets of a corporation must be approved by
the board of directors and a majority of the outstanding shares entitled to vote
thereon. Under Delaware law, a stockholder of a corporation participating in
certain major corporate transactions may, under certain circumstances, be
entitled to appraisal rights pursuant to which such stockholder may receive cash
in the amount of the fair value of the shares held by such stockholder (as
determined by a court) in lieu of the consideration such stockholder would
otherwise receive in the transaction.

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       Takeovers.  Bermuda law provides that where an offer is made for shares
of a company and, within four months of the offer, the holders of not less than
90% of the shares which are the subject of the offer accept, the offeror may by
notice require the non-tendering shareholders to transfer their shares on the
terms of the offer. Dissenting shareholders may apply to the court within one
month of the notice objecting to the transfer. The burden is on the dissenting
shareholders to show that the court should exercise its discretion to enjoin the
required transfer, which the court will be unlikely to do unless there is
evidence of fraud or bad faith or collusion between the offeror and the holders
of the shares who have accepted the offer as a means of unfairly forcing out
minority shareholders. Delaware law provides that a parent corporation, by
resolution of its board of directors and without any stockholder vote, may merge
with any subsidiary of which it owns at least 90% of each class of capital
stock. Upon any such merger, dissenting stockholders of the subsidiary would
have appraisal rights.

       Shareholders' Suits.  The rights of shareholders under Bermuda law are
not as extensive as the rights of shareholders under legislation or judicial
precedent in many United States jurisdictions. Class actions and derivative
actions are generally not available to shareholders under the laws of Bermuda.
However, the Bermuda courts ordinarily would be expected to follow English case
law precedent, which would permit a shareholder to commence an action in our
name to remedy a wrong done to us where the act complained of is alleged to be
beyond our corporate power or is illegal or would result in the violation of our
memorandum of association or bye-laws. Furthermore, consideration would be given
by the court to acts that are alleged to constitute a fraud against the minority
shareholders or where an act requires the approval of a greater percentage of
our shareholders than actually approved it. The winning party in such an action
generally would be able to recover a portion of attorneys' fees incurred in
connection with such action. Endurance Holdings' bye-laws provide that
shareholders waive all claims or rights of action that they might have,
individually or in the right of Endurance Holdings, against any director or
officer for any action or failure to act in the performance of such director's
or officer's duties, except such waiver shall not extend to claims or rights of
action that would render the waiver void pursuant to the Companies Act, that
arise out of any fraud or dishonesty of such director or officer or with respect
to the recovery of any gain, personal profit or advantage to which the officer
or director is not legally entitled. Class actions and derivative actions
generally are available to stockholders under Delaware law for, among other
things, breach of fiduciary duty, corporate waste and actions not taken in
accordance with applicable law. In such actions, the court generally has
discretion to permit the winning party to recover attorneys' fees incurred in
connection with such action.

       Indemnification of Directors and Officers.  Under Bermuda law and
Endurance Holdings' bye-laws, Endurance Holdings may indemnify its directors,
officers or any other person appointed to a committee of the board of directors
and any resident representative (and their respective heirs, executors or
administrators) against all actions, costs, charges, liabilities, loss, damage
or expense to the full extent permitted by law, incurred or suffered by such
person by reason of any act done, conceived in or omitted in the conduct of our
business or in the discharge of his/her duties; provided that such
indemnification shall not extend to any matter involving any fraud or dishonesty
on the part of such director, officer or other person. Under Delaware law, a
corporation may indemnify a director or officer of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in defense of an action, suit or
proceeding by reason of such position if (i) such director or officer acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and (ii) with respect to any criminal action
or proceeding, such director or officer had no reasonable cause to believe his
conduct was unlawful.

       Inspection of Corporate Records.  Members of the general public have the
right to inspect our public documents available at the office of the Registrar
of Companies in Bermuda and our registered office in Bermuda, which will include
our memorandum of association (including its objects and powers) and any
alteration to our memorandum of association and documents relating to any
increase or reduction of authorized capital. Our shareholders have the
additional right to inspect our bye-laws, minutes of general meetings and
financial statements, which must be presented to the annual general meeting of
shareholders. The register of our shareholders is also open to inspection by
shareholders without charge,

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and to members of the public for a fee. We are required to maintain our share
register in Bermuda but may establish a branch register outside of Bermuda. We
are required to keep at our registered office a register of its directors and
officers which is open for inspection by members of the public without charge.
Bermuda law does not, however, provide a general right for shareholders to
inspect or obtain copies of any other corporate records. Delaware law permits
any shareholder to inspect or obtain copies of a corporation's shareholder list
and its other books and records for any purpose reasonably related to such
person's interest as a shareholder.

       Shareholder Proposals.  Under Bermuda law, the Companies Act provides
that shareholders may, as set forth below and at their own expense (unless a
company otherwise resolves), require a company to give notice of any resolution
that the shareholders can properly propose at the next annual general meeting
and/or to circulate a statement prepared by the requesting shareholders in
respect of any matter referred to in a proposed resolution or any business to be
conducted at a general meeting. The number of shareholders necessary for such a
requisition is either that number of shareholders representing at least 5% of
the total voting rights of all shareholders having a right to vote at the
meeting to which the requisition relates or not less than 100 shareholders.
Delaware law does not include a provision restricting the manner in which
nominations for directors may be made by shareholders or the manner in which
business may be brought before a meeting.

       Calling of Special Shareholders Meetings.  Under Endurance Holdings'
bye-laws, a special general meeting may be called by the board of directors or
by the President of Endurance Holdings. Under Bermuda law a special meeting may
also be called by the shareholders when requisitioned by the holders of at least
10% of the paid up voting share capital of Endurance Holdings as provided by the
Companies Act. Delaware law permits the board of directors or any person who is
authorized under a corporation's certificate of incorporation or bye-laws to
call a special meeting of stockholders.

       Staggered Board of Directors.  Bermuda law does not contain statutory
provisions specifically mandating staggered board of directors arrangements for
a Bermuda exempted company. Such provisions, however, may validly be provided
for in the bye-laws governing the affairs of such a company. Delaware law
permits corporations to have a staggered board of directors.

       Amendment of Memorandum of Association.  Bermuda law provides that the
memorandum of association of a company may be amended by a resolution passed at
a general meeting of shareholders of which due notice has been given. An
amendment to the memorandum of association that alters the company's business
objects may require approval of the Bermuda Minister of Finance, who may grant
or withhold approval at his or her discretion.

       Under Bermuda law, the holders of an aggregate of not less than 20% in
par value of a company's issued share capital have the right to apply to the
Bermuda courts for an annulment of any amendment of the memorandum of
association adopted by shareholders at any general meeting, other than an
amendment which alters or reduces a company's share capital as provided in the
Companies Act. Where such an application is made, the amendment becomes
effective only to the extent that it is confirmed by the Bermuda court. An
application for an annulment of an amendment of the memorandum of association
must be made within 21 days after the date on which the resolution altering the
company's memorandum of association is passed and may be made on behalf of
persons entitled to make the application by one or more of their designees as
such holders may appoint in writing for such purpose. No application may be made
by the shareholders voting in favor of the amendment.

       Under Delaware law, amendment of the certificate of incorporation, which
is the equivalent of a memorandum of association, of a company must be made by a
resolution of the board of directors setting forth the amendment, declaring its
advisability, and either calling a special meeting of the shareholders entitled
to vote or directing that the amendment proposed be considered at the next
annual meeting of the shareholders. Delaware law requires that, unless a
different percentage is provided for in the certificate of incorporation, a
majority of the voting power of the corporation is required to approve the
amendment of the certificate of incorporation at the shareholders meeting. If
the amendment would alter the number of authorized shares or par value or
otherwise adversely affect the rights or preference of any class of a company's
stock, the holders of
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the outstanding shares of such affected class, regardless of whether such
holders are entitled to vote by the certificate of incorporation, should be
entitled to vote as a class upon the proposed amendment. However, the number of
authorized shares of any class may be increased or decreased, to the extent not
falling below the number of shares then outstanding, by the affirmative vote of
the holders of a majority of the stock entitled to vote, if so provided in the
company's certificate of incorporation that was authorized by the affirmative
vote of the holders of a majority of such class or classes of stock.

       Amendment of Bye-laws.  Consistent with the Companies Act, Endurance
Holdings' bye-laws provide that the bye-laws may only be rescinded, altered or
amended, upon approval by a resolution of Endurance Holdings' board of directors
and by a simple majority of votes cast by its shareholders.

       Under Delaware law, holders of a majority of the voting power of a
corporation and, if so provided in the certificate of incorporation, the
directors of the corporation, have the power to adopt, amend and repeal the
bylaws of a corporation.

LISTING

       We intend to apply to have our ordinary shares approved for listing on
the NYSE under the trading symbol "ENH."

TRANSFER AGENT AND REGISTRAR

       The transfer agent and registrar for the ordinary shares will be
               .

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                              CERTAIN INDEBTEDNESS

       On August 13, 2002, Endurance Holdings entered into a $108 million
revolving credit facility with a syndicate of lenders led by The Bank of New
York, and a $192 million term loan facility with a syndicate led by JPMorgan
Chase Bank. Under the revolving credit facility, we may request up to an
additional $42 million of revolving commitments. Proceeds of the revolving
credit facility and the term loan facility may be used by us or our subsidiaries
for general corporate purposes and working capital requirements. The revolving
credit facility also provides for the issuance of standby letters of credit. The
amounts due under each facility are unsecured obligations. Endurance Holdings
guaranteed the obligations of any of our subsidiaries under the revolving credit
facility.

       The revolving credit facility requires that the outstanding principal of
revolving loans be repaid in full or converted to term loans on August 11, 2003.
The interest rate for revolving loans under the revolving credit facility is the
prime rate or LIBOR plus an applicable margin that ranges from 0.41% to 0.85%,
based upon the LEVERAGE RATIO of the Company on a consolidated basis and other
conditions provided in the credit agreement. Term loans under the revolving
credit facility must be repaid in full on February 11, 2004. The interest rate
for term loans under the revolving credit facility is an applicable margin over
the prime rate that ranges from 0.00% to 0.10% or LIBOR plus an applicable
margin that ranges from 0.66% to 1.10%, in each case based upon the Company's
leverage ratio on a consolidated basis and other conditions provided in the
credit agreement. In addition, the revolving credit facility requires payment of
a facility fee ranging from 0.09% to 0.15% of the revolving credit facility
commitments or the outstanding amount under term loans and letters of credit, as
applicable, depending upon the leverage ratio on a consolidated basis and other
conditions provided in the credit agreement. We must also pay a utilization fee
equal to 0.125% of the total amount outstanding on the revolving credit facility
or term loans, as applicable, at any time the aggregate amount of any such loans
exceeds $40 million. We are also required to pay a fee with respect to the daily
stated amount of letters of credit issued under the revolving credit facility
calculated in the same manner as the interest rate for revolving LIBOR loans. As
of September 30, 2002, we had letters of credit outstanding of $2.8 million.

       As of September 30, 2002, we had $100 million of principal outstanding
under our term loan facility. On November 21, 2002, we borrowed the remaining
$92 million available under the term loan facility. This term loan facility
requires repayment of outstanding principal in three installments. The first
installment equals 20% of all outstanding principal and is due one year after
initial borrowing under the term loan facility or September 30, 2003, whichever
occurs first. The second installment equals 40% of all outstanding principal and
is due two years after the initial borrowing or September 30, 2004, whichever
occurs first. The final installment equals all remaining outstanding principal
and is due three years after initial borrowing or September 30, 2005, whichever
occurs first. The term loan facility bears interest at either the prime rate
plus an applicable margin that ranges from 0.000% to 0.375% or LIBOR plus an
applicable margin that ranges from 0.875% to 1.375%, in each case based upon the
Company's leverage ratio on a consolidated basis and other conditions provided
in the credit agreement. Currently, the $100 million outstanding under the term
loan bears interest at the rate of 2.81% per annum; the remaining $92 million
outstanding under the term loan bears interest at 2.5% per annum. We must apply
all of the cash proceeds, net of the underwriting discount and our estimated
offering expenses, of any public debt we or any of our subsidiaries issue and
50% of the cash proceeds of any equity securities we or any of our subsidiaries
may issue to the outstanding principal of term loans outstanding under the term
loan facility. Therefore, based on an initial offering price of $          (the
midpoint of the range stated on the cover page of the prospectus), we plan to
apply approximately $          million, based on net proceeds from this offering
of approximately $          million after deducting the estimated underwriting
discount and on estimated offering expenses (assuming no exercise of the
underwriter's over-allotment option) or $          million, based on net
proceeds from this offering of $          million (assuming the full exercise of
the underwriter's over-allotment option) to the repayment of amounts outstanding
under the term loan facility.

       The revolving credit facility and the term loan facility require
compliance with certain customary restrictive covenants. These include certain
financial covenants, such as a leverage ratio (no greater than
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0.35:1.00 at any time), a consolidated tangible net worth covenant (no less than
$750 million at any time), and a consolidated fixed charge coverage ratio (no
less than 2.0:1.0 as of the end of any fiscal quarter). In addition, each of the
Company's regulated insurance subsidiaries that has a claims paying rating from
A.M. Best must maintain a rating of at least B++ at all times. The terms of
these facilities restrict the declaration or payment of dividends if the Company
is already in default or the payment or declaration would cause a default under
the terms of the loan facilities. These facilities also include other covenants
restricting such activities as:

       -     changes in business;
       -     consolidation or merger with another entity;
       -     disposal of assets;
       -     incurrence of additional indebtedness;
       -     incurrence of liens on our property;
       -     issuance of preferred or preference equity securities;
       -     dissolution or liquidation;
       -     transactions with affiliates; and
       -     changes of control.

       Endurance Holdings has entered into an interest rate swap agreement
whereby it has exchanged floating rate payments for fixed rate payments (2.62%
per annum) on a declining notional amount corresponding to the outstanding
principal amount under the term loan facility.

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                        SHARES ELIGIBLE FOR FUTURE SALE

       We can make no prediction as to the effect, if any, that market sales of
our ordinary shares or the availability of ordinary shares for sale will have on
the market price prevailing from time to time. The sale of substantial amounts
of ordinary shares in the public market could adversely affect the prevailing
market price of the ordinary shares and our ability to raise equity capital in
the future.

         SALE OF RESTRICTED SHARES

       As of September 30, 2002, we had an aggregate of 54,061,185 outstanding
ordinary shares and 938,815 outstanding class A shares. We expect to issue an
additional        ordinary shares to be sold in this offering, or
ordinary shares if the U.S. underwriters' over-allotment option is exercised in
full. All of the ordinary shares to be sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
except that any shares purchased by our affiliates, as that term is defined in
Rule 144 under the Securities Act, may generally only be sold in compliance with
the limitations of Rule 144 described below. As defined in Rule 144, an
affiliate of an issuer is a person that directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with
the issuer.

         LOCK-UP AGREEMENTS

       Endurance Holdings' directors, executive officers, all of its
warrantholders and certain of its current shareholders have agreed not to
directly or indirectly, dispose of or hedge any of their ordinary shares or
securities convertible into or exchangeable for ordinary shares, whether owned
currently or acquired later, for a period of 180 days from the date of this
prospectus without the prior written consent of Endurance Holdings,    and    ,
subject to certain exceptions. Immediately following this offering, shareholders
subject to lock-up agreements will own        ordinary shares and
warrants exercisable for        ordinary shares, representing approximately
     % of the then outstanding ordinary shares, or approximately      % if the
underwriters' over-allotment option is exercised in full.

       Endurance Holdings may, however, grant options to purchase ordinary
shares under its existing stock option plan and issue ordinary shares upon the
conversion of outstanding class A shares, the exercise of warrants for ordinary
shares or class A shares, or the exercise of outstanding options under the
existing stock option plan as long as the holder of such ordinary shares agrees
in writing to be bound by the obligations and restrictions of the lock-up
agreement.

         RULE 144

       In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of our ordinary shares for at least one year,
including a person who is an affiliate, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

       -     1% of the number of shares of ordinary shares then outstanding; or

       -     the average weekly trading volume of the ordinary shares on the
             NYSE during the four calendar weeks preceding the filing of a
             notice on Form 144 with respect to a sale, subject to restrictions
             specified in Rule 144.

Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about us.

         RULE 144(K)

       Under Rule 144(k), a person who has not been one of our affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell those
shares without regard to the volume, manner-of-sale or other limitations
contained in Rule 144.

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         STOCK OPTIONS

       The Company had granted options to purchase a total of 438,640 ordinary
shares that were fully vested as of September 30, 2002.

       We intend to file one or more registration statements on Form S-8 under
the Securities Act to register ordinary shares issued or reserved for issuance
under our stock option plan. The first such registration statement is expected
to be filed soon after the date of this prospectus and will automatically become
effective upon filing. Accordingly, shares registered under such registration
statement will be available for sale in the open market, unless such shares are
subject to vesting restrictions with us or the lock-up restrictions described
above.

         SHAREHOLDERS AGREEMENT

       We entered into a shareholders agreement with all of our existing
shareholders at the time of the exchange offer in July of 2002. Except for
specific provisions described below which survive termination under certain
conditions, the shareholders agreement will generally terminate upon the
earliest of (i) this initial public offering, (ii) consent among us and
shareholders and warrant holders of 75% of the aggregate number of our shares
outstanding, on a fully diluted basis, held by parties to the agreement at the
time or (iii) our liquidation or dissolution.

       The shareholders agreement, together with the bye-laws, define the rights
and obligations of existing shareholders party to the shareholders agreement
with respect to the transfer of ordinary shares, our corporate governance and
related matters. The shareholders agreement may be amended only with our consent
and the consent of the holders of at least 66 2/3% of the common shares, on a
fully diluted basis, held by shareholders and warrant holders party to that
agreement. Amendments require the prior written consent of each holder or
warrant holder at the time if such amendment or waiver would (i) rescind, alter,
amend or waive any of the provisions governing the method of amending or waiving
the agreement, (ii) provide a benefit to the consenting shareholders and/or
warrant holders not shared on a proportionate basis with all shareholders and/or
warrant holders at that time or (iii) operate to the detriment of the
shareholders and/or warrant holders that do not consent relative to the
shareholders and/or warrant holders that do consent.

         REGISTRATION RIGHTS AGREEMENT

       We entered into a registration rights agreement in conjunction with our
exchange offer in July of 2002 with all of our existing shareholders at the
time. Pursuant to the terms of this agreement, after the consummation of this
offering, shareholders that collectively hold at least 10% of the securities
eligible for registration rights outstanding as of the date of the agreement
will have the rights to require us, subject to specified exceptions, on five
occasions, to register under the Securities Act any common shares owned by such
shareholders. Under certain circumstances, after the consummation of this
offering, if we propose to register the sale of any of our securities under the
Securities Act, shareholders who are a party to the registration rights
agreement and so request will have the right to participate proportionately in
such sale.

       If the managing underwriters advise us that, in their opinion, the number
of securities requested to be included in an offering pursuant to the
shareholders agreement exceeds the number which can be sold without adversely
affecting the marketability of the offering and within a price range acceptable
to the holders of a majority of the securities requesting registration, we will
first include those securities requested to be included, that in the opinion of
the underwriters, can be sold without adversely affecting the marketability of
the offering, pro rata among the holders thereof on the basis of the amount of
securities owned by each holder. Under certain circumstances, we may postpone
the filing or the effectiveness of a registration statement if we reasonably
believe that, in the absence of such postponement, we would be required under
state or federal securities laws to disclose any material non-public
information.

       The registration rights agreement also provides, that as required by the
managing underwriters, neither we, nor the existing shareholders party to that
agreement, will offer, sell, or otherwise dispose of any ordinary shares or
other securities convertible or exchangeable for ordinary shares for 180 days
after the effective date of the registration statement for this offering or, in
the case of all other offerings, 90 days following the date of the corresponding
underwriting agreement.

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                          MATERIAL TAX CONSIDERATIONS

       This following summary does not purport to be a comprehensive discussion
of all the tax considerations that may be relevant to a decision to purchase
ordinary shares. Prospective investors should consult their professional
advisors concerning the possible tax consequences of the subscription, purchase,
ownership, sale or redemption of ordinary shares under the laws of their
countries of citizenship, residence, ordinary residence or domicile.

         CERTAIN BERMUDA TAX CONSIDERATIONS

       The following is a summary of certain Bermuda income tax considerations
under current law and is based upon the advice of Appleby Spurling & Kempe, our
Bermuda counsel.

       Currently, there is no Bermuda income, corporation or profits tax,
withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by us or our shareholders, other than shareholders
ordinarily resident in Bermuda, if any. Currently, there is no Bermuda
withholding or other tax on principal interest or dividends paid to holders of
the ordinary shares, other than holders ordinarily resident in Bermuda, if any.
There can be no assurance that we or our shareholders will not be subject to any
such tax in the future.

       Endurance Bermuda has received written assurance dated December 7, 2001
and Endurance Holdings has received written assurance dated July 18, 2002 from
the Bermuda Minister of Finance under the Exempted Undertakings Tax Protection
Act 1966 of Bermuda, as amended, that if there is enacted in Bermuda any
legislation imposing tax computed on profits or income, or computed on any
capital asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of that tax would not be applicable to
Endurance Bermuda or Endurance Holdings or to any of their respective
operations, shares, debentures or obligations until March 28, 2016; provided,
that the assurance is subject to the condition that it will not be construed to
prevent the application of such tax to people ordinarily resident in Bermuda, or
to prevent the application of any taxes payable by Endurance Bermuda or
Endurance Holdings in respect of real property or leasehold interests in Bermuda
held by them. There can be no assurance that we will not be subject to any such
tax after March 28, 2016.

         CERTAIN UNITED KINGDOM TAX CONSIDERATIONS

       Endurance U.K. is a company incorporated in the United Kingdom and is,
therefore, resident in the United Kingdom for United Kingdom corporation tax
purposes and will be subject to United Kingdom corporation tax on its worldwide
profits (including revenue profits and capital gains). The current rate of
United Kingdom corporation tax is generally 30% on profits of whatever
description. Currently, no United Kingdom withholding tax applies to dividends
paid by Endurance U.K.

         CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

       The following discussion is a summary of certain U.S. federal income tax
considerations relating to Endurance Holdings, Endurance Bermuda, Endurance U.K.
and Endurance U.S. and the ownership of our ordinary shares by investors who
acquire such shares in the offering.

       This summary is based upon the opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, U.S. counsel to Endurance Holdings ("Skadden Arps"). The advice of
such firm does not include any factual or accounting matters, determinations or
conclusions such as RPII (as defined below), amounts and computations and
amounts of components thereof or facts relating to the business or activities of
Endurance Holdings, Endurance Bermuda, Endurance U.K. and Endurance U.S. The
opinion of Skadden Arps relies upon and is premised on the accuracy of factual
statements and representations made by Endurance Holdings, Endurance Bermuda,
Endurance U.K. and Endurance U.S. concerning their respective businesses,
properties, ownership, organization, source of income and manner of operation.

       This summary is also based upon the Code, the regulations promulgated
thereunder, rulings and other administrative pronouncements issued by the IRS,
judicial decisions, the tax treaty between the
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United States and Bermuda (the "Bermuda Treaty") and the tax treaty between the
United States and the United Kingdom (the "U.K. Treaty"), all as currently in
effect, and all of which are subject to differing interpretations or to change,
possibly with retroactive effect. No assurance can be given that the IRS would
assert, or that a court would not sustain, a position contrary to any of the tax
consequences described below. No advance ruling has been or will be sought from
the IRS regarding any matter discussed in this registration statement. This
summary is for general information only, and does not purport to discuss all
aspects of U.S. federal income taxation that may be important to a particular
investor in light of such investor's investment or tax circumstances, or to
investors subject to special tax rules, such as shareholders who own directly,
or indirectly through certain foreign entities or through the constructive
ownership rules of the Code, 10% or more of the voting power or value of
Endurance Holdings, tax-exempt organizations, dealers in securities, banks,
insurance companies, persons that hold ordinary shares that are a hedge or that
are hedged against interest rate or insurance risks or that are part of a
straddle or conversion transaction, or persons whose functional currency is not
the U.S. dollar. This summary assumes that an investor will acquire our ordinary
shares in this offering and hold our ordinary shares as capital assets, which
generally means as property held for investment. Prospective investors should
consult their tax advisors concerning the consequences, in their particular
circumstances, of the ownership of ordinary shares under U.S. federal, state,
local and other tax laws.

       For U.S. federal income tax purposes and purposes of the following
discussion, a "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
the United States or under the laws of the United States or of any of its
political subdivisions, (iii) an estate the income of which is subject to U.S.
federal income tax without regard to its source or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust.

         UNITED STATES TAXATION OF ENDURANCE HOLDINGS, ENDURANCE BERMUDA,
         ENDURANCE U.K. AND ENDURANCE U.S.

       We intend to operate Endurance Holdings, Endurance Bermuda and Endurance
U.K. in such a manner that they will not be considered to be conducting business
within the United States for purposes of U.S. federal income taxation. Whether
business is being conducted in the United States is an inherently factual
determination. Because the Code, regulations and court decisions fail to
identify definitively activities that constitute being engaged in a trade or
business in the United States, there can be no assurance that the IRS will not
contend successfully that Endurance Holdings, Endurance Bermuda and/or Endurance
U.K. are or will be engaged in a trade or business in the United States. A
foreign corporation deemed to be so engaged would be subject to U.S. federal
income tax (at a current maximum rate of 35%), as well as a 30% branch profits
tax in certain circumstances, on its income which is treated as effectively
connected with the conduct of that trade or business unless the corporation is
entitled to relief under the permanent establishment provision of an applicable
tax treaty, as discussed below. Such income tax, if imposed, would be based on
effectively connected income computed in a manner generally analogous to that
applied to the income of a U.S. corporation, except that a foreign corporation
is entitled to deductions and credits only if it timely files a U.S. federal
income tax return. Endurance Holdings, Endurance Bermuda and Endurance U.K.
intend to file protective U.S. federal income tax returns on a timely basis in
order to preserve the right to claim income tax deductions and credits if it is
ever determined that they are subject to U.S. federal income tax.

       If Endurance Bermuda is entitled to the benefits under the Bermuda
Treaty, it will not be subject to U.S. federal income tax on any income found to
be effectively connected with a U.S. trade or business unless that trade or
business is conducted through a permanent establishment in the United States.
Endurance Bermuda intends to conduct its activities so as not to have a
permanent establishment in the United States, although there can be no assurance
that it will achieve this result. An insurance enterprise resident in Bermuda
generally will be entitled to the benefits of the Bermuda Treaty if (i) more
than 50% of its shares are owned beneficially, directly or indirectly, by
individual residents of the United States or

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<PAGE>

Bermuda or U.S. citizens and (ii) its income is not used in substantial part,
directly or indirectly, to make disproportionate distributions to, or to meet
certain liabilities of, persons who are neither residents of either the United
States or Bermuda nor U.S. citizens.

       Foreign insurance companies that conduct an insurance business within the
United States must maintain a certain minimum amount of effectively connected
net investment income, determined in accordance with a formula that depends, in
part, on the amount of U.S. risk insured or reinsured by such companies. If
Endurance Bermuda is considered to be engaged in the conduct of an insurance
business in the United States and it is not entitled to the benefits of the
Bermuda Treaty, either because it fails to satisfy one of the limitations on
Bermuda Treaty benefits described above or because Endurance Bermuda is
considered to have a U.S. permanent establishment, a significant portion of
Endurance Bermuda's premium and investment income could be subject to U.S.
federal income tax. In addition, while the Bermuda Treaty clearly applies to
premium income, it is not clear whether it applies to other income, such as
investment income. If Endurance Bermuda is considered to be engaged in the
conduct of an insurance business in the United States and is entitled to the
benefits of the Bermuda Treaty, but the Bermuda Treaty is interpreted so as not
to apply to investment income, a significant portion of Endurance Bermuda's
investment income could be subject to U.S. federal income tax even if Endurance
Bermuda does not maintain a permanent establishment in the United States.

       Under the current U.K. Treaty, Endurance U.K., if entitled to the
benefits of the current U.K. Treaty, will not be subject to U.S. federal income
tax on any income found to be effectively connected with a U.S. trade or
business unless that trade or business is conducted through a permanent
establishment in the United States. Endurance U.K. intends to conduct its
activities in a manner so that it does not have a permanent establishment in the
United States, although there can be no assurance that it will achieve this
result.

       The United States and the United Kingdom have signed a new income tax
treaty which is not yet in force. As with the current U.K. Treaty, under the
provisions of the new treaty, Endurance U.K., if entitled to the benefits of the
new U.K. Treaty, will not be subject to U.S. federal income tax on any income
found to be effectively connected with a U.S. trade or business unless that
trade or business is conducted through a permanent establishment in the United
States. Endurance U.K. will be entitled to the benefits of the new U.K. Treaty
if (i) during at least half of the days during the relevant taxable period, at
least 50% of Endurance U.K.'s stock is beneficially owned, directly or
indirectly, by citizens or residents of the United States and the United
Kingdom, and less than 50% of Endurance U.K.'s gross income for the relevant
taxable period is paid or accrued, directly or indirectly, to persons who are
not U.S. or U.K. residents in the form of payments that are deductible for
purposes of U.K. taxation or (ii) with respect to specific items of income,
profit or gain derived from the United States, if such income, profit or gain is
considered to be derived in connection with, or incidental to, Endurance U.K.'s
business conducted in the United Kingdom. The new U.K. Treaty will enter into
force upon the exchange of instruments of ratification and will apply with
respect to U.S. federal income taxes for taxable periods beginning on or after
the first day of January next following the date on which the new U.K. Treaty
enters into force.

       Foreign corporations not engaged in a trade or business in the United
States are nonetheless subject to U.S. withholding tax at a rate of 30% of the
gross amount of certain "fixed or determinable annual or periodical gains,
profits and income" derived from sources within the United States (such as
dividends and certain interest on investments), subject to reduction by
applicable treaties.

       The United States also imposes an excise tax on insurance and reinsurance
premiums paid to foreign insurers or reinsurers with respect to risks located in
the United States. The rate of tax applicable to premiums paid to Endurance
Bermuda is 4% for casualty insurance premiums and 1% for reinsurance premiums.
The excise tax does not apply to premiums paid to Endurance U.K., provided that
Endurance U.K. is entitled to the benefits of the current U.K. Treaty (or to the
benefits of the new U.K. Treaty once that treaty comes into force), both as
described above, and certain other requirements are met.

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<PAGE>

       Endurance U.S. is a New York State corporation and will be subject to
taxation in the United States at regular corporate rates. Dividends paid by
Endurance U.S. Holdings Corp. to Endurance Bermuda will be subject to U.S.
withholding tax at the rate of 30%.

       Personal Holding Companies.  Endurance Holdings and/or any of its
subsidiaries could be subject to U.S. tax on a portion of its income earned from
U.S. sources if any of them are considered to be a PHC for U.S. federal income
tax purposes. A corporation generally will be classified as a PHC for U.S.
federal income tax purposes in a given taxable year if (i) at any time during
the last half of such taxable year, five or fewer individuals (without regard to
their citizenship or residency) own or are deemed to own (pursuant to certain
constructive ownership rules) more than 50% of the stock of the corporation by
value and (ii) at least 60% of the corporation's gross income, as determined for
U.S. federal income tax purposes, for such taxable year consists of "PHC
income." PHC income includes, among other things, dividends, interest,
royalties, annuities and, under certain circumstances, rents. For purposes of
the 50% test, each partner of an investment partnership who is an individual
will be treated as owning his/her proportionate share of any stock owned by the
partnership. Additionally, certain entities (such as tax-exempt organizations
and pension funds) will be treated as individuals. The PHC rules contain an
exception for foreign corporations that are classified as Foreign Personal
Holding Companies (as discussed below).

       If Endurance Holdings or any subsidiary were a PHC in a given taxable
year, such corporation would be subject to PHC tax (at the highest marginal rate
on ordinary income applicable to individuals) on its "undistributed PHC income."

       Although Endurance Holdings does not believe it or any of its
subsidiaries will be a PHC immediately following the offering, there can be no
assurance that they will not become PHCs immediately following the offering or
in the future because of factors including legal and factual uncertainties
regarding the application of the constructive ownership rules, the makeup of
Endurance Holdings' shareholder base and the gross income of Endurance Holdings
or any of its subsidiaries and other circumstances that could change the
application of the PHC rules to Endurance Holdings and its subsidiaries. In
addition, if Endurance Holdings or any of its subsidiaries were to become PHCs
there can be no assurance that the amount of PHC income will be immaterial.

         UNITED STATES TAXATION OF HOLDERS OF ORDINARY SHARES

        SHAREHOLDERS WHO ARE U.S. PERSONS

       Dividends.  Distributions with respect to ordinary shares will be treated
as ordinary dividend income to the extent of Endurance Holdings' current or
accumulated earnings and profits as determined for U.S. federal income tax
purposes, subject to the discussion below relating to the potential application
of the "controlled foreign corporation," "related person insurance income,"
"passive foreign investment company" and "foreign personal holding company"
rules. Such dividends will not be eligible for the dividends-received deduction
allowed to U.S. corporations under the Code. The amount of any distribution in
excess of the current and accumulated earnings and profits of Endurance Holdings
will first be applied to reduce a holder's tax basis in the ordinary shares, and
any amount in excess of tax basis will be treated as gain from the sale or
exchange of such holder's ordinary shares.

       Classification of Endurance Holdings, Endurance U.K. or Endurance Bermuda
as a Controlled Foreign Corporation.  Each "10% U.S. Shareholder" of a foreign
corporation that is a CFC for an uninterrupted period of 30 days or more during
a taxable year, and who owns shares in the CFC directly or indirectly through
foreign entities on the last day of the CFC's taxable year must include in its
gross income for U.S. federal income tax purposes its pro rata share of the
CFC's "subpart F income," even if the subpart F income is not distributed. A
foreign corporation is considered a CFC if "10% U.S. Shareholders" own more than
50% of the total combined voting power of all classes of voting stock of such
foreign corporation, or the total value of all stock of such corporation. A 10%
U.S. Shareholder is a U.S. Person who owns at least 10% of the total combined
voting power of all classes of stock entitled to vote of the foreign
corporation. For purposes of taking into account insurance income, a CFC also
includes

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<PAGE>

a foreign corporation in which more than 25% of the total combined voting power
of all classes of stock (or more than 25% of the total value of the stock) is
owned by 10% U.S. Shareholders, on any day during the taxable year of such
corporation, if the gross amount of premiums or other consideration for the
reinsurance or the issuing of insurance contracts exceeds 75% of the gross
amount of all premiums or other consideration in respect of all risks. For
purposes of determining whether a corporation is a CFC, and therefore whether
the 50% (or 25%, in the case of insurance income) and 10% ownership tests have
been satisfied, "own" means owned directly, indirectly through foreign entities
or is considered as owned by application of certain constructive ownership
rules. Endurance Holdings believes that it is currently, and after the offering
that it could be, considered a CFC under the 25% ownership test. Endurance
Holdings believes, however, that due to the anticipated dispersion of its share
ownership among holders, its bye-law provisions that impose limitations on the
concentration of voting power of its voting shares, that authorize the board to
repurchase such shares under certain circumstances and other factors, no U.S.
Person that owns shares in Endurance Holdings directly or indirectly through
foreign entities should be subject to treatment as a 10% U.S. Shareholder of a
CFC. (These bye-law provisions are described in "Risk Factors -- Risks Related
to Ownership of Ordinary Shares" and "Description of Share Capital -- Bye-
laws."). There can be no assurance, however, that the IRS will not challenge the
effectiveness of these provisions for purposes of preventing CFC and 10% U.S.
Shareholder status and that a court will not sustain such challenge.

       RPII Companies.  The CFC rules also apply to certain insurance companies
that earn "related person insurance income." For purposes of applying the CFC
rules to foreign corporations that earn RPII, a different definition of
"controlled foreign corporation," as discussed below, applies.

       RPII is defined as any "insurance income" attributable to policies of
insurance or reinsurance with respect to which the person (directly or
indirectly) insured is a "RPII Shareholder" of the foreign corporation or a
"related person" to such RPII Shareholder. In general, and subject to certain
limitations, "insurance income" is income (including premium and investment
income) attributable to the issuing of any insurance or reinsurance contract
which would be taxed under the portions of the Code relating to insurance
companies if the income were the income of a domestic insurance company.

       For purposes of the RPII rules, "related person" means someone who
controls or is controlled by the RPII Shareholder or someone who is controlled
by the same person or persons which control the RPII Shareholder. "Control" is
measured by either more than 50% in value or more than 50% in voting power of
stock, applying constructive ownership principles. A corporation's pension plan
is ordinarily not a "related person" with respect to the corporation unless the
pension plan owns, directly or indirectly through the application of
constructive ownership rules, more than 50%, measured by vote or value, of the
stock of the corporation.

       For purposes of inclusion of Endurance U.K.'s or Endurance Bermuda's RPII
in the income of a RPII Shareholder, to the extent required under the RPII
rules, the term "RPII Shareholder" means any U.S. Person who owns, directly or
indirectly through foreign entities, any amount (rather than stock possessing
10% or more of the total combined voting power) of Endurance U.K.'s or Endurance
Bermuda's stock. Endurance U.K. or Endurance Bermuda will be treated as a CFC
for RPII purposes if such persons collectively own directly, indirectly through
foreign entities or by application of the constructive ownership rules 25% or
more of the stock of Endurance U.K. or Endurance Bermuda by vote or value.

       RPII Exceptions.  The special RPII rules do not apply if (i) direct or
indirect insureds and persons related to such insureds, whether or not U.S.
Persons, own, directly or indirectly, less than 20% of the voting power and less
than 20% of the value of the stock of Endurance U.K. or Endurance Bermuda, as
applicable (the "20% Ownership Exception"), (ii) RPII, determined on a gross
basis, is less than 20% of Endurance U.K.'s or Endurance Bermuda's gross
insurance income for the taxable year, as applicable (the "20% Gross Income
Exception"), (iii) Endurance U.K. or Endurance Bermuda elects to be taxed on its
RPII as if the RPII were effectively connected with the conduct of a U.S. trade
or business and to waive all treaty benefits with respect to RPII and meets
certain other requirements or (iv) Endurance

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U.K. or Endurance Bermuda elects to be treated as a U.S. corporation. Endurance
Bermuda and Endurance U.K. intend to operate in a manner that is intended to
ensure that each qualifies for the 20% Gross Income Exception. No assurances,
however, can be given that either of Endurance Bermuda or Endurance U.K. will be
successful in qualifying under this exception.

       If none of these exceptions applies, each U.S. Person who owns shares in
Endurance Holdings (and therefore, indirectly in Endurance U.K. and Endurance
Bermuda) on the last day of Endurance Holdings' taxable year, will be required
to include in its gross income for U.S. federal income tax purposes its share of
RPII of Endurance U.K. and/or Endurance Bermuda for the entire taxable year.
This inclusion will be determined as if such RPII were distributed
proportionately only to such U.S. Persons holding ordinary shares at that date.
The inclusion will be limited to the current-year earnings and profits of
Endurance U.K. or Endurance Bermuda, as applicable, reduced by the shareholder's
pro rata share, if any, of certain prior-year deficits in earnings and profits.

       Computation of RPII.  In order to determine how much RPII each of
Endurance U.K. and Endurance Bermuda has earned in each taxable year, Endurance
Holdings intends to obtain and rely upon information from Endurance U.K.'s and
Endurance Bermuda's insureds and reinsureds to determine whether any of the
insureds, reinsureds or other persons related to such insureds or reinsureds own
Endurance Holdings' ordinary shares and are U.S. Persons. Endurance Holdings may
not be able to determine whether any of the underlying insureds of the insurance
companies to which Endurance U.K. and Endurance Bermuda provide insurance or
reinsurance are U.S. shareholders or related persons to such shareholders.
Consequently, Endurance Holdings may not be able to determine accurately the
gross amount of RPII earned by Endurance U.K. or Endurance Bermuda in a given
taxable year. For any taxable year in which Endurance U.K.'s or Endurance
Bermuda's gross RPII is 20% or more of its gross insurance income for the year,
Endurance Holdings may also seek information from its shareholders to determine
whether direct or indirect owners of Endurance Holdings' ordinary shares at the
end of the year are U.S. Persons so that the RPII may be determined and
apportioned among such persons. To the extent Endurance Holdings is unable to
determine whether a direct or indirect owner of shares is a U.S. Person,
Endurance Holdings may assume that such owner is not a U.S. Person, thereby
increasing the per share RPII amount for all shareholders identified as U.S.
Persons.

       Apportionment of RPII to United States Shareholders.  Every RPII
Shareholder who owns shares of Endurance Holdings on the last day of any taxable
year of Endurance Holdings in which Endurance U.K.'s or Endurance Bermuda's, as
the case may be, RPII for that year equals or exceeds 20% of Endurance U.K.'s or
Endurance Bermuda's gross insurance income and to whom the 20% Ownership
Exception does not apply should expect that for such year it will be required to
include in gross income its share of Endurance U.K.'s or Endurance Bermuda's
RPII for the portion of the taxable year during which Endurance U.K. or
Endurance Bermuda, as the case may be, was a CFC under the RPII provisions, even
if such RPII Shareholder did not own the shares throughout such period. A RPII
Shareholder who owns Endurance Holdings' shares during the taxable year, but not
on the last day of such taxable year will not be required to include any RPII
into income, whether or not distributed.

       Basis Adjustments.  A RPII Shareholder's tax basis in its Endurance
Holdings ordinary shares will be increased by the amount of any RPII that the
shareholder includes in income. Any distributions made by Endurance Holdings out
of previously taxed RPII income will be exempt from further tax in the hands of
the RPII Shareholder. The RPII Shareholder's tax basis in its Endurance Holdings
ordinary shares will be reduced by the amount of any distributions that are
excluded from income under this rule.

       Information Reporting.  Under certain circumstances, U.S. Persons owning
stock in a foreign corporation are required to file IRS Form 5471 with their
U.S. federal income tax returns. Generally, information reporting on IRS Form
5471 is required with respect to (i) a person who is treated as a RPII
Shareholder, (ii) a 10% U.S. Shareholder of a foreign corporation that is a CFC
for an uninterrupted period of 30 days or more during any tax year of the
foreign corporation, and who owned the stock on the last of that year and (iii)
under certain circumstances, a U.S. Person who acquires stock in a foreign
corporation, and as a result thereof owns 10% or more of the voting power or
value of such foreign

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corporation, whether or not such foreign corporation is a CFC. For any taxable
year in which Endurance Holdings determines that gross RPII constitutes 20% or
more of Endurance U.K.'s or Endurance Bermuda's gross insurance income and the
20% Ownership Exception does not apply, Endurance Holdings intends to mail to
all U.S. Persons registered as holders of its ordinary shares IRS Form 5471,
completed with information from Endurance Holdings, for attachment to the U.S.
federal income tax returns of such shareholders. A tax-exempt organization that
is treated as a 10% U.S. Shareholder or a RPII Shareholder also must file IRS
Form 5471 in the circumstances described above. Failure to file IRS Form 5471
may result in penalties.

       Tax-Exempt Shareholders.  Tax-exempt entities will be required to treat
certain subpart F insurance income, including RPII, that is includible in income
by the tax-exempt entity as unrelated business taxable income.

       Dispositions of Ordinary Shares.  Subject to the discussion below
relating to the potential application of Code section 1248 or the "PFIC" rules,
any gain or loss realized by a U.S. Person on the sale or other disposition of
ordinary shares of Endurance Holdings will be subject to U.S. federal income
taxation as capital gain or loss in an amount equal to the difference between
the amount realized upon such sale or exchange and such person's tax basis in
the shares. If the holding period for these ordinary shares exceeds one year,
any gain will be subject to tax at a current maximum marginal tax rate of 20%
for individuals and 35% for corporations. Moreover, gain, if any, generally will
be U.S. source gain and generally will constitute "passive income" for foreign
tax credit limitation purposes.

       Code section 1248 provides that if a U.S. Person sells or exchanges stock
in a foreign corporation and such person owned directly, indirectly through
certain foreign entities or constructively 10% or more of the voting power of
the corporation at any time during the five-year period ending on the date of
disposition when the corporation was a CFC, any gain from the sale or exchange
of the shares will be treated as ordinary income to the extent of the CFC's
earnings and profits (determined under U.S. federal income tax principles)
during the period that the shareholder held the shares and while the corporation
was a CFC (with certain adjustments). A 10% U.S. Shareholder may in certain
circumstances be required to report a disposition of shares of a CFC by
attaching IRS Form 5471 to the U.S. federal income tax or information return
that it would normally file for the taxable year in which the disposition
occurs. Section 1248 also applies to the sale or exchange of shares in a foreign
corporation if the foreign corporation would be treated as a CFC for RPII
purposes and would be taxed as an insurance company if it were a domestic
corporation, regardless of whether the shareholder is a 10% U.S. Shareholder or
whether RPII constitutes 20% or more of the corporation's gross insurance income
or the 20% Ownership Exception applies. Existing U.S. Department of the Treasury
(the "U.S. Treasury") regulations do not address whether Code section 1248 would
apply if a foreign corporation is not a CFC but the foreign corporation has a
subsidiary that is a CFC or that would be taxed as an insurance company if it
were a domestic corporation. Prospective investors should consult their tax
advisors regarding the effects of these rules on a disposition of ordinary
shares.

       Uncertainty as to Application of RPII.  Regulations interpreting the RPII
provisions of the Code exist only in proposed form. It is not certain whether
these regulations will be adopted in their proposed form or what changes might
ultimately be made or whether any such changes, as well as any interpretation or
application of the RPII rules by the IRS, the courts or otherwise, might have
retroactive effect. Accordingly, the meaning of the RPII provisions and their
application to Endurance U.K. and Endurance Bermuda is uncertain. These
provisions include the grant of authority to the U.S. Treasury to prescribe
"such regulations as may be necessary to carry out the purposes of this
subsection, including . . . regulations preventing the avoidance of this
subsection through cross insurance arrangements or otherwise." In addition,
there can be no assurance that the IRS will not challenge any determinations by
Endurance U.K. or Endurance Bermuda as to the amount, if any, of RPII that
should be includible in income or that the amounts of the RPII inclusions will
not be subject to adjustment based upon subsequent IRS examination. Prospective
investors should consult their tax advisors as to the effects of these
uncertainties.

                                       111
<PAGE>

       Passive Foreign Investment Companies.  In general, a foreign corporation
will be a PFIC during a given year if (i) 75% or more of its gross income
constitutes "passive income" or (ii) 50% or more of its assets produce passive
income.

       If Endurance Holdings were characterized as a PFIC during a given year,
U.S. Persons owning ordinary shares would be subject to a penalty tax at the
time of the sale at a gain of, or receipt of an "excess distribution" with
respect to, their shares, unless such shareholders made a "qualified electing
fund election" or "mark-to-market" election. In general, a shareholder receives
an "excess distribution" if the amount of the distribution is more than 125% of
the average distribution with respect to the shares during the three preceding
taxable years (or shorter period during which the taxpayer held the shares). In
general, the penalty tax is equivalent to an interest charge on taxes that are
deemed due during the period the shareholder owned the shares, computed by
assuming that the excess distribution or gain (in the case of a sale) with
respect to the shares was taxed in equal portions at the highest applicable tax
rate on ordinary income throughout the shareholder's period of ownership. The
interest charge is equal to the applicable rate imposed on underpayments of U.S.
federal income tax for such period.

       For the above purposes, passive income generally includes interest,
dividends, annuities and other investment income. The PFIC statutory provisions,
however, contain an express exception for income derived in the active conduct
of an insurance business by a corporation which is predominantly engaged in an
insurance business.

       This exception is intended to ensure that income derived by a bona fide
insurance company is not treated as passive income, except to the extent such
income is attributable to financial reserves in excess of the reasonable needs
of the insurance business. Endurance Holdings expects for purposes of the PFIC
rules, that each of Endurance U.K. and Endurance Bermuda will be predominantly
engaged in an insurance business and is unlikely to have financial reserves in
excess of the reasonable needs of its insurance business. Accordingly, Endurance
Holdings believes that neither should be treated as a PFIC for U.S. federal
income tax purposes. The PFIC statutory provisions contain a look-through rule
stating that, for purposes of determining whether a foreign corporation is a
PFIC, such foreign corporation shall be treated as if it received "directly its
proportionate share of the income . . ." and as if it "held its proportionate
share of the assets . . ." of any other corporation in which it owns at least
25% by value of the shares. While no explicit guidance is provided by the
statutory language, under this look-through rule Endurance Holdings should be
deemed to own the assets and to have received the income of its insurance
subsidiaries directly for purposes of determining whether it qualifies for the
insurance exception. Consequently, Endurance Holdings believes that it should
not be treated as a PFIC for U.S. federal income tax purposes. This
interpretation of the look-through rule is consistent with the legislative
intention generally to exclude bona fide insurance companies from the
application of PFIC provision. There can be no assurance, however, that the IRS
will not challenge this position or that a court will not sustain such
challenge. Prospective investors should consult their tax advisor as to the
effects of the PFIC rules.

       Foreign Personal Holdings Companies.  A foreign corporation will be
classified as a FPHC for U.S. federal income tax purposes if, (i) at any time
during the taxable year, five or fewer individuals who are U.S. citizens or
residents own or are deemed to own (pursuant to certain constructive ownership
rules) more than 50% of all classes of the corporation's shares measured by
voting power or value and (ii) at least 60% of its gross income for the year is
FPHC income. For purposes of the 50% test, each partner of an investment
partnership who is an individual will be treated as owning his/her proportionate
share of any shares owned by the partnership. If Endurance Holdings or any of
its subsidiaries were to become FPHCs, shareholders of Endurance Holdings who
are U.S. Persons would be taxed on their proportionate share of the
"undistributed foreign personal holding company income" of each such FPHC as a
dividend, even if no cash dividend were actually paid. In such event, subsequent
cash distributions would first be treated as a tax-free return of any previously
taxed and undistributed amounts. Moreover, each shareholder who owns, directly
or indirectly, 10% or more of the value of a FPHC is required to file IRS Form
5471.

       Although Endurance Holdings does not believe it or any of its
subsidiaries will be a FPHC immediately following the offering, there can be no
assurance that they will not become FPHCs

                                       112
<PAGE>

immediately following the offering or in the future because of factors including
legal and factual uncertainties regarding the application of the constructive
ownership rules, the makeup of Endurance Holdings' shareholder base, the gross
income of Endurance Holdings or any of its subsidiaries and other circumstances
that could change the application of the FPHC rules to Endurance Holdings and
its subsidiaries. In addition, if Endurance Holdings or any of its subsidiaries
were to become FPHCs there can be no assurance that the amount of FPHC income
will be immaterial.

       Other.  Except as discussed below with respect to backup withholding,
dividends paid by Endurance Holdings will not be subject to U.S. withholding
tax.

  SHAREHOLDERS WHO ARE NON-U.S. PERSONS

       Subject to certain exceptions, non-U.S. Persons will be subject to U.S.
federal income tax on dividend distributions with respect to, and gain realized
from the sale or exchange of, ordinary shares only if such dividends or gains
are effectively connected with the conduct of a trade or business within the
United States. Nonresident alien individuals will not be subject to U.S. estate
tax with respect to the ordinary shares.

  ALL SHAREHOLDERS

       Information reporting to the IRS by paying agents and custodians located
in the United States will be required with respect to payments of dividends on
the ordinary shares to U.S. Persons. Thus, you may be subject to backup
withholding with respect to dividends paid by such persons unless you (i) are a
corporation, non-U.S. Person or come within certain other exempt categories and,
when required, demonstrate this fact, or (ii) provide a taxpayer identification
number, certify as to no loss of exemption from backup withholding and otherwise
comply with applicable requirements of the backup withholding rules.

       Backup withholding is not an additional tax and may be credited against
your regular U.S. federal income tax liability or otherwise you may be entitled
to a refund for any such tax withheld.

PROPOSED U.S. TAX LEGISLATION

       Legislation has been introduced in the U.S. Congress intended to
eliminate certain perceived tax advantages of companies (including insurance
companies) that have legal domiciles outside the United States but have certain
U.S. connections. While there is no currently pending legislative proposal
which, if enacted, would have a material adverse effect on us, our subsidiaries
or our shareholders, it is possible that broader-based legislative proposals
could emerge in the future that could have an adverse impact on us, our
subsidiaries or our shareholders.

                                       113
<PAGE>

                                  UNDERWRITING

       Endurance Holdings and the underwriters named below have entered into a
purchase agreement with respect to the ordinary shares being offered. Subject to
certain conditions, each underwriter has severally agreed to purchase the number
of ordinary shares indicated in the following table. Goldman, Sachs & Co. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as joint
bookrunning managers of this offering and, together with J.P. Morgan Securities
Inc., Credit Suisse First Boston Corporation and Deutsche Bank Securities Inc.,
are acting as the representatives of the underwriters.

<Table>
<Caption>
                       UNDERWRITERS                           NUMBER OF ORDINARY SHARES
                       ------------                           -------------------------
<S>                                                           <C>
Goldman, Sachs & Co. ......................................
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated..................................
J.P. Morgan Securities Inc. ...............................
Credit Suisse First Boston Corporation.....................
Deutsche Bank Securities Inc. .............................

                                                                      --------
     Total.................................................
                                                                      ========
</Table>

       The underwriters are committed to take and pay for all of the ordinary
shares being offered, if any are taken, other than the ordinary shares covered
by the option described below unless and until this option is exercised.

       The underwriters are offering the ordinary shares, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of legal
matters by their counsel, including the validity of the ordinary shares, and
other conditions contained in the purchase agreement, such as the receipt by the
underwriters of officer's certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.

       If the underwriters sell more ordinary shares than the total number set
forth in the table above, the underwriters have an option to buy up to an
additional           ordinary shares from Endurance Holdings to cover such
sales. They may exercise that option for 30 days. If any ordinary shares are
purchased pursuant to this option, the underwriters will severally purchase
ordinary shares in approximately the same proportion as set forth in the table
above.

       The following table shows the per ordinary share and the total
underwriting discount to be paid to the underwriters by Endurance Holdings. Such
amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase an additional           ordinary shares.

<Table>
<Caption>
                                                               PER       NO        FULL
                                                              SHARE   EXERCISE   EXERCISE
                                                              -----   --------   --------
<S>                                                           <C>     <C>        <C>
Public offering price.......................................  $        $          $
Underwriting discount.......................................  $        $          $
Proceeds, before expenses, to Endurance Holdings............  $        $          $
</Table>

       Ordinary shares sold by the underwriters to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus. Any ordinary shares sold by the underwriters to securities dealers
may be sold at a discount of up to $     per ordinary share from the initial
public offering price. Any such securities dealers may resell any ordinary
shares purchased from the underwriters to certain other brokers or dealers at a
discount of up to $     per ordinary share from the initial public offering
price. If all the ordinary shares are not sold at the initial public offering
price, the representatives may change the offering price and the other selling
terms.

                                       114
<PAGE>

       Endurance Holdings, its directors and officers, all its warrantholders
and certain of its shareholders prior to the offering have agreed with the
underwriters not to, directly or indirectly, dispose of or hedge any of their
ordinary shares or securities convertible into or exchangeable for ordinary
shares, whether owned currently or acquired later, during the period from the
date of this prospectus continuing through the date 180 days after the date of
this prospectus, without the prior written consent of Endurance Holdings,
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
subject to certain exceptions. The Company may grant options to purchase
ordinary shares under its existing stock option plan and issue ordinary shares
upon the conversion of outstanding class A shares, the exercise of warrants for
ordinary shares or class A shares, or the exercise of outstanding options under
the existing stock option plan as long as the holder of such ordinary shares
agrees in writing to be bound by the obligations and restrictions of the lock-up
agreement. See "Shares Eligible for Future Sale" for a discussion of certain
transfer restrictions.

       Prior to this offering, there has been no public market for the ordinary
shares. The initial public offering price was determined by negotiations between
Endurance Holdings and the representatives of the underwriters. The factors
considered in determining the initial public offering price include the future
prospects of the Company and its industry in general, premiums, earnings and
other financial and operating information in recent periods, and the
price-earnings ratios, ratios of price to book value, market prices of
securities and financial and operating information of companies engaged in
activities similar to those of Endurance Holdings.

       Endurance Holdings intends to apply to have its ordinary shares approved
for listing on the NYSE under the symbol "ENH." In connection with the listing
of the ordinary shares on the NYSE, the underwriters will undertake to sell
round lots of 100 shares or more to a minimum of 2,000 beneficial owners.

       The underwriters do not expect to sell more than 5% of the ordinary
shares in the aggregate to accounts over which they exercise discretionary
authority.

       In connection with the offering, the underwriters may purchase and sell
ordinary shares in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
ordinary shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the underwriters'
option to purchase additional ordinary shares from the Company in the offering.
The underwriters may close out any covered short position by either exercising
their option to purchase additional ordinary shares or purchasing ordinary
shares in the open market. In determining the source of ordinary shares to close
out the covered short position, the underwriters will consider, among other
things, the price of ordinary shares available for purchase in the open market
as compared to the price at which they may purchase ordinary shares through the
overallotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
ordinary shares in the open market. A naked short position is more likely to be
created if the underwriters are concerned that there may be downward pressure on
the price of the ordinary shares in the open market after pricing that could
adversely affect investors who purchase in the offering. Stabilizing
transactions consist of various bids for or purchases of ordinary shares made by
the underwriters in the open market prior to the completion of the offering.

       The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased ordinary
shares sold by or for the account of such underwriter in stabilizing or short
covering transactions.

       These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the ordinary shares. As a result, the price of the
ordinary shares may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the NYSE, in the
over-the-counter market, or otherwise. Neither Endurance Holdings nor any of the
underwriters makes any representation or
                                       115
<PAGE>

prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the ordinary shares.

       Endurance Holdings estimates that its share of the total expenses of the
offering, excluding the estimated underwriting discount, will be approximately
$          .

       Endurance Holdings has agreed to indemnify the several underwriters
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments the underwriters may be required to make with respect
to these liabilities.

       The underwriters and their affiliates have from time to time, and expect
to provide in the future, investment banking and commercial banking and
financial advisory services to Endurance Holdings in the ordinary course of
business, for which they have received and may continue to receive customary
fees and commissions. An affiliate of J.P. Morgan Securities Inc. is a lender
and/or administrative agent under our revolving credit facility and term loan
facility and will receive a portion of the amounts repaid under the term loan
facility with a portion of the net proceeds of this offering. Because more than
10% of the net proceeds of the offering may be paid to affiliates of the
underwriters, this offering is being made in accordance with Rule 2710(c)(8) of
the Conduct Rules of the National Association of Securities Dealers, Inc.

       Credit Suisse First Boston Corporation, which is a member of the National
Association of Securities Dealers, owns, either directly or indirectly, or has
affiliates that own securities of Endurance Holdings and are subject to the
venture capital restrictions of the Conduct Rules. Accordingly, this offering
will be made in compliance with the applicable provisions of Rule 2710(c)(7)(C)
of the Conduct Rules. In accordance with this rule, the initial public offering
price can be no higher than that recommended by a "qualified independent
underwriter" meeting certain standards. In accordance with this requirement,
          has assumed the responsibilities of acting as a qualified independent
underwriter and recommended a price in compliance with the requirements of Rule
2720 of the Conduct Rules.           , in its role as qualified independent
underwriter, has performed due diligence investigations and reviewed and
participated in the preparation of this prospectus and the registration
statement of which this prospectus is a part.           will receive no
compensation for acting in this capacity; however, Endurance Holdings has agreed
to indemnify           for acting as a qualified independent underwriter against
specified liabilities under the Securities Act.

                                       116
<PAGE>

                                 LEGAL MATTERS

       Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York is
representing us in connection with this offering. The validity of the issuance
of the ordinary shares under Bermuda law will be passed upon by Appleby Spurling
& Kempe, Hamilton, Bermuda. LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited
liability partnership including professional corporations, New York, New York,
will act as counsel for the underwriters. LeBoeuf, Lamb, Greene & MacRae, L.L.P.
has in the past performed, and continues to perform, legal services for us. The
underwriters are being advised as to certain legal matters with respect to
Bermuda law by Conyers Dill & Pearman, Hamilton, Bermuda.

                                    EXPERTS

       Ernst & Young, independent auditors, have audited our consolidated
financial statements at December 31, 2001, and for the period from November 30,
2001 to December 31, 2001, as set forth in their report. We have included our
financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young's report, given on their authority as
experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

       We have filed a Registration Statement on Form S-1 with the Securities
and Exchange Commission (the "Commission") regarding this offering. This
prospectus, which is part of the registration statement, does not contain all of
the information included in the registration statement, and you should refer to
the registration statement and its exhibits to read that information. References
in this prospectus to any of our contracts or other documents are not
necessarily complete, and you should refer to the exhibits attached to the
registration statement for copies of the actual contract or document. You may
read and copy the registration statement, the related exhibits and the reports,
and other information we file with the Commission at the Commission's public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., in Washington, D.C. 20549. You can also request copies of those
documents, upon payment of a duplicating fee, by writing to the Commission.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Commission also maintains an
Internet site that contains reports, proxy and information statements and other
information regarding issuers that file with the Commission. The site's internet
address is www.sec.gov. You may also request a copy of these filings, at no
cost, by writing or telephoning us as follows:

                       Endurance Specialty Holdings Ltd.
                            Office of the Secretary
                                  Crown House
                              4 Par-la-Ville Road
                            Hamilton, HM 08 Bermuda
                                  441-278-0400

       Upon completion of this offering, we will become subject to the
informational requirements of the Exchange Act and will be required to file
reports, proxy statements and other information with the Commission. You will be
able to inspect and copy these reports, proxy statements and other information
at the public reference facilities maintained by the Commission at the address
noted above. You also will be able to obtain copies of this material from the
public reference room of the Commission as described above, or inspect them
without charge at the Commission's website.

                                       117
<PAGE>

                      ENFORCEABILITY OF CIVIL LIABILITIES
         UNDER UNITED STATES FEDERAL SECURITIES LAWS AND OTHER MATTERS

       Endurance Holdings was incorporated under the laws of Bermuda. In
addition, some of its directors and officers reside outside the United States,
and all or a substantial portion of their assets and its assets are or may be
located in jurisdictions outside the United States. Therefore, it may be
difficult for investors to effect service of process within the United States
upon our non-U.S. based directors and officers or to recover against Endurance
Holdings, or such directors and officers or obtain judgments of U.S. courts,
including judgments predicated upon the civil liability provisions of the U.S.
federal securities laws against them. However, Endurance Holdings may be served
with process in the United States with respect to actions against it arising out
of or in connection with violations of U.S. federal securities laws relating to
offers and sales of ordinary shares made hereby by serving CT Corporation
System, 111 Eighth Avenue, New York, New York 10011, our U.S. agent irrevocably
appointed for that purpose.

       We have been advised by Appleby Spurling & Kempe, our Bermuda counsel,
that there is no treaty in force between the United States and Bermuda providing
for the reciprocal recognition and enforcement of judgments in civil and
commercial matters. As a result, whether a United States judgment would be
enforceable in Bermuda against us or our directors and officers depends on
whether the U.S. court that entered the judgment is recognized by the Bermuda
court as having jurisdiction over us or our directors and officers, as
determined by reference to Bermuda conflict of law rules. A judgment debt from a
U.S. court that is final and for a sum certain based on U.S. Federal securities
laws will not be enforceable in Bermuda unless the judgment debtor had submitted
to the jurisdiction of the U.S. court, and the issue of submission and
jurisdiction is a matter of Bermuda (not U.S.) law.

       In addition, and irrespective of jurisdictional issues, the Bermuda
courts will not enforce a United States Federal securities law that is either
penal or contrary to public policy. Certain remedies available under the laws of
U.S. jurisdictions, including certain remedies under U.S. federal securities
laws, would not be available under Bermuda law or enforceable in a Bermuda
court, as they would be contrary to Bermuda public policy. Further, no claim may
be brought in Bermuda against us or our directors and officers in the first
instance for violation of U.S. Federal securities laws because these laws have
no extraterritorial jurisdiction under Bermuda law and do not have force of law
in Bermuda. A Bermuda court may, however, impose civil liability on us or our
directors and officers if the facts alleged in a complaint constitute or give
rise to a cause of action under Bermuda law.

                             ---------------------

       Before this offering, we expect the BMA will have issued their permission
for the issue and free transferability of the ordinary shares being offered
pursuant to this prospectus, as long as the shares are listed on the NYSE, to
and among persons who are non-residents of Bermuda for exchange control
purposes. In addition, we will deliver to and file a copy of this prospectus
with the Registrar of Companies in Bermuda in accordance with Bermuda law. The
BMA and the Registrar of Companies accept no responsibility for the financial
soundness of any proposal or for the correctness of any of the statements made
or opinions expressed in this prospectus.

                                       118
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<S>                                                            <C>
Report of Independent Auditors..............................    F-2
Consolidated Balance Sheet at December 31, 2001.............    F-3
Consolidated Statement of Income for the period from
  November 30, 2001 to December 31, 2001....................    F-4
Consolidated Statement of Changes in Shareholders' Equity
  for the period from November 30, 2001 to December 31,
  2001......................................................    F-5
Consolidated Statement of Cash Flows for the period from
  November 30, 2001 to December 31, 2001....................    F-6
Notes to the Consolidated Financial Statements for the
  period from November 30, 2001 to December 31, 2001........    F-7
Consolidated Balance Sheets at September 30, 2002
  (unaudited) and December 31, 2001.........................   F-14
Consolidated Statement of Income and Comprehensive Income
  for the nine months ended September 30, 2002
  (unaudited)...............................................   F-15
Consolidated Statement of Changes in Shareholders' Equity
  for the nine months ended September 30, 2002
  (unaudited)...............................................   F-16
Consolidated Statement of Cash Flows for the nine months
  ended September 30, 2002 (unaudited)......................   F-17
Notes to the Consolidated Financial Statements for the nine
  months ended September 30, 2002 (unaudited)...............   F-18
</Table>

                                       F-1
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
Endurance Specialty Holdings Ltd.

     We have audited the accompanying consolidated balance sheet of Endurance
Specialty Holdings Ltd. and subsidiary as of December 31, 2001 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the period from November 30, 2001 to December 31, 2001. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Endurance Specialty Holdings Ltd. and subsidiary at December 31, 2001 and the
consolidated results of their operations and their cash flows for the period
from November 30, 2001 to December 31, 2001, in conformity with accounting
principles generally accepted in the United States.

/s/ Ernst & Young

Hamilton, Bermuda
November 27, 2002,
except Note 12(d), as to which the date is December 17, 2002.

                                       F-2
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 2001
         (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AMOUNTS)

<Table>
<S>                                                           <C>
                                 ASSETS
Cash and cash equivalents...................................  $1,162,498
Premiums receivable, net....................................         320
Deferred acquisition costs..................................          56
Other assets................................................       2,225
                                                              ----------
Total assets................................................  $1,165,099
                                                              ==========
                              LIABILITIES
Reserve for unearned premiums...............................  $      375
Accounts payable and accrued liabilities....................       2,412
                                                              ----------
Total liabilities...........................................  $    2,787
                                                              ----------
                          SHAREHOLDERS' EQUITY
Common shares
  Ordinary -- 59,061,185 issued and outstanding.............  $   59,061
  Class A -- 938,815 issued and outstanding.................         939
Additional paid-in capital..................................   1,102,000
Retained earnings...........................................         312
                                                              ----------
Total shareholders' equity..................................   1,162,312
                                                              ----------
Total liabilities and shareholders' equity..................  $1,165,099
                                                              ==========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-3
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                        CONSOLIDATED STATEMENT OF INCOME
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
  (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<S>                                                           <C>
Revenues
  Gross premiums written....................................  $       376
  Change in unearned premiums...............................         (375)
                                                              -----------
  Net premiums earned.......................................            1
  Net investment income.....................................          838
                                                              -----------
Total revenues..............................................          839
                                                              -----------
Expenses
  General and administrative expenses.......................          527
                                                              -----------
Total expenses..............................................          527
                                                              -----------
Net income..................................................  $       312
                                                              ===========
Per share data
  Weighted average number of common and common equivalent
     shares outstanding:
     Basic..................................................   39,629,630
                                                              ===========
     Diluted................................................   39,629,630
                                                              ===========
  Basic earnings per share..................................  $      0.01
                                                              ===========
  Diluted earnings per share................................  $      0.01
                                                              ===========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-4
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                    (IN THOUSANDS OF UNITED STATES DOLLARS)

<Table>
<S>                                                           <C>
Common shares
  Issuance of common shares.................................  $   60,000
                                                              ----------
Balance, end of period......................................      60,000
                                                              ----------
Additional paid-in capital
  Issuance of common shares.................................   1,140,000
  Fair value of warrants issued.............................      51,945
  Private offering costs....................................     (89,945)
                                                              ----------
Balance, end of period......................................   1,102,000
                                                              ----------
Retained earnings
  Net income................................................         312
                                                              ----------
Balance, end of period......................................         312
                                                              ----------
Total shareholders' equity..................................  $1,162,312
                                                              ==========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-5
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                    (IN THOUSANDS OF UNITED STATES DOLLARS)

<Table>
<S>                                                            <C>
Cash flows used in operating activities:
  Net income................................................   $      312
  Adjustments to reconcile net income to net cash used in
     operating activities:
     Premiums receivable, net...............................         (320)
     Deferred acquisition costs.............................          (56)
     Other assets...........................................       (2,225)
     Reserve for unearned premiums..........................          375
     Accounts payable and accrued liabilities...............          548
                                                               ----------
Net cash used in operating activities.......................       (1,366)
                                                               ----------
Cash flows provided by financing activities:
  Issuance of common shares.................................    1,200,000
  Offering costs paid.......................................      (36,136)
                                                               ----------
Net cash provided by financing activities...................    1,163,864
                                                               ----------
Net increase in cash and cash equivalents...................    1,162,498
Cash and cash equivalents, beginning of period..............           --
                                                               ----------
Cash and cash equivalents, end of period....................   $1,162,498
                                                               ==========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-6
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

1.     ORGANIZATION

       Endurance Specialty Holdings Ltd. ("Endurance Holdings") was incorporated
on June 27, 2002 under the laws of Bermuda to act as a holding company of
providers of property and casualty insurance and reinsurance on a worldwide
basis.

       Endurance Holdings' wholly-owned subsidiary, Endurance Specialty
Insurance Ltd. ("Endurance Bermuda"), was incorporated in Bermuda on November
30, 2001. On December 14, 2001, Endurance Bermuda completed a private offering
of 60 million common shares for gross cash proceeds of $1.2 billion. Under the
terms of an Exchange Offer dated July 22, 2002, the shareholders of Endurance
Bermuda transferred their interest in Endurance Bermuda to Endurance Holdings in
exchange for an identical shareholding in Endurance Holdings. This Exchange
Offer represents a business combination of companies under common control and
has been accounted for at historical cost.

       Endurance Holdings, through Endurance Bermuda, intends to write specialty
lines of insurance and reinsurance on a global basis.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The consolidated financial statements have been prepared on the basis of
accounting principles generally accepted in the United States ("U.S. GAAP") and
include the accounts of Endurance Holdings and Endurance Bermuda, which are
collectively referred to herein as the "Company". All intercompany transactions
and balances have been eliminated on consolidation. The following are the
significant accounting policies adopted by the Company:

                (a)     Premiums and related expenses.  Premiums written and
       ceded are earned on a pro-rata basis over the terms of the underlying
       contracts and policies. Premiums written and ceded include estimates
       based on information received from brokers, ceding companies and
       insureds, and any subsequent differences arising on such estimates are
       recorded in the periods in which they are determined. The portion of the
       premiums written and ceded applicable to the unexpired terms of the
       underlying contracts and policies are recorded as unearned premiums and
       prepaid reinsurance premiums, respectively.

                Acquisition expenses are costs that vary with and are directly
       related to the production of new and renewal business, and consist
       principally of commissions and brokerage expenses. These costs are
       deferred and amortized over the periods in which the related premiums are
       earned. Deferred acquisition costs are limited to their estimated
       realizable value based on the related unearned premiums. Anticipated net
       investment income is considered in determining the recoverability of
       deferred acquisition costs.

                (b)     Reserve for losses and loss expenses.  The reserve for
       losses and loss expenses includes reserves for unpaid reported losses and
       for losses incurred but not reported. The reserve for unpaid reported
       losses and loss expenses is established by management based on reports
       from brokers, ceding companies and insureds and consultations with
       independent legal counsel, and represents the estimated ultimate cost of
       events or conditions that have been reported to or specifically
       identified by the Company. The reserve for incurred but not reported
       losses and loss expenses is established by management based on estimates
       of ultimate losses and loss expenses. Inherent in the estimates of
       ultimate losses and loss expenses are expected trends in claim severity
       and frequency and other factors which may vary significantly as claims
       are settled. Accordingly,

                                       F-7
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       ultimate losses and loss expenses may differ materially from the amounts
       recorded in the consolidated financial statements. These estimates are
       reviewed regularly and, as experience develops and new information
       becomes known, the reserves are adjusted as necessary. Such adjustments,
       if any, are reflected in earnings in the period in which they become
       known.

                (c)     Investments.  Investments in fixed maturity securities
       are designated as available for sale and are carried at 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. Fair value is generally based on listed market
       prices. If listed market prices are not available, fair value is
       determined based on other relevant factors, including broker or dealer
       price quotations and valuation pricing models that take into account time
       value and volatility factors underlying the financial instruments.
       Realized gains and losses on the sale of investments are recognized in
       earnings using the specific identification method. Investments are
       reviewed for declines in value that are considered to be
       other-than-temporary, and if applicable, such adjustments are included in
       earnings as a component of realized losses. Interest on fixed maturity
       securities is recorded in net investment income when earned and adjusted
       for any amortization of premium or discount.

                (d)     Cash equivalents.  Cash equivalents include highly
       liquid short-term deposits and securities with maturities of ninety days
       or less at the time of purchase.

                (e)     Intangible assets.  Identifiable intangible assets and
       goodwill that arise from business combinations are accounted for in
       accordance with Statement of Financial Accounting Standard ("SFAS") No.
       141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
       Intangible Assets". Identifiable intangible assets are amortized in
       accordance with their useful lives. Goodwill and intangible assets with
       indefinite useful lives are not amortized but are tested for impairment
       annually or more often if impairment indicators arise.

                (f)     Offering and incorporation costs.  Offering costs
       incurred in connection with common share offerings, including investment
       banking fees, legal fees and the fair value of warrants issued to certain
       sponsors, are deducted from the proceeds of the offerings. Incorporation
       costs not related to the raising of capital are expensed as incurred and
       are included in general and administrative expenses.

                (g)     Foreign exchange.  Assets and liabilities of foreign
       operations whose functional currency is not the United States 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 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.

                (h)     Stock-based employee compensation plans.  Stock-based
       compensation is accounted for using the intrinsic value-based method in
       accordance with Accounting Principles Board Opinion No. 25, "Accounting
       for Stock issued to Employees".

                                       F-8
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

                (i)     Earnings per share.  Basic earnings per common share are
       based on the weighted average number of common shares outstanding and
       exclude any dilutive effects of options and warrants. Diluted earnings
       per common share are based on the weighted average number of common
       shares and common share equivalents outstanding, using the treasury stock
       method. Common share equivalents include options and warrants which are
       dilutive when the book value of the Company exceeds the exercise price of
       the options and warrants.

                (j)     Use of estimates.  The preparation of financial
       statements in conformity with U.S. GAAP requires management to make
       estimates and assumptions that affect the reported and disclosed amounts
       of assets and liabilities and disclosure of contingent assets and
       liabilities at the date of the financial statements and the reported
       amounts of revenues and expenses during the reporting period. Actual
       results could differ from those estimates.

3.     RESERVE FOR LOSSES AND LOSS EXPENSES

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
occurrence of a loss, the reporting of the loss to the Company, and the
settlement of the Company's liability may be several years. During this period,
additional facts and trends will be revealed. As these factors become apparent,
case reserves will be adjusted, sometimes requiring an increase in the overall
reserves of the Company, and at other times requiring a reallocation of incurred
but not reported reserves to specific case reserves. These estimates are
reviewed regularly, and such adjustments, if any, are reflected in earnings in
the period in which they become known. While management believes that it has
made a reasonable estimate of ultimate losses, the ultimate claims experience
may not be as reliably predicted as may be the case with other insurance and
reinsurance operations, and there can be no assurance that losses and loss
expenses will not exceed the total reserves.

       The Company was incorporated on November 30, 2001 and wrote only three
insurance policies during the period ended December 31, 2001. Given the absence
of reported loss events during the period, the Company did not establish a
reserve for losses and loss expenses at December 31, 2001.

       In the period to December 31, 2001, the Company did not purchase
reinsurance.

4.     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
six reportable business segments: property per risk treaty reinsurance, property
catastrophe reinsurance, casualty treaty reinsurance, property individual risk,
casualty individual risk and other specialty lines.

       -     Property Per Risk Treaty Reinsurance -- reinsures individual
             property risks of ceding companies on a treaty basis.

       -     Property Catastrophe Reinsurance -- reinsures catastrophic perils
             for ceding companies on a treaty basis.

       -     Casualty Treaty Reinsurance -- reinsures third party liability
             exposures from ceding companies on a treaty basis.

       -     Property Individual Risk -- insurance and facultative reinsurance
             of commercial properties.

                                       F-9
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       -     Casualty Individual Risk -- insurance and facultative reinsurance
             of third party liability exposures.

       -     Other Specialty Lines -- insurance and reinsurance of unique
             opportunities, including Aerospace, Self Insured Risks and a
             limited number of other reinsurance programs such as surety,
             marine, energy, personal accident, terrorism and others.

       Because the Company does not manage its assets by segment, investment
income and total assets are not allocated to the individual segments. Management
measures segment 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. During the period
ended December 31, 2001, the Company wrote three insurance policies, all of
which are included in the property individual risk business segment.

5.     COMMITMENTS AND CONTINGENCIES

       (a)     Concentrations of credit risk.  As at December 31, 2001,
substantially all of the Company's cash and cash equivalents were held by one
custodian.

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

6.     SHAREHOLDERS' EQUITY

       The Company's share capital at December 31, 2001 is comprised as follows:

       Authorized:
         120,000,000 common shares of $1.00 par value each

<Table>
<S>                                                           <C>
       Issued, outstanding and fully paid:
          59,061,185 Ordinary common shares of $1.00 par
            value each......................................  $59,061,185
          938,815 Class A common shares of $1.00 par value
            each............................................      938,815
                                                              -----------
                                                              $60,000,000
                                                              ===========
</Table>

       Class A common shares have no voting rights and are convertible on a
one-for-one basis into Ordinary common shares.

       In conjunction with the capitalization of the Company, certain
shareholders have been issued warrants. The fair value of the warrants issued on
December 14, 2001 was $51.9 million. The fair value of each warrant issued was
estimated on the date of grant using the Black-Scholes option-pricing model. The
volatility assumption used, of approximately 19%, was derived from an average of
the historical ten-year volatility of two insurance industry indices. An
allowance of 30% was provided to recognize the start-up nature of the Company's
operations and for the potential illiquidity associated with the private trading
of the Company's shares. The other assumptions used in the option pricing model
were as follows: risk-free interest rate of 4.5%, expected life of ten years and
a dividend yield of nil.

                                       F-10
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       The warrants are exercisable for Ordinary and Class A common shares as
follows:

<Table>
<S>                                                           <C>
Ordinary common shares......................................  8,691,560
Class A common shares.......................................    600,930
                                                              ---------
Total common shares.........................................  9,292,490
                                                              =========
</Table>

       These warrants, which have an exercise price of $20 per share, became
exercisable upon capitalization of the Company on December 14, 2001, and expire
on December 14, 2011.

7.     EARNINGS PER SHARE

       The Company follows SFAS No. 128, "Earnings per Share", to account for
its weighted average shares. The numerator and denominator in both the Company's
basic and diluted earnings per share calculation is identical. There were no
dilutive securities at December 31, 2001. The Company's basic and diluted
weighted average number of shares outstanding throughout the period from
November 30, 2001 to December 31, 2001 was 39.6 million.

8.     RELATED PARTY TRANSACTIONS

       The Company is party to agreements with an affiliate of a founding
shareholder, Zurich Financial Services Group ("Zurich") as follows:

                Investment management services.  The Company utilized the
       services of a wholly-owned subsidiary of Zurich to perform portions of
       its short-term investment and cash management and provide investment
       accounting services. Under the terms of the investment management
       agreement, which is subject to the Company's investment guidelines and
       other restrictions, the Company pays a fee based on the value of its cash
       and investment portfolio. The Company expensed investment management and
       accounting fees of $22,000 during the period ended December 31, 2001.

                Office services.  The Company rented office space and received
       limited administrative services from various Bermuda based subsidiaries
       of Zurich during the period ended December 31, 2001. Rent and office
       services fees of $40,000 were expensed during the period.

       In addition to warrants (see note 6), certain founding shareholders
received $29 million for assistance with the Company's private offering
completed on December 14, 2001.

9.     STOCK OPTIONS

       The Company reserved a total of 3,646,975 common shares for issuance
under management incentive plans and at December 31, 2001, the Company had
granted 2,662,290 options. The exercise price for the options granted during the
period ended December 31, 2001 is $20 per share and all such options expire in
2011. There were 313,640 options exercisable at December 31, 2001. There were no
options exercised, forfeited or that expired during the period ended December
31, 2001.

       The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
as a result, no stock compensation expense has been recognized. If compensation
expense for options granted had been recognized based on the provisions

                                       F-11
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

of SFAS No. 123, "Accounting for Stock-Based Compensation", the Company's
results for the period ended December 31, 2001 would have been as follows:

<Table>
<S>                                                           <C>
Net loss (in thousands of U.S. dollars).....................  $(7,200)
Basic net loss per share....................................  $ (0.18)
Diluted net loss per share..................................  $ (0.18)
</Table>

       The weighted average fair value used to calculate pro-forma compensation
expense for the period was $5.59 per share. The fair value of each option issued
was estimated on the date of grant using the Black-Scholes option-pricing model.
The volatility assumption used, of approximately 19%, was derived from an
average of the historical ten year volatility of two insurance industry indices.
An allowance of 30% was made to recognize the start-up nature of the Company's
operations and for the potential illiquidity associated with the private trading
of the Company's shares. The other assumptions used in the option pricing model
were as follows: risk free interest rate of 4.5%, expected life of 10 years and
a dividend yield of nil.

10.     STATUTORY REQUIREMENTS AND DIVIDEND RESTRICTIONS

       Endurance Bermuda's ability to pay dividends and make capital
distributions is subject to certain regulatory restrictions. Endurance Bermuda
is licensed as a Class 4 insurer under the Bermuda Insurance Act 1978,
amendments thereto and related regulations. The minimum amount of statutory
capital and surplus required by license as a Class 4 insurer is $100 million. At
December 31, 2001, Endurance Bermuda's statutory capital and surplus was $1.16
billion. In addition, a minimum statutory liquidity ratio must be maintained.

11.     TAXES

       Currently, the Company is not required to pay any income or capital gains
taxes in Bermuda. The Company has received an assurance from the Minister of
Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 of
Bermuda, as amended, that in the event any legislation is enacted in Bermuda
imposing any tax computed on profits or income, or computed on any capital
asset, gain or appreciation or any tax in the nature of estate duty or
inheritance tax, such tax shall not be applicable to the Company until March 28,
2016 provided that the assurance is subject to the condition that it will not
prevent the application of any taxes payable by the Company in respect of real
property or leasehold interests in Bermuda held by it. Endurance Bermuda intends
to operate in a manner such that it will owe no United States tax other than
premium excise tax and withholding taxes on certain investments.

12.     SUBSEQUENT EVENTS

       (a)     Business combination.  On May 16, 2002, the Company completed a
transaction with LaSalle Re Limited ("LaSalle"), its parent, LaSalle Re Holdings
Limited, and the ultimate parent of LaSalle, Trenwick Group Ltd. LaSalle is a
Bermuda domiciled reinsurance company. The transaction was structured as a
bordereaux quota share retrocession agreement effective April 1, 2002, a
purchase of renewal rights, a transfer and purchase agreement and an
administrative services agreement. The Company did not assume any of LaSalle's
historical reinsurance liabilities. The primary reasons for the transaction were
to increase the Company's presence in the property catastrophe marketplace and
to increase the Bermuda-based staff of the Company. The transaction was
accounted for as a purchase method business combination in accordance with SFAS
141, "Business Combinations".

                                       F-12
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       (b)     Debt and financing arrangement.  On August 13, 2002, the Company
entered into a $192 million three-year term loan agreement and a $108 million
letter of credit and revolving credit facility with a syndicate of commercial
banks. Interest rates on the term loan are LIBOR plus a spread which is based on
the Company's debt to capital ratio. On September 27, 2002, the Company drew
down $100 million of the term loan. On November 21, 2002, the Company drew down
the remaining $92 million.

       (c)     Repurchase of common shares.  On September 27, 2002, the Company
repurchased 5,000,000 of its Ordinary common shares at $20 per share and
cancelled 2,049,600 warrants to purchase Ordinary common shares.

       (d)     Share premium issuance.  On December 17, 2002, the Company
effected a share premium issuance to its shareholders. Immediately after the
share premium issuance was effected, the Company's shareholders held five
Ordinary common shares for each Ordinary common share previously held, and held
five Class A common shares for each Class A common share previously held. The
share premium issuance has been reflected in the December 31, 2001 financial
statements and all applicable references as to the number of common shares and
per share information have been restated. Appropriate adjustments have been made
in the exercise price and number of shares subject to warrants and stock
options.

                                       F-13
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                          CONSOLIDATED BALANCE SHEETS
         (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                  2002            2001
                                                              -------------   ------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
                                          ASSETS
Cash and cash equivalents...................................   $  132,575      $1,162,498
Fixed maturity investments available for sale, at fair value
  (amortized cost: $1,272,051)..............................    1,320,659              --
Premiums receivable, net....................................      265,508             320
Deferred acquisition costs..................................       76,053              56
Prepaid reinsurance premiums................................       16,197              --
Accrued investment income...................................       12,296              --
Other assets................................................       29,795           2,225
                                                               ----------      ----------
Total assets................................................   $1,853,083      $1,165,099
                                                               ==========      ==========
                                       LIABILITIES
Reserve for losses and loss expenses........................   $  114,779      $       --
Reserve for unearned premiums...............................      402,803             375
Reinsurance balances payable................................       14,243              --
Bank debt...................................................      100,000              --
Investments pending settlement..............................       36,086              --
Other liabilities...........................................       10,764           2,412
                                                               ----------      ----------
Total liabilities...........................................      678,675           2,787
                                                               ----------      ----------
                                   SHAREHOLDERS' EQUITY
Common shares:
  Ordinary -- 54,061,185 issued and outstanding
     (2001 -- 59,061,185)...................................       54,061          59,061
  Class A -- 938,815 issued and outstanding
     (2001 -- 938,815)......................................          939             939
Additional paid-in capital..................................    1,007,000       1,102,000
Accumulated other comprehensive income......................       48,608              --
Retained earnings...........................................       63,800             312
                                                               ----------      ----------
Total shareholders' equity..................................    1,174,408       1,162,312
                                                               ----------      ----------
Total liabilities and shareholders' equity..................   $1,853,083      $1,165,099
                                                               ==========      ==========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-14
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                      CONSOLIDATED STATEMENT OF INCOME AND
                              COMPREHENSIVE INCOME
                                  (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
  (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<S>                                                            <C>
Revenues
  Gross premiums written and acquired.......................   $   623,472
                                                               ===========
  Net premiums written and acquired.........................   $   590,513
  Change in unearned premiums...............................      (386,231)
                                                               -----------
  Net premiums earned.......................................       204,282
                                                               -----------
  Net investment income.....................................        29,355
  Net foreign exchange gains................................         1,107
  Net realized gains on sales of investments................         3,688
                                                               -----------
Total revenues..............................................       238,432
                                                               -----------
Expenses
  Losses and loss expenses..................................       115,146
  Acquisition expenses......................................        33,304
  General and administrative expenses.......................        26,494
                                                               -----------
Total expenses..............................................       174,944
                                                               -----------
Net income..................................................        63,488
                                                               -----------
Other comprehensive income
  Net change in unrealized gains on investments.............        48,608
                                                               -----------
Comprehensive income........................................   $   112,096
                                                               ===========
Per share data
  Weighted average number of common and common equivalent
     shares outstanding:
     Basic..................................................    59,945,055
                                                               ===========
     Diluted................................................    60,088,229
                                                               ===========
  Basic earnings per share..................................   $      1.06
                                                               ===========
  Diluted earnings per share................................   $      1.06
                                                               ===========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-15
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                                  (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
                    (IN THOUSANDS OF UNITED STATES DOLLARS)

<Table>
<S>                                                            <C>
Common shares
  Balance, beginning of period..............................   $   60,000
  Repurchase of common shares...............................       (5,000)
                                                               ----------
  Balance, end of period....................................       55,000
                                                               ----------
Additional paid-in capital
  Balance, beginning of period..............................    1,102,000
  Repurchase of common shares...............................      (95,000)
                                                               ----------
  Balance, end of period....................................    1,007,000
                                                               ----------
Accumulated other comprehensive income
  Balance, beginning of period..............................           --
  Net change in unrealized gains on investments.............       48,608
                                                               ----------
  Balance, end of period....................................       48,608
                                                               ----------
Retained earnings
  Balance, beginning of period..............................          312
  Net income................................................       63,488
                                                               ----------
  Balance, end of period....................................       63,800
                                                               ----------
Total shareholders' equity..................................   $1,174,408
                                                               ==========
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-16
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
                    (IN THOUSANDS OF UNITED STATES DOLLARS)

<Table>
<S>                                                           <C>
Cash flows provided by operating activities:
  Net income................................................  $    63,488
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation and amortization..........................        5,960
     Net realized gains on sales of investments.............       (3,688)
     Premiums receivable, net...............................     (176,631)
     Deferred acquisition costs.............................      (64,485)
     Prepaid reinsurance premiums...........................        5,292
     Accrued investment income..............................      (12,296)
     Other assets...........................................       (9,243)
     Reserve for losses and loss expenses...................      114,779
     Reserve for unearned premiums..........................      313,870
     Reinsurance balances payable...........................      (21,557)
     Other liabilities......................................        8,567
                                                              -----------
Net cash provided by operating activities...................      224,056
                                                              -----------
Cash flows used in investing activities:
  Proceeds from sales of fixed maturity investments.........      218,981
  Purchases of fixed maturity investments...................   (1,455,780)
  Purchases of fixed assets.................................       (4,256)
  Purchase of net assets -- LaSalle.........................      (11,060)
                                                              -----------
Net cash used in investing activities.......................   (1,252,115)
                                                              -----------
Cash flows used in financing activities:
  Offering costs paid.......................................       (1,864)
  Proceeds from bank debt...................................      100,000
  Repurchase of common shares...............................     (100,000)
                                                              -----------
Net cash used in financing activities.......................       (1,864)
                                                              -----------
Net decrease in cash and cash equivalents...................   (1,029,923)
Cash and cash equivalents, beginning of period..............    1,162,498
                                                              -----------
Cash and cash equivalents, end of period....................  $   132,575
                                                              -----------
</Table>

        See accompanying notes to the consolidated financial statements
                                       F-17
<PAGE>

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

1.     ORGANIZATION

       Endurance Specialty Holdings Ltd. ("Endurance Holdings") was incorporated
on June 27, 2002 under the laws of Bermuda to act as a holding company of
providers of property and casualty insurance and reinsurance on a worldwide
basis.

       Endurance Holdings' wholly-owned subsidiary, Endurance Specialty
Insurance Ltd. ("Endurance Bermuda"), was incorporated in Bermuda on November
30, 2001. On December 14, 2001, Endurance Bermuda completed a private offering
of 60 million common shares for gross cash proceeds of $1.2 billion. Under the
terms of an Exchange Offer dated July 22, 2002, the shareholders of Endurance
Bermuda transferred their interest in Endurance Bermuda to Endurance Holdings in
exchange for an identical shareholding in Endurance Holdings. This Exchange
Offer represents a business combination of companies under common control and
has been accounted for at historical cost.

       Endurance Holdings writes specialty lines of insurance and reinsurance on
a global basis through its three wholly-owned operating subsidiaries: Endurance
Bermuda, based in Bermuda; Endurance Worldwide Insurance Limited, based in
London, England; and Endurance Reinsurance Corporation of America, based in New
York.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The consolidated financial statements have been prepared on the basis of
accounting principles generally accepted in the United States ("U.S. GAAP") and
include the accounts of Endurance Holdings and its wholly-owned subsidiaries,
which are collectively referred to herein as the "Company". All intercompany
transactions and balances have been eliminated on consolidation. In the opinion
of management, these financial statements reflect all the normal recurring
adjustments necessary for a fair presentation of the Company's financial
position as of September 30, 2002 and its results of operations and cash flows
for the nine-month period then ended. These consolidated financial statements
should be read in conjunction with the 2001 audited consolidated financial
statements and related notes thereto. The following are the significant
accounting policies adopted by the Company:

                (a)     Premiums and related expenses.  Premiums written and
       ceded are earned on a pro-rata basis over the terms of the underlying
       contracts and policies. Premiums written and ceded include estimates
       based on information received from brokers, ceding companies and
       insureds, and any subsequent differences arising on such estimates are
       recorded in the periods in which they are determined. The portion of the
       premiums written and ceded applicable to the unexpired terms of the
       underlying contracts and policies are recorded as unearned premiums and
       prepaid reinsurance premiums, respectively.

                Acquisition expenses are costs that vary with and are directly
       related to the production of new and renewal business, and consist
       principally of commissions and brokerage expenses. These costs are
       deferred and amortized over the periods in which the related premiums are
       earned. Deferred acquisition costs are limited to their estimated
       realizable value based on the related unearned premiums. Anticipated net
       investment income is considered in determining the recoverability of
       deferred acquisition costs.

                (b)     Reserve for losses and loss expenses.  The reserve for
       losses and loss expenses includes reserves for unpaid reported losses and
       for losses incurred but not reported. The reserve for unpaid reported
       losses and loss expenses is established by management based on reports
       from brokers, ceding companies and insureds and consultations with
       independent legal counsel, and

                                       F-18
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

       represents the estimated ultimate cost of events or conditions that have
       been reported to or specifically identified by the Company. The reserve
       for incurred but not reported losses and loss expenses is established by
       management based on estimates of ultimate losses and loss expenses.
       Inherent in the estimates of ultimate losses and loss expenses are
       expected trends in claim severity and frequency and other factors which
       may vary significantly as claims are settled. Accordingly, ultimate
       losses and loss expenses may differ materially from the amounts recorded
       in the consolidated financial statements. These estimates are reviewed
       regularly and, as experience develops and new information becomes known,
       the reserves are adjusted as necessary. Such adjustments, if any, are
       reflected in earnings in the period in which they become known.

                (c)     Investments.  Investments in fixed maturity securities
       are designated as available for sale and are carried at 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. Fair value is generally based on listed market
       prices. If listed market prices are not available, fair value is
       determined based on other relevant factors, including broker or dealer
       price quotations and valuation pricing models that take into account time
       value and volatility factors underlying the financial instruments.
       Realized gains and losses on the sale of investments are recognized in
       earnings using the specific identification method. Investments are
       reviewed for declines in value that are considered to be
       other-than-temporary, and if applicable, such adjustments are included in
       earnings as a component of realized losses. Interest on fixed maturity
       securities is recorded in net investment income when earned and adjusted
       for any amortization of premium or discount.

                (d)     Cash equivalents.  Cash equivalents include highly
       liquid short-term deposits and securities with maturities of ninety days
       or less at the time of purchase.

                (e)     Intangible assets.  Identifiable intangible assets and
       goodwill that arise from business combinations are accounted for in
       accordance with Statement of Financial Accounting Standard ("SFAS") No.
       141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
       Intangible Assets". Identifiable intangible assets are amortized in
       accordance with their useful lives. Goodwill and intangible assets with
       indefinite useful lives are not amortized but are tested for impairment
       annually or more often if impairment indicators arise.

                (f)     Offering and incorporation costs.  Offering costs
       incurred in connection with common share offerings, including investment
       banking fees, legal fees and the fair value of warrants issued to certain
       sponsors, are deducted from the proceeds of the offerings. Incorporation
       costs not related to the raising of capital are expensed as incurred and
       are included in general and administrative expenses.

                (g)     Foreign exchange.  Assets and liabilities of foreign
       operations whose functional currency is not the United States 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 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.

                                       F-19
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

                (h)     Stock-based employee compensation plans.  Stock-based
       compensation is accounted for using the intrinsic value-based method in
       accordance with Accounting Principles Board Opinion No. 25, "Accounting
       for Stock Issued to Employees".

                (i)     Earnings per share.  Basic earnings per common share are
       based on the weighted average number of common shares outstanding and
       exclude any dilutive effects of options and warrants. Diluted earnings
       per common share are based on the weighted average number of common
       shares and common share equivalents outstanding, using the treasury stock
       method. Common share equivalents include options and warrants which are
       dilutive when the book value of the Company exceeds the exercise price of
       the options and warrants.

                (j)     Use of estimates.  The preparation of financial
       statements in conformity with U.S. GAAP requires management to make
       estimates and assumptions that affect the reported and disclosed amounts
       of assets and liabilities and disclosure of contingent assets and
       liabilities at the date of the financial statements and the reported
       amounts of revenues and expenses during the reporting period. Actual
       results could differ from those estimates.

3.     INVESTMENTS

       The amortized cost, fair value and related gross unrealized gains and
losses on fixed maturity investments at September 30, 2002 are as follows:

<Table>
<Caption>
                                                  GROSS        GROSS
                                   AMORTIZED    UNREALIZED   UNREALIZED      FAIR
                                      COST        GAINS        LOSSES       VALUE
                                   ----------   ----------   ----------   ----------
<S>                                <C>          <C>          <C>          <C>
U.S. government and agency
  securities.....................  $  395,023    $15,732        $ (6)     $  410,749
Corporate securities.............     191,437     15,589          --         207,026
Mortgage-backed securities.......     522,674     11,933         (36)        534,571
Asset-backed securities..........     162,917      5,397          (1)        168,313
                                   ----------    -------        ----      ----------
                                   $1,272,051    $48,651        $(43)     $1,320,659
                                   ==========    =======        ====      ==========
</Table>

       The following table summarizes the composition of the fixed maturity
portfolio by investment ratings assigned by rating agencies:

<Table>
<Caption>
                                                          FAIR VALUE   PERCENTAGE
                                                          ----------   ----------
<S>                                                       <C>          <C>
U.S. government and agency securities...................  $  410,749      31.1%
AAA/Aaa.................................................     715,957      54.2%
AA/Aa...................................................      53,281       4.0%
A/A.....................................................     140,672      10.7%
                                                          ----------     -----
Total...................................................  $1,320,659     100.0%
                                                          ==========     =====
</Table>

       Contractual maturities of fixed maturity securities are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.

                                       F-20
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

<Table>
<Caption>
                                                          SEPTEMBER 30, 2002
                                                        -----------------------
                                                        AMORTIZED       FAIR
                                                           COST        VALUE
                                                        ----------   ----------
<S>                                                     <C>          <C>
Due within one year...................................  $       --   $       --
Due after one year through five years.................     422,368      440,716
Due after five years through ten years................     118,950      129,989
Due after ten years...................................      45,142       47,070
Mortgage-backed securities............................     522,674      534,571
Asset-backed securities...............................     162,917      168,313
                                                        ----------   ----------
                                                        $1,272,051   $1,320,659
                                                        ==========   ==========
</Table>

       The components of net investment income for the nine months ended
September 30, 2002 are as follows:

<Table>
<S>                                                           <C>
Fixed maturity investments..................................  $30,148
Cash and cash equivalents...................................       93
                                                              -------
                                                               30,241
Investment expenses.........................................     (886)
                                                              -------
Net investment income.......................................  $29,355
                                                              =======
</Table>

       The analysis of realized gains (losses) on sales of investments for the
nine months ended September 30, 2002 is as follows:

<Table>
<S>                                                           <C>
Gross realized gains........................................  $3,822
Gross realized losses.......................................    (134)
                                                              ------
Net realized gains on sales of investments..................  $3,688
                                                              ======
</Table>

4.     RESERVE FOR LOSSES AND LOSS EXPENSES

       Reserves for losses and loss expenses are based in part upon the
estimation of losses resulting from catastrophic events. Estimation of the
losses and loss expenses resulting from catastrophic events based upon the
Company's historical claim experience is inherently difficult because of the
Company's short operating history and the possible severity of catastrophe
claims. Therefore, the Company utilizes both proprietary and commercially
available models, as well as historical reinsurance industry catastrophe claims
experience, for purposes of evaluating future trends and providing an estimate
of ultimate claims costs.

       Several aspects of the Company's casualty insurance and reinsurance
operations complicate the actuarial reserving techniques for loss reserves as
compared to other insurance and reinsurance operations. Among these aspects are
the differences in the Company's policy forms from more traditional forms, the
lack of complete historical data for losses of the same type intended to be
covered by the policies and contracts, and the expectation that losses in excess
of the Company's attachment levels will be low frequency and high severity in
nature, limiting the utility of claims experience of other insureds for similar
claims.

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
occurrence of a loss, the reporting of the loss to the

                                       F-21
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

Company, and the settlement of the Company's liability may be several years.
During this period, additional facts and trends will be revealed. As these
factors become apparent, case reserves will be adjusted, sometimes requiring an
increase in the overall reserves of the Company, and at other times requiring a
reallocation of incurred but not reported reserves to specific case reserves.
These estimates are reviewed regularly, and such adjustments, if any, are
reflected in earnings in the period in which they become known. While management
believes that it has made a reasonable estimate of ultimate losses, the ultimate
claims experience may not be as reliably predicted as may be the case with other
insurance and reinsurance operations, and there can be no assurance that losses
and loss expenses will not exceed the total reserves.

5.     REINSURANCE

       Reinsurance ceded contracts do not relieve the Company from its
obligations to policyholders. The Company remains primarily liable to its
policyholders for the portion reinsured to the extent that any reinsurer does
not meet the obligations assumed under the reinsurance agreements.

6.     DEBT AND FINANCING ARRANGEMENTS

       On August 13, 2002, the Company entered into a $192 million three-year
term loan agreement and a $108 million letter of credit and revolving credit
facility with a syndicate of commercial banks. As at September 30, 2002, the
Company had $100 million on the term loan and letters of credit totaling $2.8
million outstanding. Under the terms of the loan agreement, the Company is
committed to making repayments of $20 million on September 27, 2003 and $40
million on September 27, 2004 and 2005 each, respectively.

       Interest rates on the term loan are LIBOR plus a spread which is based on
the Company's debt to capital ratio. On September 27, 2002, the Company drew
down $100 million of the term loan and the interest rate applied to the
outstanding balance averaged 2.81% during the period ended September 30, 2002.
The letter of credit and revolving credit facility expires on August 11, 2003,
at which point any revolving credit balance will be converted into a six-month
term loan. The agreements contain certain covenants including requirements that
debt, as defined in the agreements, to shareholders' equity does not exceed a
ratio of 0.35:1; consolidated tangible net worth must exceed $750 million; and
the consolidated fixed charge ratio, as defined in the agreements, must exceed
2:1. The Company was in compliance with all covenants of these agreements at
September 30, 2002.

       The Company accrued interest expense of $30,000 for the period ended
September 30, 2002 and at September 30, 2002 the fair value of the borrowings
approximated the carrying value.

7.     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
six reportable business segments: property per risk treaty reinsurance, property
catastrophe reinsurance, casualty treaty reinsurance, property individual risk,
casualty individual risk and other specialty lines.

       -     Property Per Risk Treaty Reinsurance -- reinsures individual
             property risks of ceding companies on a treaty basis.

       -     Property Catastrophe Reinsurance -- reinsures catastrophic perils
             for ceding companies on a treaty basis.

                                       F-22
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

       -     Casualty Treaty Reinsurance -- reinsures third party liability
             exposures from ceding companies on a treaty basis.

       -     Property Individual Risk -- insurance and facultative reinsurance
             of commercial properties.

       -     Casualty Individual Risk -- insurance and facultative reinsurance
             of third party liability exposures.

       -     Other Specialty Lines -- insurance and reinsurance of unique
             opportunities, including Aerospace, Self Insured Risks and a
             limited number of other reinsurance programs such as surety,
             marine, energy, personal accident, terrorism and others.

       Because the Company does not manage its assets by segment, investment
income and total assets are not allocated to the individual segments. Management
measures segment 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. General and
administrative expenses are allocated to segments based on the segment's
proportional share of gross premiums written and acquired.

       The following table provides a summary of the segment revenues and
results for the nine month period ended September 30, 2002:

<Table>
<Caption>
                                              PROPERTY PER    PROPERTY      CASUALTY
                                              RISK TREATY    CATASTROPHE     TREATY
                                              REINSURANCE    REINSURANCE   REINSURANCE
                                              ------------   -----------   -----------
<S>                                           <C>            <C>           <C>
REVENUES
  Gross premiums written and acquired.......    $123,585      $170,185      $143,481
                                                --------      --------      --------
  Net premiums written and acquired.........     123,585       138,099       143,481
                                                --------      --------      --------
  Net premiums earned.......................      28,448        77,257        35,405
                                                --------      --------      --------
EXPENSES
  Losses and loss expenses..................      14,657        45,937        20,820
  Acquisition expenses......................       6,019        11,419         8,452
  General and administrative expenses.......       5,252         7,232         6,097
                                                --------      --------      --------
  TOTAL EXPENSES............................      25,928        64,588        35,369
                                                --------      --------      --------
  UNDERWRITING INCOME.......................    $  2,520      $ 12,669      $     36
                                                ========      ========      ========
  Loss ratio................................        51.5%         59.5%         58.8%
  Acquisition expense ratio.................        21.2%         14.8%         23.9%
  General and administrative expense
     ratio..................................        18.5%          9.4%         17.2%
                                                --------      --------      --------
  Combined ratio............................        91.2%         83.7%         99.9%
                                                ========      ========      ========
</Table>

                                       F-23
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

<Table>
<Caption>
                                                    PROPERTY     CASUALTY      OTHER
                                                   INDIVIDUAL   INDIVIDUAL   SPECIALTY
                                                      RISK         RISK        LINES
                                                   ----------   ----------   ---------
<S>                                                <C>          <C>          <C>
REVENUES
  Gross premiums written and acquired............   $50,989      $66,289      $68,943
                                                    -------      -------      -------
  Net premiums written and acquired..............    50,116       66,289       68,943
                                                    -------      -------      -------
  Net premiums earned............................    19,263       21,525       22,384
                                                    -------      -------      -------
EXPENSES
  Losses and loss expenses.......................     4,661       16,425       12,646
  Acquisition expenses...........................     1,909        1,894        3,611
  General and administrative expenses............     2,167        2,817        2,929
                                                    -------      -------      -------
  TOTAL EXPENSES.................................     8,737       21,136       19,186
                                                    -------      -------      -------
  UNDERWRITING INCOME............................   $10,526      $   389      $ 3,198
                                                    =======      =======      =======
  Loss ratio.....................................      24.2%        76.3%        56.5%
  Acquisition expense ratio......................       9.9%         8.8%        16.1%
  General and administrative expense ratio.......      11.2%        13.1%        13.1%
                                                    -------      -------      -------
  Combined ratio.................................      45.3%        98.2%        85.7%
                                                    =======      =======      =======
</Table>

       The following table reconciles total segment results to consolidated net
income for the nine months ended September 30, 2002:

<Table>
<S>                                                           <C>
TOTAL UNDERWRITING INCOME...................................  $29,338
Net investment income.......................................   29,355
Net foreign exchange gains..................................    1,107
Net realized gains on sales of investments..................    3,688
                                                              -------
NET INCOME..................................................  $63,488
                                                              =======
</Table>

8.     BUSINESS COMBINATION

       On May 16, 2002, the Company completed a transaction with LaSalle Re
Limited ("LaSalle"), its parent, LaSalle Re Holdings Limited, and the ultimate
parent of LaSalle, Trenwick Group Ltd. LaSalle is a Bermuda domiciled
reinsurance company. The transaction was structured as a bordereaux quota share
retrocession agreement effective April 1, 2002, a purchase of renewal rights, a
transfer and purchase agreement and an administrative services agreement. The
Company did not assume any of LaSalle's historical reinsurance liabilities. The
primary reasons for the transaction were to increase the Company's presence in
the property catastrophe marketplace and to increase the Bermuda-based staff of
the Company. The transaction was accounted for as a purchase method business
combination in accordance with SFAS 141, "Business Combinations".

       The initial purchase price payable by the Company was $25.6 million and
the fair value of the net assets acquired was $24.7 million, resulting in $0.9
million of goodwill.

                                       F-24
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

The fair value of net assets acquired is summarized as follows:

<Table>
<S>                                                           <C>
                                ASSETS
Premiums receivable, net....................................  $ 72,643
Prepaid reinsurance premiums................................    21,490
Acquisition cost of in-force contracts......................    11,513
Other identifiable intangible assets........................    14,205
Other assets................................................       440
                                                              --------
     Assets acquired........................................   120,291
                                                              --------
                             LIABILITIES
Unearned premiums...........................................    88,558
Reinsurance balances payable................................     5,575
Accrued liabilities.........................................     1,410
                                                              --------
     Liabilities acquired...................................    95,543
                                                              --------
     Net assets acquired....................................  $ 24,748
                                                              ========
</Table>

       Other identifiable intangible assets include the fair value of the
underwriters' relationships, customer lists and the non-solicit and non-compete
rights purchased. These other identifiable assets are estimated to have finite
lives of up to ten years and they are being amortized over such periods. The
amortization expense in the nine months to September 30, 2002 of $0.3 million
was recorded in general and administrative expenses in the consolidated
statement of income. The acquisition expenses of the in-force contracts are
included in deferred acquisition costs in the consolidated balance sheet and are
amortized pro-rata over the remaining terms of the related in-force contracts,
and the related amortization expense in the period of $7.2 million is included
in acquisition expenses in the consolidated statement of income.

       In addition to the initial purchase price, the Company may be required to
pay further amounts to LaSalle. Such contingent amounts are based on the renewal
and profitability of the April 1, 2002 in-force contracts acquired, and will be
recorded in the period in which they are determined to be payable.

       Operating results of the LaSalle business acquired have been included in
the consolidated financial statements from April 1, 2002, which is the effective
date of the retrocession agreement. As required by SFAS 141, the following
selected pro forma information is being provided to present a summary of the
combined results of the Company and the LaSalle business acquired assuming the
transaction had been effected on January 1, 2002. The pro forma data is for
informational purposes only and does not necessarily represent results that
would have occurred if the transaction had taken place on the basis assumed
above.

<Table>
<S>                                                           <C>
NINE MONTHS ENDED SEPTEMBER 30, 2002
Total revenues..............................................  $263,525
Net income..................................................    77,197
Earnings per share -- basic.................................      1.29
Earnings per share -- diluted...............................      1.29
</Table>

                                       F-25
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

9.     COMMITMENTS AND CONTINGENCIES

       Concentrations of credit risk.  As at September 30, 2002, substantially
all of the Company's cash and investments were held by one custodian. The
Company's investment guidelines limit the amount of credit exposure to any one
issuer other than the U.S. treasury.

       Major production sources.  During the nine months to September 30, 2002,
the Company obtained 70.7% of its gross premiums written through two brokers,
Aon Corporation ("Aon") -- 42.6%, Marsh & McLennan Companies, Inc. -- 28.1%.
Gross premiums written excludes $88.6 million of gross premiums acquired from
LaSalle (see note 8).

       Letters of credit.  As of September 30, 2002, the Company's bankers have
issued letters of credit of approximately $2.8 million in favor of certain
ceding companies.

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

10.     SHAREHOLDERS' EQUITY

       The Company's share capital at September 30, 2002 is comprised as
follows:

<Table>
<S>                                                           <C>
Authorized:
  120,000,000 common shares of $1.00 par value each
Issued, outstanding and fully paid:
  54,061,185 Ordinary common shares of $1.00 par value
     each...................................................  $54,061
  938,815 Class A common shares of $1.00 par value each.....      939
                                                              -------
                                                              $55,000
                                                              =======
</Table>

       Class A common shares have no voting rights and are convertible on a
one-for-one basis into Ordinary common shares.

       In conjunction with the capitalization of the Company, certain
shareholders have been issued warrants. The fair value of the warrants issued on
December 14, 2001 was $51.9 million. The fair value of each warrant issued was
estimated on the date of grant using the Black-Scholes option-pricing model. The
volatility assumption used, of approximately 19%, was derived from an average of
the historical ten-year volatility of two insurance industry indices. An
allowance of 30% was provided to recognize the start-up nature of the Company's
operations and for the potential illiquidity associated with the private trading
of the Company's shares. The other assumptions used in the option pricing model
are as follows: risk-free interest rate of 4.5%, expected life of ten years and
a dividend yield of nil.

       The warrants are exercisable for Ordinary and Class A common shares as
follows:

<Table>
<S>                                                           <C>
Ordinary common shares......................................  6,641,960
Class A common shares.......................................    600,930
                                                              ---------
Total common shares.........................................  7,242,890
                                                              =========
</Table>

       These warrants, which have an exercise price of $20 per share, became
exercisable upon capitalization of the Company on December 14, 2001, and expire
on December 14, 2011.

                                       F-26
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

       On September 27, 2002, the Company repurchased 5,000,000 of its Ordinary
common shares at $20 per share and cancelled 2,049,600 warrants to purchase
Ordinary common shares.

11.     EARNINGS PER SHARE

       The Company follows SFAS No. 128, "Earnings per Share", to account for
its weighted average shares. The numerator in both the Company's basic and
diluted earnings per share calculation is identical. The reconciliation of the
denominator from basic to diluted weighted average shares outstanding for the
nine-month period ended September 30, 2002 is as follows:

<Table>
<S>                                                           <C>
Weighted average shares -- basic............................  59,945,055
Share equivalents
  Warrants..................................................     105,881
  Options...................................................      37,293
                                                              ----------
Weighted average shares -- diluted..........................  60,088,229
                                                              ==========
</Table>

12.     RELATED PARTY TRANSACTIONS

       The Company is party to agreements with various affiliates of two
founding shareholders, Aon and Zurich Financial Services Group ("Zurich") as
follows:

                Underwriting activities.  In the normal course of business, the
       Company enters into reinsurance contracts with various subsidiaries of
       Aon and Zurich. Such contracts resulted in gross premiums written of
       $65.0 million, losses and loss expenses of $7.5 million and acquisition
       expenses of $3.2 million for the nine months ended September 30, 2002. As
       at September 30, 2002, there were related reinsurance premiums receivable
       of $38.3 million. During the nine months ended September 30, 2002,
       affiliates of Aon produced 42.6% of the Company's gross premiums written.
       Gross premiums written excludes $88.6 million of gross premiums acquired
       from LaSalle (see note 8).

                Analytical services.  The Company utilized certain analytical
       services and licensed technology from an affiliate of Aon during the nine
       months ended September 30, 2002. Fees incurred of $109,000 pursuant to
       the agreement were included in general and administrative expenses.

                Financial accounting and administrative services.  An affiliate
       of Aon performed certain financial accounting and administrative services
       for the Company during the nine months ended September 30, 2002. Fees
       incurred of $289,000 pursuant to the agreement were included in general
       and administrative expenses.

                Investment management services.  The Company utilized the
       services of a wholly-owned subsidiary of Zurich to perform portions of
       its short-term investment and cash management and provide investment
       accounting services. Under the terms of the investment management
       agreement, which is subject to the Company's investment guidelines and
       other restrictions, the Company pays a fee based on the value of its cash
       and investment portfolio. The Company expensed related investment
       management and accounting fees of $227,000 during the nine months ended
       September 30, 2002.

                                       F-27
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

                Office services.  The Company rented office space and received
       limited administrative services from various Bermuda based subsidiaries
       of Zurich until April 5, 2002. Rent and office services fees for the nine
       months ended September 30, 2002 of $419,000 were paid and the expense is
       recorded in general and administrative expenses.

13.     STOCK OPTIONS

       Endurance Holdings established a Stock Option Plan (the "Option Plan"),
which provides for the grant of options to purchase shares of the Company's
common stock to key employees. Under the terms of the Option Plan, a total of
3,646,975 common shares has been reserved for issuance. As of September 30,
2002, 3,287,290 options had been granted with dates of entitlement between
December 14, 2001 and December 14, 2006. The exercise price for all options
granted through September 30, 2002 under the Option Plan is $20 per share and
the maximum term of an option is 10 years.

       Activity with respect to the Option Plan for the nine months ended
September 30, 2002 was as follows:

<Table>
<S>                                                           <C>
Options outstanding, beginning of period....................  2,662,290
Options granted.............................................    625,000
                                                              ---------
Options outstanding, end of period..........................  3,287,290
                                                              =========
Exercisable options, end of period..........................    438,640
                                                              =========
</Table>

       There were no options exercised, forfeited or that expired during the
period ended September 30, 2002.

       The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
as a result, no stock compensation expense has been recognized. If compensation
expense for options granted had been recognized based on the provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation", the Company's results for
the nine months ended September 30, 2002 would have been as follows:

<Table>
<S>                                                           <C>
Net income..................................................  $60,287
Basic earnings per share....................................  $  1.01
Diluted earnings per share..................................  $  1.00
</Table>

       The weighted average fair value used to calculate pro-forma compensation
expense for the period was $5.68 per share. The fair value of each option issued
was estimated on the date of grant using the Black-Scholes option-pricing model.
The volatility assumption used, of approximately 19%, was derived from an
average of the historical ten-year volatility of two insurance industry indices.
An allowance of 20% to 30% was made to recognize the start-up nature of the
Company's operations and for the potential illiquidity associated with the
private trading of the Company's shares. The other assumptions used in the
option pricing model were as follows: risk free interest rate of 4.2% to 5.2%,
expected life of ten years and a dividend yield of nil.

14.     STATUTORY REQUIREMENTS AND DIVIDEND RESTRICTIONS

       Endurance Bermuda's ability to pay dividends and make capital
distributions is subject to certain regulatory restrictions. Endurance Bermuda
is licensed as a Class 4 insurer under the Bermuda Insurance Act 1978,
amendments thereto and related regulations. The minimum amount of statutory
capital and

                                       F-28
<PAGE>
                       ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

surplus required by license as a Class 4 insurer is $100 million. At September
30, 2002, Endurance Bermuda's statutory capital and surplus was $1.18 billion.
In addition, a minimum statutory liquidity ratio must be maintained.

15.     TAXES

       Currently, the Company is not required to pay any income or capital gains
taxes in Bermuda. The Company has received an assurance from the Minister of
Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 of
Bermuda, as amended, that in the event any legislation is enacted in Bermuda
imposing any tax computed on profits or income, or computed on any capital
asset, gain or appreciation or any tax in the nature of estate duty or
inheritance tax, such tax shall not be applicable to the Company until March 28,
2016 provided that the assurance is subject to the condition that it will not
prevent the application of any taxes payable by the Company in respect of real
property or leasehold interests in Bermuda held by it. Endurance Bermuda intends
to operate in a manner such that it will owe no United States tax other than
premium excise tax and withholding taxes on certain investments.

       The Company's subsidiaries based in the United Kingdom and United States
will be subject to income tax in their respective jurisdictions once their
operations commence.

16.     SUBSEQUENT EVENTS

       (a)     Debt and financing arrangement.  On November 21, 2002, the
Company drew down the remaining $92 million of the term loan.

       (b)     Share premium issuance.  On December 17, 2002, the Company
effected a share premium issuance to its shareholders. Immediately after the
share premium issuance was effected, the Company's shareholders held five
Ordinary common shares for each Ordinary common share previously held, and held
five Class A common shares for each Class A common share previously held. The
share premium issuance has been reflected in the September 30, 2002 financial
statements and all applicable references as to the number of common shares and
per share information have been restated. Appropriate adjustments have been made
in the exercise price and number of shares subject to warrants and stock
options.

                                       F-29
<PAGE>

                 GLOSSARY OF SELECTED INSURANCE AND OTHER TERMS

Acquisition expense ratio.....   Financial ratio calculated by dividing
                                 acquisition expenses by net premiums earned.

Attachment point..............   The amount of loss retained by the cedent (per
                                 occurrence or in the aggregate, as the case may
                                 be) above which excess of loss insurance or
                                 reinsurance becomes operative.

Broker........................   An intermediary who negotiates contracts of
                                 insurance or reinsurance on behalf of an
                                 insured party, receiving a commission from the
                                 insurer or reinsurer for placement and other
                                 services rendered.

Broker-market participant.....   An insurer or reinsurer that markets and sells
                                 insurance or reinsurance principally through
                                 brokers or other intermediaries rather than
                                 through its own employees.

Capacity......................   The percentage of surplus, or the dollar amount
                                 of exposure, that an insurer or reinsurer is
                                 willing or able to place at risk. Capacity may
                                 apply to a single risk, a program, a line of
                                 business or an entire book of business.
                                 Capacity may be constrained by legal
                                 restrictions, corporate restrictions or
                                 indirect restrictions.

Captive insurance companies or
captives......................   An insurance company formed to insure the risks
                                 of its parent entity or entities.

Case reserves.................   Loss reserves, established with respect to
                                 specific, individual reported claims.

Casualty insurance or
reinsurance...................   Insurance or reinsurance which is primarily
                                 concerned with the losses caused by injuries to
                                 third persons, i.e., not the insured, or to
                                 property owned by third persons and the legal
                                 liability imposed on the insured resulting
                                 therefrom. It includes, but is not limited to,
                                 employers' liability, workers' compensation,
                                 public liability, automobile liability,
                                 personal liability and aviation liability
                                 insurance. It excludes certain types of losses
                                 that by law or custom are considered as being
                                 exclusively within the scope of other types of
                                 insurance or reinsurance, such as fire or
                                 marine.

Catastrophe...................   A severe loss, typically involving multiple
                                 claimants. Common perils include earthquakes,
                                 hurricanes, hailstorms, severe winter weather,
                                 floods, fires, tornadoes, explosions and other
                                 natural or man-made disasters. Catastrophe
                                 losses may also arise from acts of war, acts of
                                 terrorism and political instability.

Catastrophe loss..............   Loss and directly identified loss adjustment
                                 expenses from catastrophes.

Catastrophe reinsurance.......   A form of excess of loss reinsurance which,
                                 subject to a specified limit, indemnifies the
                                 ceding company for the amount of loss in excess
                                 of a specified retention with respect to an
                                 accumulation of losses resulting from a
                                 catastrophic event. The actual reinsurance
                                 document is called a "catastrophe cover." These
                                 reinsurance contracts are typically designed to
                                 cover property insurance losses but can be
                                 written to cover other types of insurance
                                 losses such as from workers' compensation
                                 policies.

                                       G-1
<PAGE>

Cede; cedent; ceding
company.......................   When an insurer reinsures some or all of its
                                 liability with another insurer, it "cedes"
                                 business and is referred to as the "ceding
                                 company."

Ceded premiums payable........   Reinsurance premium that a ceding company is
                                 obligated to pay to a reinsurer but which has
                                 not yet been paid.

Claim.........................   Request by an insured or reinsured for
                                 indemnification by an insurance company or a
                                 reinsurance company for loss incurred from an
                                 insured peril or event.

Claims-made basis.............   Insurance or reinsurance coverage with respect
                                 to claims reported during the policy period.

Combined ratio................   The sum of the loss ratio, the acquisition
                                 expense ratio and the general and
                                 administrative expense ratio. A combined ratio
                                 under 100% generally indicates an underwriting
                                 profit. A combined ratio over 100% generally
                                 indicates an underwriting loss.

Correlation...................   The degree to which events or financial results
                                 tend to correspond to each other.

CRESTA zone...................   Areas worldwide where natural hazards, such as
                                 floods, hurricanes and tornadoes, occur.
                                 Insurers use them to classify areas susceptible
                                 to particular risks.

Deductible....................   The amount of loss that an insured retains.

Deferred acquisition
expenses......................   Primarily commissions and premium taxes, which
                                 vary with and are primarily related to the
                                 production of business, are deferred and
                                 amortized to achieve a matching of revenues and
                                 expenses when reported in financial statements
                                 prepared in accordance with U.S. GAAP.

Direct insurance..............   Insurance sold by an insurer that contracts
                                 with the insured, as distinguished from
                                 reinsurance.

Directors' and officers'
liability.....................   Insurance which covers liability for corporate
                                 directors and officers for wrongful acts,
                                 subject to applicable exclusions, terms and
                                 conditions of the policy.

Earned premiums or premiums
earned........................   That portion of property and casualty premiums
                                 written that applies to the expired portion of
                                 the policy term. Earned premiums are recognized
                                 as revenues under both SAP and U.S. GAAP.

Excess of loss................   Reinsurance or insurance that indemnifies the
                                 reinsured or insured against all or a specified
                                 portion of losses over a specified currency
                                 amount or "retention."

Exclusions....................   Provisions in an insurance or reinsurance
                                 policy excluding certain risks or otherwise
                                 limiting the scope of coverage.

Exposure......................   The possibility of loss. A unit of measure of
                                 the amount of risk a company assumes.

Facultative reinsurance.......   The reinsurance of all or a portion of the
                                 insurance provided by a single policy. Each
                                 policy reinsured is separately negotiated.

Frequency.....................   The number of claims occurring during a given
                                 coverage period.

                                       G-2
<PAGE>

General and administrative
expense ratio.................   Financial ratio calculated by dividing general
                                 and administrative expenses by net premiums
                                 earned.

Gross premiums written and
acquired......................   Total premiums for insurance written and
                                 assumed reinsurance during a given period.

Incurred but not reported
("IBNR") reserves.............   Reserves for estimated losses and loss expenses
                                 that have been incurred but not yet reported to
                                 the insurer or reinsurer.

Liability insurance...........   Same as casualty insurance.

Limits........................   The maximum amounts that an insurer or
                                 reinsurer will insure or reinsure in a given
                                 area of coverage. The term also refers to the
                                 maximum amount of benefit payable for a given
                                 situation or occurrence.

Loss; losses..................   An occurrence that is the basis for submission
                                 and/or payment of a claim. Losses may be
                                 covered, limited or excluded from coverage,
                                 depending on the terms of the policy.

Loss expenses.................   The expenses of settling claims, including
                                 legal and other fees and the portion of general
                                 expenses allocated to claim settlement costs.

Loss ratio....................   Financial ratio calculated by dividing net
                                 losses and loss expenses by net premiums
                                 earned.

Loss ratio cap................   Provision in a reinsurance contract limiting
                                 the amount of loss to be assumed by the
                                 reinsurer under any one contract.

Loss reserves.................   Liabilities established by insurers and
                                 reinsurers to reflect the estimated cost of
                                 claims incurred that the insurer or reinsurer
                                 will ultimately be required to pay in respect
                                 of insurance or reinsurance it has written.
                                 Reserves are established for losses and for
                                 loss expenses, and consist of case reserves and
                                 IBNR reserves. As the term is used in this
                                 prospectus, "loss reserves" is meant to include
                                 reserves for both losses and for loss expenses.

Losses incurred...............   The total losses sustained by an insurer or
                                 reinsurer under a policy or policies, whether
                                 paid or unpaid. Incurred losses include a
                                 provision for IBNR.

Losses occurring basis........   Insurance or reinsurance coverage with respect
                                 to losses that occur during the policy period.

Maximum aggregate
limitations...................   The maximum amount recoverable under an
                                 insurance or reinsurance policy, regardless of
                                 the number or size of claims.

Monoline......................   Insurance that applies to one kind of coverage.

National Association of
Insurance Commissioners
("NAIC")......................   An organization of the insurance commissioners
                                 or directors of all 50 states and the District
                                 of Columbia organized to promote consistency of
                                 regulatory practice and statutory accounting
                                 standards throughout the United States.

Net premiums earned...........   The portion of net premiums written during or
                                 prior to a given period that was actually
                                 recognized as income during such period.

                                       G-3
<PAGE>

Net premiums written and
acquired......................   Direct written premiums plus assumed
                                 reinsurance premiums less premiums ceded to
                                 reinsurers.

Per occurrence limitations....   The maximum amount recoverable under an
                                 insurance or reinsurance policy as a result of
                                 any one event, regardless of the number of
                                 claims.

Per risk limitations..........   The maximum amount which may be claimed in
                                 association with damage to or loss of any one
                                 "risk". A "risk" in this context may mean a
                                 building, a group of buildings or an object,
                                 based on the definition used in the particular
                                 policy.

Policies attaching basis......   Reinsurance coverage with respect to the
                                 policies written by the ceding company during
                                 the reinsurance contract period.

Policy attaching contracts....   Reinsurance contracts written on a policies
                                 attaching basis.

Potential economic loss.......   As used in this prospectus, expected ultimate
                                 net earned premiums, including reinstatement
                                 premiums, less acquisition costs and less
                                 expected ultimate net losses.

Premiums......................   The amount charged during the term on policies
                                 and contracts issued, renewed or reinsured by
                                 an insurance company or reinsurance company.

Probable maximum loss.........   The largest probable loss on any given
                                 insurance policy or coverage, as determined by
                                 past experience and information.

Professional liability........   Insurance that provides coverage for attorneys,
                                 doctors, accountants and other professionals.

Property insurance or
reinsurance...................   Insurance or reinsurance that provides coverage
                                 to a person with an insurable interest in
                                 tangible property for that person's property
                                 loss, damage or loss of use.

Property per risk treaty
reinsurance...................   Reinsurance on a treaty basis of individual
                                 property risks insured by a ceding company.

Proportional basis
reinsurance...................   A generic term describing all forms of
                                 reinsurance in which the reinsurer shares a
                                 proportional part of both the original premiums
                                 and the losses of the reinsured.

Proportional treaties.........   Reinsurance treaties which assume a
                                 proportional share of the risks and premiums
                                 taken on by the ceding company.

Quota share agreements........   Reinsurance agreements wherein the insurer
                                 cedes an agreed-upon fixed percentage of
                                 liabilities, premiums and losses for each
                                 policy covered on a pro rata basis.

Qualifying quota shares.......   A reinsurance arrangement under which premiums
                                 paid by a Lloyd's syndicate to a reinsurer
                                 qualify under the Lloyd's Bye-laws to be
                                 set-off against the syndicate's aggregate
                                 premiums received, thereby increasing the
                                 syndicate's underwriting capacity.

Rates.........................   Amounts charged per unit of insurance and
                                 reinsurance.

Reinstatement.................   A ceding company's right and, typically,
                                 obligation to reinstate the portion of coverage
                                 exhausted by prior claims. Reinstatement
                                 provisions typically limit the amount of
                                 aggregate coverage for all claims during the
                                 contract period and often require additional
                                 premium payments.

                                       G-4
<PAGE>

Reinsurance...................   The practice whereby one insurer, called the
                                 reinsurer, in consideration of a premium paid
                                 to that reinsurer, agrees to indemnify another
                                 insurer, called the ceding company, for part or
                                 all of the liability of the ceding company
                                 under one or more policies or contracts of
                                 insurance which it has issued.

Reinsurance agreement.........   A contract specifying the terms of a
                                 reinsurance transaction.

Reported losses...............   Claims or potential claims that have been
                                 identified to a reinsurer by a ceding company
                                 or to an insurer by an insured.

Retention.....................   The amount of exposure a policyholder company
                                 retains on any one risk or group of risks. The
                                 term may apply to an insurance policy, where
                                 the policyholder is an individual, family or
                                 business, or a reinsurance policy, where the
                                 policyholder is an insurance company.

Retrocessional coverage.......   A transaction whereby a reinsurer cedes to
                                 another reinsurer, the retrocessionaire, all or
                                 part of the reinsurance that the first
                                 reinsurer has assumed. Retrocessional
                                 reinsurance does not legally discharge the
                                 ceding reinsurer from its liability with
                                 respect to its obligations to the reinsured.
                                 Reinsurance companies cede risks to
                                 retrocessionaires for reasons similar to those
                                 that cause primary insurers to purchase
                                 reinsurance: to reduce net liability on
                                 individual risks, to protect against
                                 catastrophic losses, to stabilize financial
                                 ratios and to obtain additional underwriting
                                 capacity.

Risk-based Capital ("RBC")....   A measure adopted by the NAIC and enacted by
                                 states for determining the minimum statutory
                                 capital and surplus requirements of insurers
                                 with required regulatory and company actions
                                 that apply when an insurer's capital and
                                 surplus is below these minimums.

Self-insure...................   That portion of the risk retained by a person
                                 for its own account.

Statutory accounting practices
("SAP").......................   The practices and procedures prescribed or
                                 permitted by domiciliary state insurance
                                 regulatory authorities in the United States for
                                 recording transactions and preparing financial
                                 statements. Statutory accounting practices
                                 generally reflect a modified going concern
                                 basis of accounting.

Statutory policyholders'
surplus or surplus............   As determined under SAP, the amount remaining
                                 after all liabilities, including loss reserves,
                                 are subtracted from all admitted assets.
                                 Admitted assets are assets of an insurer
                                 prescribed or permitted by a state to be
                                 recognized on the statutory balance sheet.
                                 Statutory surplus is also referred to as
                                 "surplus" or "surplus as regards policyholders"
                                 for statutory accounting purposes.

Treaty reinsurance............   The reinsurance of a specified type or category
                                 of risks defined in a reinsurance agreement (a
                                 "treaty") between a primary insurer or other
                                 reinsured and a reinsurer. Typically, in treaty
                                 reinsurance, the primary insurer or reinsured
                                 is obligated to offer and the reinsurer is
                                 obligated to accept a specified portion of all
                                 of that type or category of risks originally
                                 written by the primary insurer or reinsured.

                                       G-5
<PAGE>

U.S. GAAP.....................   United States generally accepted accounting
                                 principles as defined by the American Institute
                                 of Certified Public Accountants or statements
                                 of the Financial Accounting Standards Board.
                                 U.S. GAAP is the method of accounting to be
                                 used by the Company for reporting to
                                 shareholders.

U.S. Person...................   For U.S. federal income tax purposes, (i) a
                                 citizen or resident of the United States, (ii)
                                 a corporation, partnership or other entity
                                 created or organized in the United States or
                                 under the laws of the United States or of any
                                 of its political subdivisions, (iii) an estate
                                 the income of which is subject to U.S. federal
                                 income tax without regard to its source or (iv)
                                 a trust if a court within the United States is
                                 able to exercise primary supervision over the
                                 administration of the trust and one or more
                                 U.S. persons have the authority to control all
                                 substantial decisions of the trust.

Umbrella liability............   A form of insurance protection against losses
                                 in excess of amounts covered by other liability
                                 insurance policies or amounts not covered by
                                 the usual liability policies.

Underwriter...................   An employee of an insurance or reinsurance
                                 company who examines, accepts or rejects risks
                                 and classifies accepted risks in order to
                                 charge an appropriate premium for each accepted
                                 risk. The underwriter is expected to select
                                 business that will produce an average risk of
                                 loss no greater than that anticipated for the
                                 class of business.

Underwriting..................   The insurer's or reinsurer's process of
                                 reviewing applications for insurance coverage,
                                 and the decision whether to accept all or part
                                 of the coverage and determination of the
                                 applicable premiums; also refers to the
                                 acceptance of that coverage.

Underwriting gain or
underwriting loss.............   The pre-tax profit or loss experienced by a
                                 property and casualty insurance company or
                                 reinsurance company after deducting losses and
                                 loss expenses and operating expenses from net
                                 earned premiums. This profit or loss
                                 calculation includes reinsurance assumed and
                                 ceded but excludes investment income.

Unearned premium..............   The portion of premiums written that is
                                 allocable to the unexpired portion of the
                                 policy term.

Workers' compensation.........   A system (established under state and federal
                                 laws) under which employers provide insurance
                                 for benefit payments to their employees for
                                 work-related injuries, deaths and diseases,
                                 regardless of fault.

Working layer.................   Reinsurance which absorbs the losses
                                 immediately above the reinsured's retention
                                 layer. A working layer reinsurer will pay up to
                                 a certain dollar amount of losses over the
                                 insured's retention, at which point a higher
                                 layer reinsurer (or the ceding company) will be
                                 liable for additional losses. The coverage
                                 terms of a working layer typically assume an
                                 element of loss frequency.

                                       G-6
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

     THROUGH AND INCLUDING          , 2003 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO A DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING
AS AN UNDERWRITER AND WITH RESPECT TO AN UNSOLD ALLOTMENT OR SUBSCRIPTION.

                                             SHARES

                                (ENDURANCE LOGO)

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                                ORDINARY SHARES

                             ----------------------

                                   PROSPECTUS
                             ----------------------

                           JOINT BOOKRUNNING MANAGERS
         GOLDMAN, SACHS & CO.                       MERRILL LYNCH & CO.
                            ------------------------
                                    JPMORGAN
                            ------------------------
CREDIT SUISSE FIRST BOSTON                                         DEUTSCHE BANK
                                          , 2003

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

       The following table sets forth the various expenses payable by us in
connection with the offering of the ordinary shares being registered hereby. All
of the fees set forth below are estimates except for the SEC registration fee,
the NASD fee and the NYSE listing fee.

<Table>
<S>                                                            <C>
SEC registration fee........................................   $ 18,400
NYSE listing fee............................................    250,000
NASD fee....................................................     20,500
Printing and engraving expenses.............................          *
Legal fees and expenses.....................................          *
Accounting fees and expenses................................          *
Transfer agent and registrar fees...........................          *
Miscellaneous fees and expenses.............................          *
                                                               ========
     Total..................................................   $      *
</Table>

------------

* To be completed by amendment

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

       The Bye-laws of the Registrant provide for the indemnification of the
Registrant's officers and directors, members of a (duly constituted) committee
and any resident representative (and their respective heirs, executors or
administrators), each referred to as an Indemnified Person, against all actions,
costs, charges, liabilities, loss, damage or expense to the full extent
permitted by Bermuda law, incurred or suffered by such party by reason of any
act done, conceived in or omitted in the conduct of the Registrant's business or
in the discharge of his/her duties; provided that such indemnification shall not
extend to any matter which would render it void pursuant to the Companies Act
1981 (the "Companies Act") as in effect from time to time in Bermuda.

       The Registrant's bye-laws state that an Indemnified Person shall be
indemnified out of the funds of the Registrant against all liabilities incurred
by him or her by reason of any act done, conceived in or omitted in the conduct
of the Registrant's business or in the discharge of his or her duties, in
defending any proceedings, whether civil or criminal, in which judgment is given
in his or her favor, or in which he or she is acquitted, or in connection with
the application under the Companies Act in which relief is granted to him or her
by the court.

       In addition, each shareholder and the Registrant agree to waive any claim
or right of action he or it may have at any time, whether individually or by or
in the right of the Registrant against any Indemnified Person on account of any
action taken by such person in the performance of his duties with or for the
Registrant; provided that such waiver shall not extend to any claims or rights
of action which would render it void pursuant to the Companies Act 1981 as in
effect from time to time in Bermuda, that arises out of fraud or dishonesty on
the part of such Indemnified Person or with respect to the recovery of any gain,
personal profit or advantage to which such Indemnified Person is not legally
entitled.

       The Companies Act provides that a Bermuda company may indemnify its
directors in respect of any loss arising or liability attaching to them as a
result of any negligence, default, breach of duty or breach of trust of which
they may be guilty. However, the Companies Act also provides that any provision,
whether contained in the company's bye-laws or in a contract or arrangement
between the company and the director, indemnifying a director against any
liability which would attach to him in respect of his fraud or dishonesty will
be void.

                                       II-1
<PAGE>

       Reference is made to the form of Purchase Agreement to be filed as
Exhibit 1.1 hereto for provisions providing that the Underwriters are obligated,
under certain circumstances, to indemnify the directors, certain officers and
the controlling persons of the Registrant against certain liabilities under the
Securities Act of 1933, as amended (the "Securities Act").

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

       Since its formation, the Registrant has issued unregistered securities as
described below. None of the transactions involved any underwriters,
underwriting discounts or commissions, or any public offering and the Registrant
believes that each transaction, if deemed to be a sale of a security, was exempt
from the registration requirements of the Securities Act by virtue of Section
4(2) thereof, Regulation D promulgated thereunder, or Regulation S for offerings
of securities outside of the United States. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, such securities were restricted as to transfers and
appropriate legends were affixed to the share certificates and instruments
issued in such transactions.

       On December 14, 2001, Endurance Specialty Insurance Ltd. ("Endurance
Bermuda") sold 59,061,185 ordinary shares and 938,815 class A shares to certain
accredited investors for an aggregate price of $1.2 billion and issued warrants
exercisable for 8,691,560 ordinary shares and 600,930 class A shares. The sales
of shares and warrants were made in reliance on Section 4(2) of the Exchange
Act.

       On July 22, 2002, the Registrant exchanged 59,061,185 ordinary shares and
938,815 class A shares of the Registrant for an equal number of common shares of
Endurance Bermuda. In addition, outstanding warrants exercisable for 8,691,560
ordinary shares and 600,930 class A shares of Endurance Bermuda were exchanged
for the same number of ordinary warrants and class A warrants of the Registrant.
This exchange was made in reliance on Section 4(2) of the Securities Act.

       On December 17, 2002, the Registrant issued fully paid additional shares.
These shares were issued to the existing holders of ordinary shares and class A
shares in the ratio of four additional shares for each existing share held by
them. This issuance had the effect of increasing the number of common shares. No
consideration was paid for this issuance.

                                       II-2
<PAGE>

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

       (a) Exhibits

<Table>
<Caption>
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
<S>       <C>
 1.1      Form of Purchase Agreement*
 3.1      Amended and Restated Memorandum of Association*
 3.2      Amended and Restated Bye-laws*
 4.1      Specimen Ordinary Share Certificate*
 4.2      Specimen Class A Share Certificate*
 4.3      Form of Warrant for Ordinary Shares*
 4.4      Form of Warrant for Class A Shares*
 5.1      Opinion of Appleby, Spurling & Kempe*
 8.1      Opinion of Appleby, Spurling & Kempe as to certain tax
          matters*
 8.2      Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
          certain tax matters*
10.1      Shareholders Agreement, dated as of July 22, 2002 among the
          Registrant and each of the persons listed on Schedule A
          thereto*
10.2      Registration Rights Agreement, dated as of July 22, 2002,
          among the Registrant and each of the persons listed on
          Schedule A thereto*
10.3      Employment Agreement between the Registrant and Kenneth J.
          LeStrange*
10.4      Credit Agreement, dated as of August 13, 2002, among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent*
10.5      Term Loan Agreement, dated as of August 13, 2002 among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent, as amended on September 26,
          2002*
10.6      2002 Stock Option Plan*
21.1      Subsidiaries of the Registrant*
23.1      Consent of Appleby, Spurling & Kempe (included in Exhibits
          5.1 and 8.1)*
23.2      Consent of Skadden, Arps, Slate, Meagher & Flom LLP
          (included in Exhibit 8.2)*
23.3      Consent of Ernst & Young
24.1      Power of Attorney (included as part of the signature pages)
99.1      Form F-N*
</Table>

------------

* To be filed by amendment.

ITEM 17.  UNDERTAKINGS

       (a)  Insofar as indemnification for liabilities existing under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                       II-3
<PAGE>

       (b)     The undersigned Registrant hereby undertakes that:

                (1)     For purposes of determining any liability under the Act,
       the information omitted from the form of prospectus filed as part of this
       registration statement in reliance upon Rule 430A and contained in a form
       of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
       or 497(h) under the Act shall be deemed to be part of this registration
       statement as of the time it was declared effective.

                (2)     For the purpose of determining any liability under the
       Act, each post-effective amendment that contains a form of prospectus
       shall be deemed to be a new registration statement relating to the
       securities offered therein, and the offering of such securities at that
       time shall be deemed to be the initial bona fide offering thereof.

       (c)     The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

                                       II-4
<PAGE>

                                   SIGNATURES

       Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Hamilton, Bermuda on the 19th day of December, 2002.

                                          ENDURANCE SPECIALTY HOLDINGS LTD.

                                          By: /s/ KENNETH J. LESTRANGE
                                            ------------------------------------
                                              Name: Kenneth J. LeStrange
                                              Title: Chairman of the Board

                               POWER OF ATTORNEY

     We, the undersigned officers, directors and authorized representatives of
Endurance Specialty Holdings Ltd., hereby severally constitute and appoint
Kenneth J. LeStrange, our true and lawful attorney with full power to him, with
full power of substitution and resubstitution, to sign for us and in our names
in the capacities indicated below, the Registration Statement on Form S-1 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and any subsequent Registration Statement for the same
offering which may be filed under Rule 462(b), and generally to do all such
things in our names and on our behalf in our capacities as officers and
directors to enable Endurance Specialty Holdings Ltd. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney, or his substitute or
substitutes, to said Registration Statement and any and all amendments thereto
or to any subsequent Registration Statement for the same offering which may be
filed under Rule 462(b).

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<Table>
<Caption>
                    SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
<S>     <C>                                          <C>                               <C>

/s/ KENNETH J. LESTRANGE
------------------------------------------------      Chairman of the Board, Chief     December 19, 2002
Name: Kenneth J. LeStrange                            Executive Officer, President
                                                              and Director

/s/ JAMES R. KRONER                                      Chief Financial Officer       December 19, 2002
------------------------------------------------      (Principal Financial Officer
Name: James R. Kroner                                   and Principal Accounting
                                                          Officer) and Director


/s/ WILLIAM H. BOLINDER                                         Director               December 19, 2002
------------------------------------------------
Name: William H. Bolinder


/s/ DAVID L. COLE                                               Director               December 19, 2002
------------------------------------------------
Name: David L. Cole


/s/ JONATHAN J. COSLET                                          Director               December 19, 2002
------------------------------------------------
Name: Jonathan J. Coslet
</Table>

                                       II-5
<PAGE>

<Table>
<Caption>
                    SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----

<S>     <C>                                          <C>                               <C>

/s/ ANTHONY J. DINOVI                                           Director               December 19, 2002
------------------------------------------------
Name: Anthony J. DiNovi


/s/ BRYON EHRHART                                               Director               December 19, 2002
------------------------------------------------
Name: Bryon Ehrhart


/s/ CHARLES FROLAND                                             Director               December 19, 2002
------------------------------------------------
Name: Charles Froland


/s/ RICHARD PERRY                                               Director               December 19, 2002
------------------------------------------------
Name: Richard Perry


/s/ ROBERT A. SPASS                                             Director               December 19, 2002
------------------------------------------------
Name: Robert A. Spass


/s/ RICHARD J. STERNE                                           Director               December 19, 2002
------------------------------------------------
Name: Richard J. Sterne
</Table>

                                       II-6
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
<S>       <C>
 1.1      Form of Purchase Agreement*
 3.1      Amended and Restated Memorandum of Association*
 3.2      Amended and Restated Bye-laws*
 4.1      Specimen Ordinary Share Certificate*
 4.2      Specimen Class A Share Certificate*
 4.3      Form of Warrant for Ordinary Shares*
 4.4      Form of Warrant for Class A Shares*
 5.1      Opinion of Appleby, Spurling & Kempe*
 8.1      Opinion of Appleby, Spurling & Kempe as to certain tax
          matters*
 8.2      Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
          certain tax matters*
10.1      Shareholders Agreement, dated as of July 22, 2002 among the
          Registrant and each of the persons listed on Schedule A
          thereto*
10.2      Registration Rights Agreement, dated as of July 22, 2002,
          among the Registrant and each of the persons listed on
          Schedule A thereto*
10.3      Employment Agreement between the Registrant and Kenneth J.
          LeStrange*
10.4      Credit Agreement, dated as of August 13, 2002, among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent*
10.5      Term Loan Agreement, dated as of August 13, 2002 among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent, as amended on September 26,
          2002*
10.6      2002 Stock Option Plan*
21.1      Subsidiaries of the Registrant*
23.1      Consent of Appleby, Spurling & Kempe (included in Exhibits
          5.1 and 8.1)*
23.2      Consent of Skadden, Arps, Slate, Meagher & Flom LLP
          (included in Exhibit 8.2)*
23.3      Consent of Ernst & Young
24.1      Power of Attorney (included as part of the signature pages)
99.1      Form F-N*
</Table>

------------

* To be filed by amendment.
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 2002

                                                      REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                       ENDURANCE SPECIALTY HOLDINGS LTD.
             (Exact Name of Registrant as Specified in Its Charter)
BERMUDA                                6331                            NOT APPLICABLE
  (State or Other Jurisdiction of        (Primary Standard Industrial     (I.R.S. Employer Identification No.)
   Incorporation or Organization)        Classification Code Number)
CROWN HOUSE
                              4 PAR-LA-VILLE ROAD
                            HAMILTON HM 08, BERMUDA
                                 (441) 278-0400
  (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)

                             CT CORPORATION SYSTEM
                         111 EIGHTH AVENUE, 13TH FLOOR
                            NEW YORK, NEW YORK 10011
 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
                             of Agent For Service)
                             ---------------------

                                   COPIES TO:
SUSAN J. SUTHERLAND, ESQ.                                 MICHAEL GROLL, ESQ.
       SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP                       SHERI E. BLOOMBERG, ESQ.
                  FOUR TIMES SQUARE                            LEBOEUF, LAMB, GREENE & MACRAE, L.L.P.
               NEW YORK, NEW YORK 10036                                 125 WEST 55TH STREET
                    (212) 735-3000                                    NEW YORK, NEW YORK 10019
              (212) 735-2000 (FACSIMILE)                     (212) 424-8000; (212) 424-8500 (FACSIMILE)
---------------------
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date of this Registration Statement.

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering.  [ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.  [ ]

                        CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
                                                                 PROPOSED MAXIMUM
                   TITLE OF EACH CLASS OF                       AGGREGATE OFFERING           AMOUNT OF
                SECURITIES TO BE REGISTERED                        PRICE(1)(2)            REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------
Ordinary Shares, $1.00 par value............................       $200,000,000               $18,400
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
(1) Includes shares to cover over-allotments, if any, pursuant to an
    over-allotment option granted to the underwriters.

(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(c) under the Securities Act of 1933, as amended.

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

                Subject to Completion. Dated December 19, 2002.
PROSPECTUS

                                  ,000,000 SHARES

                                (ENDURANCE LOGO)

                       ENDURANCE SPECIALTY HOLDINGS LTD.
                                ORDINARY SHARES
                             ----------------------

       This is the initial public offering of ordinary shares of Endurance
Specialty Holdings Ltd. All of the           ordinary shares are being sold by
the Company.

       The Company expects the initial public offering price to be between
$     and $     per share. No public market currently exists for the ordinary
shares. The Company intends to apply to have the ordinary shares approved for
listing on the New York Stock Exchange under the symbol "ENH."
                             ----------------------

       INVESTING IN THE ORDINARY SHARES INVOLVES RISK.   SEE "RISK FACTORS"
BEGINNING ON PAGE 9 TO READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING
ORDINARY SHARES.
                             ----------------------
PER SHARE              TOTAL
                                                              ---------              -----
Initial public offering price...............................    $                    $
Underwriting discount.......................................    $                    $
Proceeds, before expenses, to Endurance Specialty Holdings
  Ltd.......................................................    $                    $
----------------------
       To the extent that the underwriters sell more than      ordinary shares,
the underwriters have the option to purchase up to an additional      ordinary
shares from the Company at the initial price to public less the underwriting
discount.

       NEITHER THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION NOR ANY OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

       The shares will be ready for delivery on or about           , 2003.
                             ----------------------

                           JOINT BOOKRUNNING MANAGERS
GOLDMAN, SACHS & CO.                                         MERRILL LYNCH & CO.
                             ----------------------
                                    JPMORGAN
                             ----------------------
CREDIT SUISSE FIRST BOSTON                                         DEUTSCHE BANK
                             ----------------------

                The date of this prospectus is           , 2003.
TABLE OF CONTENTS
PAGE
                                                              ----
Prospectus Summary..........................................    1
Risk Factors................................................    9
Cautionary Statement Regarding Forward-Looking Statements...   27
Use of Proceeds.............................................   28
Dividend Policy.............................................   29
Capitalization..............................................   30
Dilution....................................................   31
Selected Consolidated Financial Information.................   32
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   34
Industry Background.........................................   46
Business....................................................   48
Regulatory Matters..........................................   65
Management..................................................   76
Principal Shareholders......................................   85
Certain Relationships and Related Transactions..............   88
Description of Share Capital................................   89
Certain Indebtedness........................................  101
Shares Eligible for Future Sale.............................  103
Material Tax Considerations.................................  105
Underwriting................................................  114
Legal Matters...............................................  117
Experts.....................................................  117
Where You Can Find More Information.........................  117
Enforceability of Civil Liabilities under United States
  Federal Securities Laws and Other Matters.................  118
Index to Consolidated Financial Statements..................  F-1
Glossary of Selected Insurance and Other Terms..............  G-1
---------------------

       YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
WE ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY THESE SECURITIES ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR ORDINARY SHARES.

       ORDINARY SHARES MAY BE OFFERED OR SOLD IN BERMUDA ONLY IN COMPLIANCE WITH
THE PROVISIONS OF THE INVESTMENT BUSINESS ACT OF 1998 OF BERMUDA WHICH REGULATES
THE SALE OF SECURITIES IN BERMUDA. IN ADDITION, THE BERMUDA MONETARY AUTHORITY
(THE "BMA") MUST APPROVE ALL ISSUANCES AND TRANSFERS OF SHARES OF A BERMUDA
EXEMPTED COMPANY. BEFORE THIS OFFERING, WE EXPECT THE BMA WILL HAVE ISSUED THEIR
PERMISSION FOR THE ISSUE AND FREE TRANSFERABILITY OF THE ORDINARY SHARES BEING
OFFERED PURSUANT TO THIS PROSPECTUS, AS LONG AS THE SHARES ARE LISTED ON THE
NYSE, TO AND AMONG PERSONS WHO ARE NON-RESIDENTS OF BERMUDA FOR EXCHANGE CONTROL
PURPOSES. IN ADDITION, WE WILL DELIVER TO AND FILE A COPY OF THIS PROSPECTUS
WITH THE REGISTRAR OF COMPANIES IN BERMUDA IN ACCORDANCE WITH BERMUDA LAW. THE
BMA AND THE REGISTRAR OF COMPANIES ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL
SOUNDNESS OF ANY PROPOSAL OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE
OR OPINIONS EXPRESSED IN THIS PROSPECTUS.

                                        i
PROSPECTUS SUMMARY

       This summary highlights information contained elsewhere in this
prospectus. Because it is a summary, it does not contain all of the information
that you should consider before investing. You should read the entire prospectus
carefully, including the "Risk Factors" and "Cautionary Statement Regarding
Forward-Looking Statements" sections and our consolidated financial statements
and the notes to those financial statements before making an investment
decision. As used in this prospectus, unless the context otherwise requires,
references to "we," "us," "our" and "the Company" refer to the consolidated
operations of Endurance Specialty Holdings Ltd., and its direct and indirect
subsidiaries, including Endurance Specialty Insurance Ltd. ("Endurance
Bermuda"), Endurance Worldwide Holdings Limited, Endurance Worldwide Insurance
Limited ("Endurance U.K."), Endurance U.S. Holdings Corp. and Endurance
Reinsurance Corporation of America ("Endurance U.S."). "Endurance Holdings"
refers solely to Endurance Specialty Holdings Ltd. In this prospectus, amounts
are expressed in U.S. dollars and the financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP"), except as otherwise indicated. We have included a
glossary of insurance and other terms, commencing on page G-1. Each term defined
in the glossary is printed in boldface the first time it appears in this
prospectus. On December 17, 2002, we effected a share premium issuance to our
existing shareholders. Except as otherwise indicated, all share data in this
prospectus assumes the share premium issuance to our existing shareholders of
four additional shares for each common share outstanding had occurred as of the
date such data is presented. As used in this prospectus, "common shares" refers
to our ordinary shares and class A shares, collectively. Unless otherwise
indicated, all data in this prospectus assumes no exercise of either the
underwriters' over-allotment option or of any outstanding warrants or options to
purchase common shares of Endurance Holdings.

                                  THE COMPANY

OVERVIEW

       Endurance Holdings is a holding company domiciled in Bermuda. Through our
operating subsidiaries based in Bermuda, the United Kingdom and the United
States, we focus on writing specialty lines of commercial PROPERTY and CASUALTY
INSURANCE and REINSURANCE on a global basis. We define specialty lines as those
lines of insurance and reinsurance that require dedicated, specialized
UNDERWRITING skills and resources in order to be profitably underwritten. Our
portfolio of specialty lines of business is organized into the following
segments: property per risk treaty reinsurance, property catastrophe
reinsurance, casualty treaty reinsurance, property individual risk, casualty
individual risk and other specialty lines.

       We seek to create a portfolio of specialty lines which are profitable and
have limited CORRELATION with one another. We believe that a well constructed
portfolio of diversified risks will produce less volatile results than each of
the individual lines of business independently and will provide a superior
risk-adjusted return on our capital. We identify and underwrite attractive
insurance and reinsurance business through our experienced underwriting staff
and apply a centralized quantitative framework of risk analysis across all of
our business segments. We produce our business through the leading worldwide
insurance and reinsurance intermediaries.

       We began operations on December 17, 2001 after Endurance Bermuda
completed a private placement of $1.2 billion of its equity securities. Initial
investors in Endurance Bermuda included Aon Corporation ("Aon"), Zurich
Financial Services Group ("Zurich"), Thomas H. Lee Partners, L.P. ("THL"), Texas
Pacific Group ("TPG"), Capital Z Financial Services Fund II, L.P. ("Capital Z"),
Perry Capital, Metro Center Investments Pte Ltd, General Motors Asset Management
("GM"), Lightyear Capital, Credit Suisse First Boston, Golden Gate Capital,
Reservoir Capital and TIAA-CREF.

       Since our founding and initial private placement, we have been able to
achieve significant success in the development of our business. Our
accomplishments include recruiting a highly experienced management team and
building a staff of over 100; forming and licensing insurance subsidiaries in
Bermuda, the United Kingdom and the United States; acquiring the property
catastrophe business of
                                        1
LaSalle Re Limited ("LaSalle"); establishing a $300 million credit facility; and
repurchasing the equity interests in the Company owned by Zurich. For the nine
months ended September 30, 2002, we had $623 million in GROSS PREMIUMS WRITTEN
AND ACQUIRED and $63 million in net income. At September 30, 2002, we had $1.9
billion in total assets and $1.2 billion in shareholders' equity.

       Current conditions in the global insurance and reinsurance markets
present an attractive opportunity for us to deploy our capital. Many global
property and casualty insurers and reinsurers are currently experiencing
significantly reduced capital resulting from several years of excessively
competitive pricing, expanding coverage terms, significant increases in LOSSES
from asbestos liability, under-reserving, poor investment performance and losses
from the World Trade Center tragedy. This reduction in capacity has resulted in
considerable increases in pricing and in terms and conditions that are
significantly more favorable for insurers and reinsurers. We believe that the
additional capital provided through this offering, combined with our business
strategy, experienced management team and unencumbered balance sheet, will
enhance our ability to benefit from this market environment.

OUR COMPETITIVE STRENGTHS

       We believe certain characteristics distinguish us from our competitors,
including:

       -     Extensive Specialized Underwriting and Risk Management
             Capabilities.  We have made significant initial investments in our
             technical capabilities, including hiring 38 experienced
             UNDERWRITERS, an actuarial staff of seven, and a risk analysis and
             modeling staff of six. We extensively integrate our underwriting
             decisions with actuarial analysis, developing our own view as to
             the adequacy of the pricing in the insurance and reinsurance
             business which we underwrite.

       -     Experienced Management Team.  Our senior management team averages
             over 20 years of experience in the insurance and reinsurance
             industry. Our senior management, underwriting and technical
             professionals participate in our stock option plan that ties
             compensation to the achievement of goals aligned with those of our
             shareholders.

       -     Strong Market Relationships.  The underwriting expertise and
             extensive industry relationships previously developed by our senior
             management team and underwriters have allowed us to quickly
             establish our presence in the global insurance and reinsurance
             markets. We have strong relationships with major insurance and
             reinsurance brokers, including: Aon, Marsh & McLennan Companies,
             Inc. ("Marsh"), Willis Group Holdings, Ltd. ("Willis"), Benfield
             Group plc ("Benfield") and A.J. Gallagher & Co. ("A.J. Gallagher").
             To date, we have written business with approximately 550 clients.

       -     Bermuda-Based Operations.  Bermuda is our principal base of
             operations. As one of the leading centers of the global insurance
             industry, Bermuda provides us with ready access to clients who
             increasingly seek Bermuda-based capacity to meet their insurance
             and reinsurance needs. Bermuda also has a well developed network of
             insurance and reinsurance brokers, an experienced pool of employees
             with significant insurance expertise and a very responsive
             regulatory environment which allows for rapid innovation in
             insurance and reinsurance products.

       -     Conservative Investment Policy.  We have a conservative investment
             policy aimed at minimizing the volatility of our investment
             results. At September 30, 2002, 100% of our invested assets were
             held in cash equivalents and fixed maturity securities, 86% of
             which were rated AAA and 100% were rated A or better, with an
             average duration of 2.6 years.

       -     Unencumbered Capital Base.  We have statutory capital and surplus
             of approximately $1.2 billion. As a newly formed company, we are
             unencumbered by any historical losses relating to asbestos
             liabilities, the World Trade Center tragedy and other historical
             liability EXPOSURES currently affecting many of our competitors. By
             choosing to form and license new subsidiaries rather than assuming
             unknown liabilities through the acquisition of existing
                                        2
licensed "shell" companies, we have no risk that loss reserve
             development relating to historical exposures prior to our formation
             will negatively impact our future financial results. We believe
             that our unencumbered capital will allow us to distinguish
             ourselves from many of our competitors and help to attract clients
             who are seeking long-term financial stability from their insurers
             and reinsurers.

BUSINESS STRATEGY

       Our goal is to generate a superior long-term return on capital by
leveraging our competitive strengths and executing our strategy. The key
elements of our strategy are:

       -     Maintain a Portfolio of Profitable Specialty Lines.  We believe
             that there are significant opportunities in a number of lines of
             business in the current market environment. We participate in those
             specific specialty lines which we believe have the potential to
             offer the highest risk-adjusted return on capital and in which we
             believe we can establish a competitive advantage through our
             specialized teams of expert underwriters. We intend to use our
             ability to participate in multiple lines of business to deploy
             capital and resources to the most attractive business lines at the
             most opportune times.

       -     Utilize Monoline Level of Expertise in Each Line of Business.  We
             have formed teams of highly experienced professionals to manage
             each of our specific lines of business. Each team is led by a
             senior executive with extensive experience in the distinct business
             line for which the team is responsible and is supported by highly
             experienced underwriting personnel who are specialists in their
             unique business line.

       -     Apply Extensive Technical Analysis to Our Underwriting.  We manage
             our portfolio of risks through the utilization of CATASTROPHE
             modeling and dynamic financial analysis techniques that provide a
             quantitative basis for the management of risk aggregation and
             correlation. We license a broad array of catastrophe modeling
             products available from AIR Worldwide Corporation ("AIR") and RMS,
             Inc. ("RMS"). We have also launched our own proprietary
             underwriting risk management system and are building a proprietary
             suite of individual contract, portfolio and market risk management
             and price monitoring tools around this system. We intend to
             proactively monitor market trends to look for competitive threats
             to the lines of business in which we are operating as well as
             analyze potential new lines that may provide attractive
             opportunities.

             We require significant amounts of data in our underwriting process.
             We avoid writing business for which we believe sufficient data is
             not available, and therefore, to date have written no QUALIFYING
             QUOTA SHARES and only a limited amount of retrocessional business.
             We also limit the use of retrocessional protection, relying upon
             our underwriting analysis for risk management purposes.

       -     Maintain an Efficient Expense Structure.  We believe an efficient
             expense structure will allow us to produce more profitable results
             and more easily deploy our resources to those lines of business
             that become more attractive as market conditions change. Several
             factors contribute to our low cost structure, including our
             utilization of variable cost brokerage distribution, our presence
             in the Bermuda market which targets large insurance and reinsurance
             programs for clients, our current focus on high severity, low
             FREQUENCY lines which can be underwritten by relatively small
             teams, and our centralized risk management structure which limits
             redundant expenses and systems.

       -     Proactively Manage Our Capital Base.  We actively manage our
             capital by allocating resources to underwriting opportunities which
             we believe will offer the highest risk-adjusted return on capital.
             Over the long-term, we will seek to return excess capital to our
             shareholders rather than use excess capital to underwrite business
             at unattractive pricing levels. We believe the acquisition of the
             LaSalle property catastrophe business and the

                                        3
repurchase of the Zurich equity stake in the Company demonstrates
             two different aspects of our proactive capital management.

RECENT DEVELOPMENTS

       In September 2002, Endurance Holdings repurchased 5,000,000 of its
ordinary shares and cancelled warrants to purchase 2,049,600 of its ordinary
shares from two subsidiaries of Zurich for $100 million in cash. We financed the
purchase by drawing down $100 million from our existing term loan facility. This
debt currently bears interest at the London Interbank Offer Rate ("LIBOR") plus
1.00%. See "Certain Indebtedness" for additional disclosure.

       Endurance U.K. was incorporated on April 10, 2002. On December 4, 2002,
Endurance U.K. was authorized by the United Kingdom's Financial Services
Authority ("FSA") to begin writing certain lines of insurance and reinsurance in
the United Kingdom. As an authorized insurer in the United Kingdom, Endurance
U.K. would be able to operate throughout the European Union, subject to
compliance with certain notification requirements of the FSA and, in some cases,
certain local regulatory requirements.

       Endurance U.S. was incorporated on September 5, 2002. On December 18,
2002, it received a license to write certain lines of reinsurance business in
the State of New York from the New York State Department of Insurance (the "New
York Department").

       On November 21, 2002, Endurance Holdings borrowed $92 million available
under the term loan facility. These funds were used as part of a capital
contribution to Endurance Bermuda, which in turn made contributions to Endurance
U.S. and Endurance U.K. as part of their initial capitalization. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" for additional disclosure.

                             ---------------------

       Our principal executive offices are located at Crown House, 4
Par-la-Ville Road, Hamilton HM 08, Bermuda and our telephone number is (441)
278-0400.

                                        4
THE OFFERING

Shares we are offering........        ordinary shares

Over-allotment option.........        ordinary shares

Common shares to be
outstanding after this
offering......................                  shares

Voting rights.................   On all matters submitted to a vote of
                                 shareholders, holders of our ordinary shares
                                 are entitled to one vote per share, subject to
                                 the adjustments regarding voting set forth in
                                 "Description of Share Capital -- Voting
                                 Rights."

Use of proceeds...............   Assuming our ordinary shares are offered at an
                                 initial public offering price of $
                                 (the midpoint of the range stated on the front
                                 cover page of this prospectus), the net
                                 proceeds from this offering after deducting the
                                 estimated underwriting discount and our
                                 estimated offering expenses are estimated to be
                                 approximately $          million (assuming no
                                 exercise of the underwriters' over-allotment
                                 option) or approximately $          million
                                 (assuming the full exercise of the
                                 underwriters' over-allotment option). We intend
                                 to use these proceeds to provide additional
                                 capital to our subsidiaries, to repay a portion
                                 of the outstanding debt under our credit
                                 facilities and for other general corporate
                                 purposes.

Dividend policy...............   Our board of directors has not yet determined
                                 its intention regarding the payment of
                                 dividends on our ordinary shares. Our ability
                                 to pay dividends is subject to significant
                                 restrictions which are described under
                                 "Dividend Policy," "Regulatory Matters" and
                                 elsewhere in this prospectus.

Risk factors..................   See "Risk Factors" and other information
                                 included in this prospectus for a discussion of
                                 factors you should carefully consider before
                                 deciding to invest in our ordinary shares.

Stock exchange listing........   We intend to apply to have our ordinary shares
                                 approved for listing on the New York Stock
                                 Exchange under the symbol "ENH."

The number of common shares to be outstanding after the offering is based upon
the number of shares to be outstanding as of December 18, 2002 and reflects a
share premium issuance of four additional shares for each common share
outstanding that was effected immediately prior to that date. The information
above does not include           ordinary shares that may be issued pursuant to
the underwriters' over-allotment option, 3,287,290 ordinary shares issuable upon
the exercise of stock options that had been granted as of September 30, 2002 or
6,641,960 ordinary shares and 600,930 class A shares issuable upon the exercise
of warrants outstanding as of September 30, 2002.

                                        5
SUMMARY CONSOLIDATED FINANCIAL INFORMATION

       The following table sets forth our summary consolidated financial
information for the periods ended and as of the dates indicated. As described in
Note 1 to our consolidated financial statements included elsewhere in this
prospectus, our consolidated financial statements include the accounts of both
Endurance Holdings and Endurance Bermuda (our only operating subsidiary as of
September 30, 2002). Endurance Bermuda was incorporated on November 30, 2001 and
commenced operations on December 17, 2001. Endurance Holdings was incorporated
on June 27, 2002 and effected an exchange offer in July 2002 with the
shareholders of Endurance Bermuda. The exchange offer was accounted for as a
business combination of companies under common control.

       The summary consolidated financial information presented below is derived
from our consolidated financial statements included elsewhere in this
prospectus. The financial information for and as of the nine months ended
September 30, 2002 is based on our unaudited financial statements. These
historical results are not necessarily indicative of results to be expected from
any future period or of our full year performance. You should read this summary
consolidated financial information together with our consolidated financial
statements and related notes and the section of this prospectus entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
PERIOD ENDED           NINE MONTHS ENDED
                                                               DECEMBER 31, 2001        SEPTEMBER 30, 2002
                                                             ---------------------    ----------------------
                                                             (IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
SUMMARY INCOME STATEMENT DATA:
Gross premiums written and acquired(a).....................         $   376                  $623,472
Net premiums written and acquired(b).......................             376                   590,513
Net premiums earned........................................               1                   204,282
Net investment income......................................             838                    29,355
Net realized gains on sales of investments.................              --                     3,688
Losses and loss expenses...................................              --                   115,146
Acquisition expenses.......................................              --                    33,304
General and administrative expenses........................             527                    26,494
Net income.................................................             312                    63,488
PER SHARE DATA:
Basic earnings per share...................................         $  0.01                  $   1.06
Diluted earnings per share.................................         $  0.01                  $   1.06
Weighted average number of common shares outstanding
  Basic....................................................          39,630                    59,945
  Diluted..................................................          39,630                    60,088
6
AS OF SEPTEMBER 30, 2002
                                                        AS OF          -------------------------------------
                                                  DECEMBER 31, 2001        ACTUAL           AS ADJUSTED(C)
                                                  -----------------    --------------     ------------------
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
SUMMARY BALANCE SHEET DATA:
Cash and investments............................     $1,162,498          $1,453,234
Total assets....................................      1,165,099           1,853,083
Reserve for losses and loss expenses............             --             114,779
Reserve for unearned premiums...................            375             402,803
Bank debt(d)....................................             --             100,000
Total shareholders' equity......................      1,162,312           1,174,408
PER SHARE DATA:
Book value per share(e).........................     $    19.37          $    21.35
Diluted book value per share(f).................     $    19.37          $    21.10
SELECTED NON-U.S. GAAP DATA:
Net operating income(g).........................     $      312          $   59,800
NINE MONTHS ENDED
                                                              SEPTEMBER 30, 2002
                                                              ------------------
Loss ratio(h)...............................................         56.4%
Acquisition expense ratio(i)................................         16.3%
General and administrative expense ratio(j).................         13.0%
                                                                     ----
Combined ratio(k)...........................................         85.7%
                                                                     ====
7
------------

(a) Gross premiums written and acquired for the nine months ended September 30,
    2002 include $89 million of gross premiums acquired in the LaSalle
    transaction. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations."

(b) NET PREMIUMS WRITTEN AND ACQUIRED for the nine months ended September 30,
    2002 include $67 million of net premiums acquired in the LaSalle
    transaction. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations."

(c) The as adjusted summary balance sheet data as of September 30, 2002 reflects
    the application of the net proceeds of the sale of           ordinary shares
    in this offering at an assumed initial public offering price of $     , the
    midpoint of the range set forth on the cover of this prospectus (assuming no
    exercise of the underwriters' over-allotment option) after deducting the
    estimated underwriting discount and our estimated offering expenses. See
    "Use of Proceeds."

(d) On November 21, 2002, Endurance Holdings borrowed the remaining $92 million
    available under its term loan facility. For a full description of the
    Company's credit facilities, see "Certain Indebtedness."

(e) Book value per share is based on total shareholders' equity divided by basic
    common shares outstanding of 60,000,000 at December 31, 2001 and 55,000,000
    at September 30, 2002.

(f) Diluted book value per share is based on total shareholders' equity divided
    by the number of common shares and common share equivalents outstanding at
    the end of the period, using the treasury stock method. Common share
    equivalents include options and warrants which are dilutive when the book
    value of the Company exceeds the exercise price of the options or warrants.
    Diluted shares outstanding at December 31, 2001 were 60,000,000, and at
    September 30, 2002 were 55,667,170.

(g) Net operating income for the nine months ended September 30, 2002 is
    calculated by subtracting net realized gains on sales of investments of $3.7
    million from net income of $63.5 million. Net operating income was equal to
    net income for the period ended December 31, 2001.

(h) The loss ratio is calculated by dividing losses and loss expenses by net
    premiums earned.

(i) The acquisition expense ratio is calculated by dividing acquisition expenses
    by net premiums earned.

(j) The general and administrative expense ratio is calculated by dividing
    general and administrative expenses by net premiums earned.

(k) The combined ratio is the sum of the loss ratio, the acquisition expense
    ratio and the general and administrative expense ratio.

                                        8
RISK FACTORS

       Before investing in our ordinary shares you should carefully consider the
following risk factors and all other information set forth in this prospectus.
These risks could materially affect our business, results of operations or
financial condition and cause the trading price of our ordinary shares to
decline. You could lose all or part of your investment.

                         RISKS RELATING TO OUR BUSINESS

SINCE WE HAVE A LIMITED OPERATING HISTORY, IT IS DIFFICULT TO PREDICT OUR FUTURE
PERFORMANCE.

       Our Bermuda insurance subsidiary, Endurance Bermuda, was formed on
November 30, 2001 and began operations on December 17, 2001. Endurance Holdings
was formed on June 27, 2002 and our other subsidiaries were only recently
formed. We therefore have a limited operating and financial history. As a
result, there is limited historical financial and operating information
available to help you evaluate our past performance or to make a decision about
an investment in our ordinary shares. Companies in their initial stages of
development present substantial business and financial risks and may suffer
significant losses. These new companies must successfully develop business
relationships, establish operating procedures, hire staff, install information
management and other systems, establish facilities and obtain licenses, as well
as take other steps necessary to conduct their intended business activities.
There can be no assurance that we will be successful in implementing our
business strategy or in completing the development of the infrastructure
necessary to run our business. In addition, because our business consists of a
relatively limited number of insurance and reinsurance transactions, and because
we have not experienced any substantial CLAIMS to date, our historical financial
results may not accurately predict our future performance. As a result of
industry factors or factors specific to us, we may have to alter our anticipated
methods of conducting our business, such as the nature, amount and types of
risks we assume.

AS A PROPERTY AND PROPERTY CATASTROPHE INSURER AND REINSURER, WE ARE
PARTICULARLY VULNERABLE TO LOSSES FROM CATASTROPHES.

       Our property and property catastrophe insurance and reinsurance
operations expose us to claims arising out of catastrophes. Catastrophes can be
caused by various unpredictable events, including earthquakes, hurricanes,
hailstorms, severe winter weather, floods, fires, tornadoes, explosions and
other natural or man-made disasters. We also face substantial exposure to losses
resulting from acts of war, acts of terrorism and political instability. The
global geographic distribution of our business subjects us to catastrophe
exposure for natural events occurring in a number of areas throughout the world,
including, but not limited to, windstorms in Europe, hurricanes in Florida, the
Gulf Coast and the Atlantic coast regions of the United States, typhoons and
earthquakes in Japan and earthquakes in California and the New Madrid region of
the United States. The loss experience of property catastrophe insurers and
reinsurers has generally been characterized as low frequency but high severity
in nature. In the event that we experience CATASTROPHE LOSSES, there is no
assurance that our unearned premium and LOSS RESERVES will be adequate to cover
these risks. In addition, because accounting regulations do not permit insurers
and reinsurers to reserve for such catastrophic events until they occur, claims
from catastrophic events could cause substantial volatility in our financial
results for any fiscal quarter or year and could have a material adverse affect
on our financial condition or results of operations. Our ability to write new
business also could be adversely impacted. See "Business -- Underwriting and
Risk Management."

IF ACTUAL CLAIMS EXCEED OUR RESERVE FOR LOSSES AND LOSS EXPENSES, OUR FINANCIAL
CONDITION COULD BE ADVERSELY AFFECTED.

       Our success depends upon our ability to accurately assess the risks
associated with the businesses that we insure or reinsure. We establish loss
reserves to cover our estimated liability for the payment of all losses and LOSS
EXPENSES incurred with respect to premiums earned on the policies that we write.
Loss reserves do not represent an exact calculation of liability. Rather, loss
reserves are estimates of what we

                                        9
expect the ultimate settlement and administration of claims will cost. These
estimates are based upon actuarial and statistical projections and on our
assessment of currently available data, as well as estimates of future trends in
claims severity and frequency, judicial theories of liability and other factors.
Loss reserve estimates are refined continually in an ongoing process as
experience develops and claims are reported and settled. Establishing an
appropriate level of loss reserves is an inherently uncertain process. Moreover,
these uncertainties are greater for new issuers like us than for an issuer with
a longer operating history because we do not yet have an established loss
history. Because of this uncertainty, we cannot assure you that our reserves at
any given time will prove adequate.

       To the extent we determine that actual losses and loss expenses exceed
our expectations and reserves reflected in our financial statements, we will be
required to immediately reflect these changes. This could cause a material
increase in our liabilities and a reduction in our profitability, including an
operating loss and reduction of capital. The number and size of reported claims
that we have received to date has been small. In the future, the number of
claims will increase, and their cumulative size could exceed our loss reserves.

THE RISKS ASSOCIATED WITH REINSURANCE UNDERWRITING COULD ADVERSELY AFFECT US.

       Because we participate in reinsurance markets, the success of our
underwriting efforts depends, in part, upon the policies, procedures and
expertise of the CEDING COMPANIES making the original underwriting decisions. We
face the risk that these ceding companies may fail to accurately assess the
risks that they assume initially, which, in turn, may lead us to inaccurately
assess the risks we assume. If we fail to establish and receive appropriate
premium RATES, we could face significant losses on these contracts.

THE FAILURE OF ANY OF THE LOSS LIMITATION METHODS WE EMPLOY COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION OR ON OUR RESULTS OF
OPERATIONS.

       We seek to limit our loss exposure by writing many of our insurance and
reinsurance contracts on an EXCESS OF LOSS basis, adhering to maximum
limitations on policies written in defined geographical zones, limiting program
size for each client, establishing PER RISK and PER OCCURRENCE LIMITATIONS for
each event and prudent underwriting guidelines for each program written. In the
case of PROPORTIONAL TREATIES, we seek per occurrence limitations or LOSS RATIO
CAPS to limit the impact of losses from any one event. Most of our direct
LIABILITY INSURANCE policies include MAXIMUM AGGREGATE LIMITATIONS. We also seek
to limit our loss exposure through geographic diversification. Geographic zone
limitations involve significant underwriting judgments, including the
determination of the area of the zones and whether a policy falls within
particular zone LIMITS. Disputes relating to coverage and choice of legal forum
may also arise. There can be no assurance that various provisions of our
policies, such as limitations or exclusions from coverage or choice of forum,
will be enforceable in the manner we intend nor can there be any assurance that
any of our other loss limitation methods will be effective. Underwriting is a
matter of judgment, involving important assumptions about matters that are
inherently unpredictable and beyond our control, and for which historical
experience and probability analysis may not provide sufficient guidance. One or
more catastrophic or other events could result in claims that substantially
exceed our expectations, which could have a material adverse effect on our
financial condition and our results of operations, possibly to the extent of
eliminating our shareholders' equity.

WE ARE DEPENDENT ON KEY EXECUTIVES.

       Our success substantially depends upon our ability to attract and retain
qualified employees and upon the ability of our senior management and other key
employees to implement our business strategy. We believe there are only a
limited number of available qualified executives in the business lines in which
we compete. Although we are not aware of any planned departures, we rely
substantially upon the services of Kenneth J. LeStrange, our Chief Executive
Officer, President and Chairman of the board of directors, Steven W. Carlsen,
President of Endurance U.S., and James R. Kroner, our Chief Financial Officer.
The loss of any of their services or the services of other members of our
management team or the inability to attract and retain other talented personnel
could impede the further implementation of our business
                                        10
strategy, which could have a material adverse effect on our business. We do not
currently maintain key man life insurance policies with respect to any of our
employees.

OUR BUSINESS COULD BE ADVERSELY AFFECTED BY BERMUDA EMPLOYMENT RESTRICTIONS.

       We will need to hire additional employees to work in Bermuda. Under
Bermuda law, non-Bermudians (other than spouses of Bermudians) may not engage in
any gainful occupation in Bermuda without an appropriate governmental work
permit. Work permits may be granted or extended by the Bermuda government upon
showing that, after proper public advertisement in most cases, no Bermudian (or
spouse of a Bermudian) is available who meets the minimum standard requirements
for the advertised position. The Bermuda government recently announced a new
policy limiting the duration of work permits to six years, with certain
exemptions for key employees. All of our Bermuda-based professional employees
who require work permits have been granted permits by the Bermuda government.
The terms of these permits range from three to five years depending on the
individual. None of our current Bermuda employees for whom we have applied for a
work permit have been denied. It is possible that we could lose the services of
one or more of our key employees if we are unable to obtain or renew their work
permits, which could have a material adverse affect on our business.

ENDURANCE BERMUDA AND ENDURANCE U.K. ARE RATED "A-" (EXCELLENT) BY A.M. BEST
COMPANY AND A DECLINE IN THIS RATING COULD AFFECT THEIR STANDING AMONG BROKERS
AND CUSTOMERS AND CAUSE OUR PREMIUMS AND EARNINGS TO DECREASE. OUR OTHER
INSURANCE SUBSIDIARY MAY NOT BE ABLE TO OBTAIN OR MAINTAIN RATINGS.

       Ratings have become an increasingly important factor in establishing the
competitive position of insurance and reinsurance companies. A.M. Best assigned
to Endurance Bermuda and Endurance U.K. a financial strength rating of "A-"
(Excellent). The objective of A.M. Best's rating system is to provide an opinion
of an insurer's or reinsurer's financial strength and ability to meet ongoing
obligations to its policyholders. These ratings reflect A.M. Best's opinion of
Endurance Bermuda's and Endurance U.K.'s initial capitalization, management and
sponsorship, and are not an evaluation directed to investors in our ordinary
shares and are not a recommendation to buy, sell or hold our ordinary shares.
These ratings are subject to periodic review by, and may be revised downward or
revoked at the sole discretion of, A.M. Best, and we cannot assure you that we
will be able to retain these ratings.

       If Endurance Bermuda's or Endurance U.K.'s rating is reduced from its
current level by A.M. Best, our competitive position in the insurance and
reinsurance industry would suffer, and it would be more difficult for us to
market our products. A downgrade could result in a significant reduction in the
number of insurance and reinsurance contracts we write and in a substantial loss
of business as client companies, and brokers that place such business, move to
other competitors with higher ratings.

       Our other insurance subsidiary, Endurance U.S., has not yet received a
rating from any rating agency. There can be no assurances that this insurance
subsidiary will receive or be able to maintain any particular ratings, which
could have an adverse effect on its competitive position.

OUR HOLDING COMPANY STRUCTURE AND CERTAIN REGULATORY AND OTHER CONSTRAINTS
AFFECT OUR ABILITY TO PAY DIVIDENDS AND MAKE OTHER PAYMENTS.

       Endurance Holdings is a holding company and, as such, has no substantial
operations of its own. Endurance Holdings does not have any significant
operations or assets other than its ownership of the shares of its direct and
indirect subsidiaries, including Endurance Bermuda, Endurance U.K. and Endurance
U.S. Dividends and other permitted distributions from insurance subsidiaries are
expected to be Endurance Holdings' sole source of funds to meet ongoing cash
requirements, including debt service payments and other expenses, and to pay
dividends, if any, to shareholders. Bermuda law and regulations, including, but
not limited to Bermuda insurance regulation, restrict the declaration and
payment of dividends and the making of distributions by Endurance Bermuda unless
certain regulatory requirements are met. The inability of Endurance Bermuda to
pay dividends in an amount sufficient to enable Endurance Holdings to meet its
cash requirements at the holding company level could have a material

                                        11
adverse effect on its operations. In addition, Endurance U.K. and Endurance U.S.
are subject to significant regulatory restrictions limiting their ability to
declare and pay dividends. We therefore do not expect to receive dividends from
either of those subsidiaries for the foreseeable future.

       Endurance Holdings is subject to Bermuda regulatory constraints that will
affect its ability to pay dividends on its ordinary shares and make other
payments. Under the Bermuda Companies Act of 1981, as amended (the "Companies
Act"), Endurance Holdings may declare or pay a dividend out of distributable
reserves only if it has reasonable grounds for believing that it is, or would
after the payment be, able to pay its liabilities as they become due and if the
realizable value of its assets would thereby not be less than the aggregate of
its liabilities and issued share capital and share premium accounts. In
addition, our credit facilities prohibit Endurance Holdings from declaring or
paying any dividends if a default or event of default has occurred and is
continuing at the time of such declaration or payment or would result from such
declaration or payment. For a discussion of the legal limitations on our
subsidiaries' ability to pay dividends to Endurance Holdings and of Endurance
Holdings to pay dividends to its shareholders, see "Dividend Policy,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Certain Indebtedness" and
"Regulatory Matters."

THE COST OF REINSURANCE SECURITY ARRANGEMENTS MAY MATERIALLY IMPACT OUR MARGINS.

       As a Bermuda reinsurer, Endurance Bermuda is required to post collateral
security with respect to reinsurance liabilities it assumes from ceding insurers
domiciled in the U.S. The posting of collateral security is generally required
in order for U.S. ceding companies to obtain credit on their U.S. statutory
financial statements with respect to reinsurance liabilities CEDED to unlicensed
or unaccredited reinsurers. Under applicable statutory provisions, the security
arrangements may be in the form of letters of credit, reinsurance trusts
maintained by third-party trustees or funds-withheld arrangements whereby the
trusted assets are held by the ceding company. Endurance Bermuda has the ability
to issue up to $108 million in letters of credit under the Company's revolving
credit facility that expires on August 11, 2003. If this facility is not
sufficient or if the Company is unable to renew this facility or is unable to
arrange for other types of security on commercially acceptable terms, the
ability of Endurance Bermuda to provide reinsurance to U.S.-based clients may be
severely limited.

       Security arrangements may subject our assets to security interests and/or
require that a portion of our assets may be pledged to, or otherwise held by,
third parties. Although the investment income derived from our assets while held
in trust typically accrues to our benefit, the investment of these assets is
governed by the investment regulations of the state of domicile of the ceding
insurer, which may be more restrictive than the investment regulations
applicable to us under Bermuda law. The restrictions may result in lower
investment yields on these assets, which could materially adversely affect our
profitability.

OUR LEAD INVESTORS CURRENTLY HAVE THE RIGHT TO DESIGNATE A MAJORITY OF THE
DIRECTORS ON OUR BOARD, AND WE MAY BE ADVERSELY AFFECTED BY PERCEIVED OR
POTENTIAL CONFLICTS OF INTEREST RELATING TO OUR LEAD INVESTORS OR THEIR BOARD
DESIGNEES.

       Immediately upon completion of this offering, our existing shareholders,
including the lead investors in our original private placement, are expected to
beneficially own ordinary shares aggregating      % of the combined voting power
and      % of the equity interest in our ordinary shares on a fully diluted
basis assuming the full exercise of all vested share options and warrants
exercisable for ordinary shares or class A shares and full conversion of
outstanding class A shares for ordinary shares. Certain of our lead investors
have contractual rights to representation on our board of directors and
committees of our board of directors, and have designated eight of our existing
twelve directors. See "Description of Share Capital -- Shareholders Agreement."

       As a result of their ownership position and board and committee
representation, our lead investors and their board representatives,
independently and voting together with our other existing shareholders, will
have the ability to significantly influence matters requiring shareholder
approval, including, without

                                        12
limitation, the election of directors and amalgamations, consolidations and
sales of all or substantially all of our assets.

       Certain of our lead investors engage in commercial activities and enter
into transactions or agreements with us or in competition with us, which may
give rise to conflicts of interest. We derive a significant portion of our
business through reinsurance relationships and other arrangements in which Aon
has acted as a broker or insurance or reinsurance intermediary. Due to Aon's
investment in us and their involvement in our formation, it is possible that
certain brokers and intermediaries that compete with Aon will perceive a
conflict of interest in our relationships with Aon and may, therefore, be
hesitant to present insurance and reinsurance proposals and opportunities to us.

       Our lead investors or their affiliates have sponsored, and may in the
future sponsor, other entities engaged in or intending to engage in insurance
and reinsurance underwriting, some of which, together with the lead investors,
may compete with us. Certain of our lead investors and their affiliates have
also entered into agreements with and made investments in numerous companies
that may compete with us. In particular, THL, Capital Z and Credit Suisse First
Boston have each made significant investments in new and existing companies
which compete directly with us.

PROFITABILITY MAY BE ADVERSELY IMPACTED BY INFLATION.

       The effects of inflation could cause the severity of claims from
catastrophes or other events to rise in the future. Our reserve for losses and
loss expenses includes 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, we will be required to increase our loss reserves
with a corresponding reduction in our net income in the period in which the
deficiency is identified.

OUR INVESTMENT PERFORMANCE MAY AFFECT OUR FINANCIAL ASSETS AND ABILITY TO
CONDUCT BUSINESS.

       We derive a significant portion of our income from our invested assets.
As a result, our operating results depend in part on the performance of our
investment portfolio, which currently consists of fixed maturity securities. Our
operating results are subject to a variety of investment risks, including risks
relating to general economic conditions, market volatility, interest rate
fluctuations, liquidity risk and credit and default risk. Additionally, with
respect to certain of our investments, we are subject to pre-payment or
reinvestment risk. Fixed income markets have become increasingly volatile in the
last year, particularly since the events of September 11, 2001.

       With respect to our longer-term liabilities, we strive to structure our
investments in a manner that recognizes our liquidity needs for our future
liabilities. In that regard, we attempt to correlate the maturity and duration
of our investment portfolio to our general and specific liability profile. We
cannot assure you that we will be successful in continuing to structure our
investment portfolio in that manner. The market value of our fixed maturity
investments will be subject to fluctuation depending on changes in various
factors, including prevailing interest rates. To the extent that we are
unsuccessful in correlating our investment portfolio with our expected
liabilities, we may be forced to liquidate our investments at times and prices
that are not optimal, which could have a material adverse affect on the
performance of our investment portfolio.

       Interest rates are highly sensitive to many factors, including
governmental monetary policies, domestic and international economic and
political conditions and other factors beyond our control. Although we attempt
to take measures to manage the risks of investing in a changing interest rate
environment, we may not be able to mitigate interest rate sensitivity
effectively. A significant increase in interest rates could have a material
adverse effect on our book value.

                                        13
WE MAY BE ADVERSELY AFFECTED BY FOREIGN CURRENCY FLUCTUATIONS.

       Our functional currency is U.S. dollars for Endurance Bermuda and
Endurance U.S. and British Sterling for Endurance U.K. The reporting currency
for all entities is U.S. dollars. We maintain a portion of our investments and
liabilities in currencies other than the U.S. dollar. We have made a significant
investment in the capitalization of Endurance U.K. Endurance U.K. is subject to
the FSA 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. We may, from time to time,
experience losses resulting from fluctuations in the values of foreign
currencies, which could have a material adverse effect on our results of
operations.

WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE WHICH MAY NOT BE AVAILABLE OR
ONLY AVAILABLE ON UNFAVORABLE TERMS.

       Our future capital requirements depend on many factors, including our
ability to write new business successfully and to establish premium rates and
reserves at levels sufficient to cover losses. To the extent that the funds
generated by this offering are insufficient to fund future operating
requirements and cover claim losses, we may need to raise additional funds
through financings or curtail our growth and reduce our assets. Any equity or
debt financing, if available at all, may be on terms that are not favorable to
us. In the case of equity financings, dilution to our shareholders could result,
and in any case such securities may have rights, preferences and privileges that
are senior to those of the ordinary shares offered hereby. If we cannot obtain
adequate capital, our business, results of operations and financial condition
could be adversely affected.

SINCE WE DEPEND ON A FEW BROKERS FOR A LARGE PORTION OF OUR REVENUES, LOSS OF
BUSINESS PROVIDED BY ANY ONE OF THEM COULD ADVERSELY AFFECT US.

       We market our insurance and reinsurance worldwide primarily through
insurance and reinsurance brokers. In the nine months ended September 30, 2002,
our top five brokers represented approximately 90% of our gross premiums
written, excluding gross premiums acquired in the LaSalle transaction. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." One of those brokers, Aon, is one of our investors. Affiliates of
two of these brokers, Marsh and Benfield, have also co-sponsored the formation
of Bermuda reinsurers that may compete with us, and those brokers may decide to
favor the reinsurers they sponsored over other companies. Loss of all or a
substantial portion of the business provided by one or more of these brokers
could have a material adverse effect on our business.

OUR RELIANCE ON BROKERS SUBJECTS US TO THEIR CREDIT RISK.

       In accordance with industry practice, we frequently pay amounts owed on
claims under our insurance or reinsurance contracts to brokers, and these
brokers, in turn, pay these amounts over to the clients that have purchased
insurance or reinsurance from us. In some jurisdictions, if a broker fails to
make such a payment, we may remain liable to the client for the deficiency.
Conversely, in certain jurisdictions, when the client pays premiums for these
policies to brokers for payment over to us, these premiums are considered to
have been paid and the client will no longer be liable to us for those amounts,
whether or not we have actually received the premiums. Consequently, we assume a
degree of credit risk associated with brokers around the world.

THE EFFECTS OF EMERGING CLAIM AND COVERAGE ISSUES ON OUR BUSINESS ARE UNCERTAIN.

       As industry practices and legal, judicial, social and other environmental
conditions change, unexpected and unintended issues related to claims and
coverage may emerge. These issues can have a negative effect on our business by
either extending coverage beyond our underwriting intent or by increasing the
number or size of claims. The effects of unforeseen emerging claim and coverage
issues are extremely hard to predict and could harm our business.

                                        14
WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT WHICH COULD ADVERSELY IMPACT OUR
OPERATING MARGINS.

       The insurance and reinsurance industries are highly competitive. We
compete with major U.S. and non-U.S. insurers and reinsurers, including other
Bermuda-based insurers and reinsurers. Many of our competitors have greater
financial, marketing and management resources. A number of newly-organized,
Bermuda-based insurance and reinsurance entities compete in the same market
segments in which we operate. In addition, we may not be aware of other
companies that may be planning to enter the segments of the insurance and
reinsurance market in which we operate or of existing companies that may be
planning to raise additional capital. Increasing competition could result in
fewer submissions, lower premium rates and less favorable policy terms and
conditions, which could have a material adverse impact on our growth and
profitability.

       Further, insurance/risk-linked securities and derivative and other
non-traditional risk transfer mechanisms and vehicles are being developed and
offered by other parties, including non-insurance company entities, which could
impact the demand for traditional reinsurance. A number of new, proposed or
potential legislative or industry developments could also increase competition
in our industries. In addition, insurance companies that merge may be able to
enhance their negotiating position when buying reinsurance and may be able to
spread their risks across a consolidated, larger capital base so that they
require less reinsurance.

       New competition from these developments could cause the demand for
insurance or reinsurance to fall or the expense of customer acquisition and
RETENTION to increase, either of which could have a material adverse affect on
our growth and profitability.

THE HISTORICAL CYCLICALITY OF THE PROPERTY AND CASUALTY INSURANCE AND
REINSURANCE INDUSTRIES MAY CAUSE FLUCTUATIONS IN OUR RESULTS.

       Historically, reinsurers have experienced significant fluctuations in
operating results due to competition, frequency of occurrence or severity of
catastrophic events, levels of capacity, general economic conditions and other
factors. Demand for reinsurance is influenced significantly by underwriting
results of primary property and casualty insurers and prevailing general
economic conditions. The supply of reinsurance is related to prevailing prices,
the levels of insured losses and the levels of industry surplus which, in turn,
may fluctuate in response to changes in rates of return on investments being
earned in the reinsurance industry. As a result, the reinsurance business
historically has been a cyclical industry characterized by periods of intense
price competition due to excessive underwriting capacity as well as periods when
shortages of capacity permitted favorable premium levels. Although premium
levels for many products have increased in recent months, the supply of
reinsurance may increase, either by capital provided by new entrants or by the
commitment of additional capital by existing reinsurers, which may cause prices
to decrease. Any of these factors could lead to a significant reduction in
premium rates, less favorable policy terms and conditions and fewer submissions
for our underwriting services. In addition to these considerations, changes in
the frequency and severity of losses suffered by insurers may affect the cycles
of the reinsurance business significantly, and we expect to experience the
effects of such cyclicality.

THE REGULATORY SYSTEM UNDER WHICH WE OPERATE, AND POTENTIAL CHANGES THERETO,
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

       General.  Our insurance subsidiaries may not be able to obtain or
maintain necessary licenses, permits, authorizations or accreditations, or may
be able to do so only at great cost. In addition, we may not be able to comply
fully with, or obtain appropriate exemptions from, the wide variety of laws and
regulations applicable to insurance or reinsurance companies or holding
companies. Failure to comply with or to obtain appropriate exemptions under any
applicable laws could result in restrictions on our ability to do business in
one or more of the jurisdictions in which we operate and fines and other
sanctions, which could have a material adverse effect on our business. See
"Regulatory Matters."

       Endurance Bermuda.  Endurance Bermuda is a registered Class 4 Bermuda
insurance and reinsurance company. Among other matters, Bermuda statutes,
regulations and policies of the BMA
                                        15
require Endurance Bermuda to maintain minimum levels of statutory capital,
statutory capital and surplus and liquidity, to meet solvency standards, to
obtain prior approval of ownership and transfer of shares and to submit to
certain periodic examinations of its financial condition. These statutes and
regulations may, in effect, restrict Endurance Bermuda's ability to write
insurance and reinsurance policies, to make certain investments and to
distribute funds.

       Endurance Bermuda does not maintain a principal office, and its personnel
do not solicit, advertise, settle claims or conduct other activities that may
constitute the transaction of the business of insurance or reinsurance, in any
jurisdiction in which it is not licensed or otherwise not authorized to engage
in such activities. Although Endurance Bermuda does not believe it is or will be
in violation of insurance laws or regulations of any jurisdiction outside
Bermuda, inquiries or challenges to Endurance Bermuda's insurance or reinsurance
activities may still be raised in the future.

       The offshore insurance and reinsurance regulatory environment has become
subject to increased scrutiny in many jurisdictions, including the United States
and various states within the United States. Compliance with any new laws
regulating offshore insurers or reinsurers could have a material adverse effect
on our business.

       Endurance U.K.  Endurance U.K. has received authorization from the FSA to
begin writing certain lines of insurance and reinsurance in the United Kingdom.
As an authorized insurer in the United Kingdom, Endurance U.K. would be able to
operate throughout the European Union, subject to compliance with certain
notification requirements of the FSA and in some cases, certain local regulatory
requirements. As an FSA authorized insurer, the insurance and reinsurance
businesses of Endurance U.K. will be subject to close supervision by the FSA.
The FSA is currently seeking to strengthen its requirements for senior
management arrangements, systems and controls of insurance and reinsurance
companies under its jurisdiction and intends to place an increased emphasis on
risk identification and management in relation to the prudential regulation of
insurance and reinsurance business in the United Kingdom. Changes in the FSA's
requirements may have an adverse impact on the business of Endurance U.K.

       In addition, given that the framework for supervision of insurance and
reinsurance companies in the United Kingdom is largely formed by E.U. directives
(which are implemented by member states through national legislation), changes
at the E.U. level may affect the regulatory scheme under which Endurance U.K.
will operate. A general review of E.U. insurance directives is currently in
progress and may lead to changes such as increased minimum capital requirements.

       Endurance U.S.  Endurance U.S. is organized in and has received a license
to write certain lines of reinsurance business in the State of New York and, as
a result, is subject to New York law and regulation under the supervision of the
Superintendent of Insurance of the State of New York. The New York
Superintendent also has regulatory authority over a number of affiliate
transactions between Endurance U.S. and other members of our holding company
system. The purpose of the state insurance regulatory statutes is to protect
U.S. insureds and U.S. ceding insurance companies, not our shareholders. Among
other matters, state insurance regulations will require Endurance U.S. to
maintain minimum levels of capital, surplus and liquidity, require Endurance
U.S. to comply with applicable RISK-BASED CAPITAL requirements and will impose
restrictions on the payment of dividends and distributions. These statutes and
regulations may, in effect, restrict the ability of Endurance U.S. to write new
business or distribute assets to Endurance Holdings.

       In recent years, the U.S. insurance regulatory framework has come under
increased federal scrutiny, and some state legislators have considered or
enacted laws that may alter or increase state regulation of insurance and
reinsurance companies and holding companies. Moreover, the NATIONAL ASSOCIATION
OF INSURANCE COMMISSIONERS ("NAIC"), which is an association of the insurance
commissioners of all 50 states and the District of Columbia, and state insurance
regulators regularly reexamine existing laws and regulations. Changes in these
laws and regulations or the interpretation of these laws and regulations could
have a material adverse effect on our business.

                                        16
For example, in response to the tightening of supply in certain insurance
and reinsurance markets resulting from, among other things, the World Trade
Center tragedy, the Terrorism Risk Insurance Act of 2002 was enacted to ensure
the availability of insurance coverage for terrorist acts in the United States.
This law establishes a federal assistance program through the end of 2005 to
help the commercial property and casualty insurance industry cover claims
related to future terrorism related losses and regulates the terms of insurance
relating to terrorism coverage. This law could adversely affect our business by
increasing underwriting capacity for our competitors as well as by requiring
that coverage for terrorist acts be offered by insurers. We are in the process
of evaluating the likely impact of this law on our future operations. We are
currently unable to predict the extent to which the foregoing new initiative may
affect the demand for our products or the risks which may be available for us to
consider underwriting.

               RISKS RELATED TO OWNERSHIP OF OUR ORDINARY SHARES

THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR ORDINARY SHARES.

       Currently there is no public trading market for our ordinary shares and
there can be no assurance that an active trading market will develop and
continue upon completion of this offering or that the market price of our
ordinary shares will not decline below the initial public offering price. We
intend to apply to have our ordinary shares approved for listing on the NYSE
under the symbol "ENH." The initial public offering price per ordinary share
will be determined by agreement among us and the representatives of the
underwriters and may not be indicative of the market price of our ordinary
shares after our initial public offering.

FUTURE SALES OF ORDINARY SHARES MAY AFFECT THEIR MARKET PRICE.

       We cannot predict what effect, if any, future sales of our ordinary
shares, or the availability of ordinary shares for future sale, will have on the
market price of our ordinary shares. Sales of substantial amounts of our
ordinary shares in the public market following our initial public offering, or
the perception that such sales could occur, could adversely affect the market
price of our ordinary shares and may make it more difficult for you to sell your
ordinary shares at a time and price which you deem appropriate. See "Description
of Share Capital -- Registration Rights Agreement" and "Shares Eligible for
Future Sale" for further information regarding circumstances under which
additional ordinary shares may be sold. Upon completion of our initial public
offering, we will have           ordinary shares outstanding and an additional
          ordinary shares will be issuable upon the full exercise or conversion
of outstanding vested options, warrants and class A shares. If the underwriters'
over-allotment option is exercised, an additional           ordinary shares will
be outstanding. Of these shares, the ordinary shares sold in this offering will
be freely transferable, except for any shares sold to our "affiliates," as that
term is defined in Rule 144 under the Securities Act. The remaining shares will
be "restricted securities" subject to the volume limitations and the other
conditions of Rule 144.

       We, our directors, officers and certain of our existing shareholders have
agreed, with limited exceptions, for a period of 180 days after the effective
date of this prospectus, that we and they will not, without the prior written
consent of the representatives on behalf of the underwriters, directly or
indirectly, offer to sell, sell or otherwise dispose of any of our ordinary
shares. Upon the consummation of this offering, all existing shareholders and
their transferees will have the right to require us to register their ordinary
shares under the Securities Act for sale into the public markets, subject to the
180-day lock-up agreements. Upon the effectiveness of any such registration
statement, all shares covered by the registration statement will be freely
transferable. In addition, following the consummation of this offering, we
intend to file a registration statement on Form S-8 under the Securities Act to
register an aggregate of           ordinary shares reserved for issuance under
our 2002 Stock Option Plan. Subject to the exercise of issued and outstanding
options, shares registered under the registration statement on Form S-8 will be
available for sale into the public markets after the expiration of the 180-day
lock-up agreements.

                                        17
PUBLIC INVESTORS MAY SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

       The initial public offering price per ordinary share may be higher than
our net book value per share. Accordingly, if you purchase ordinary shares in
this offering, you will suffer immediate and substantial dilution of your
investment. Based upon the issuance and sale of           ordinary shares, you
will incur immediate dilution of approximately $          in the net book value
per common share if you purchase ordinary shares in this offering.

THERE ARE PROVISIONS IN OUR CHARTER DOCUMENTS THAT MAY REDUCE OR INCREASE THE
VOTING RIGHTS OF OUR ORDINARY SHARES.

       Endurance Holdings' bye-laws provide generally that any shareholder
owning, directly, indirectly or, in the case of any U.S. PERSON, by attribution,
more than 9.5% of our ordinary shares will have the voting rights attached to
such ordinary shares reduced so that it may not exercise more than 9.5% of the
total voting rights. The reduction in votes is generally to be applied
proportionately among all shareholders who are members of the first
shareholder's "control group." A "control group" means, with respect to any
person, all shares directly owned by such person and all shares directly owned
by each other shareholder any of whose shares are included in the "controlled
shares" of such person. "Controlled shares" means all ordinary shares that a
person is deemed to own directly, indirectly (within the meaning of Section
958(a) of the Internal Revenue Code of 1986, as amended (the "Code")) or, in the
case of a U.S. Person, constructively (within the meaning of Section 958(b) of
the Code). A similar limitation is to be applied to shares held directly by
members of a "related group." A "related group" means a group of shareholders
that are investment vehicles and are under common control and management. Any
reduction in votes will generally be allocated proportionately among members of
the shareholder's "control group" or "related group," as the case may be. The
amount of any reduction of votes that occurs by operation of the above
limitations will generally be reallocated proportionately among all other
shareholders of Endurance Holdings who were not members of these groups so long
as such reallocation does not cause any person to become a 9.5% shareholder.

       Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could
have the effect of reducing the votes of certain shareholders who would not
otherwise be subject to the 9.5% limitation by virtue of their direct share
ownership. The bye-laws of Endurance Holdings provide that shareholders will be
notified of their voting interests prior to any vote to be taken by the
shareholders. See "Description of Share Capital -- Voting Rights."

       As a result of any reallocation of votes, your voting rights might
increase above 5% of the aggregate voting power of the outstanding ordinary
shares, thereby possibly resulting in your becoming a reporting person subject
to Schedule 13D or 13G filing requirements under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In addition, the reallocation of your
votes could result in your becoming subject to filing requirements under Section
16 of the Exchange Act.

       The Company also has the authority to request information from any
shareholder for the purpose of determining whether a shareholder's voting rights
are to be reallocated pursuant to the bye-laws. If a shareholder fails to
respond to a request for information from the Company or submits incomplete or
inaccurate information (after a reasonable cure period) in response to a
request, the Company, in its reasonable discretion, may reduce or eliminate the
shareholder's voting rights.

PROVISIONS OF ENDURANCE HOLDINGS' BYE-LAWS MAY RESTRICT THE ABILITY TO TRANSFER
SHARES.

       Endurance Holdings' board of directors may decline to register a transfer
of any ordinary shares under certain circumstances, including if the relevant
instrument of transfer (if any) is in favor of five persons or more jointly or
is not properly executed, the transferred shares are not fully paid shares or if
the transferor fails to comply with all applicable laws and regulations
governing the transfer.

                                        18
A SHAREHOLDER MAY BE REQUIRED TO SELL ITS SHARES.

       Endurance Holdings' bye-laws provide that we have the option, but not the
obligation, to require a shareholder to sell its ordinary shares for their fair
market value to us, to other shareholders or to third parties if we determine,
based on the written advice of legal counsel, that failure to exercise our
option would result in adverse tax consequences to us or certain U.S. Persons as
to which the shares held by such shareholder constitute controlled shares. In
the latter case, our right to require a shareholder to sell its ordinary shares
to us will be limited to the purchase of a number of ordinary shares that will
permit avoidance of those adverse tax consequences. See "Description of Share
Capital -- Acquisition of Ordinary Shares by Endurance Holdings."

INDEMNIFICATION BY A SHAREHOLDER FOR TAX LIABILITY RESULTING FROM ACTS OF THE
SHAREHOLDER.

       Our bye-laws provide certain protections against adverse tax consequences
to us resulting from laws that apply to our shareholders. If a shareholder's
death or non-payment of any tax or duty payable by the shareholder, or any other
act or thing involving the shareholder, causes any adverse tax consequences to
us, (i) the shareholder (or his executor or administrator) is required to
indemnify us against any tax liability that we incur as a result, (ii) we will
have a lien on any dividends or any other distributions payable to the
shareholder by us to the extent of the tax liability, and (iii) if any amounts
not covered by our lien on dividends and distributions are owed to us by the
shareholder as a result of our tax liability, we have the right to refuse to
register any transfer of the shareholder's shares.

THERE ARE REGULATORY LIMITATIONS ON THE OWNERSHIP AND TRANSFER OF OUR ORDINARY
SHARES.

       Ordinary shares may be offered or sold in Bermuda only in compliance with
the provisions of the Investment Business Act of 1998 of Bermuda which regulates
the sale of securities in Bermuda. In addition, the BMA must approve all
issuances and transfers of shares of a Bermuda exempted company. Before this
offering, we expect the BMA will have issued their permission for the issue and
free transferability of the ordinary shares being offered pursuant to this
prospectus, as long as the shares are listed on the NYSE, to and among persons
who are non-residents of Bermuda for exchange control purposes. In addition, we
will deliver to and file a copy of this prospectus with the Registrar of
Companies in Bermuda in accordance with Bermuda law. The BMA and the Registrar
of Companies accept no responsibility for the financial soundness of any
proposal or for the correctness of any of the statements made or opinions
expressed in this prospectus.

       The Financial Services and Markets Act 2000 ("FSMA") regulates the
acquisition of "control" of any U.K. insurance company authorized under FSMA.
Any company or individual that (together with its or his associates) directly or
indirectly acquires 10% or more of the shares of a U.K. authorized insurance
company or its parent company, or is entitled to exercise or control the
exercise of 10% or more of the voting power in such authorized insurance company
or its parent company, would be considered to have acquired "control" for the
purposes of FSMA, as would a person who had significant influence over the
management of such authorized insurance company or its parent company by virtue
of his shareholding or voting power in either. A purchaser of more than 10% of
our ordinary shares would therefore be considered to have acquired "control" of
Endurance U.K. Under the FSMA, any person proposing to acquire "control" over a
U.K. authorized insurance company must notify the FSA of his intention to do so
and obtain the FSA's prior approval. The FSA would then have three months to
consider that person's application to acquire "control." In considering whether
to approve such application, the FSA must be satisfied both that the acquirer is
a fit and proper person to have such "control" and that the interests of
consumers would not be threatened by such acquisition of "control." Failure to
make the relevant prior application would constitute a criminal offense.

       State laws in the United States also require prior notices or regulatory
agency approval of changes in control of an insurer or its holding company. The
insurance laws of the State of New York, where Endurance U.S. will be domiciled,
provide that no corporation or other person except an authorized insurer may
acquire control of a domestic insurance or reinsurance company unless it has
given notice to such

                                        19
company and obtained prior written approval of the New York Superintendent. Any
purchaser of 10% or more of our ordinary shares could become subject to such
regulations and could be required to file certain notices and reports with the
New York Superintendent prior to such acquisition.

U.S. PERSONS WHO OWN OUR ORDINARY SHARES MAY HAVE MORE DIFFICULTY IN PROTECTING
THEIR INTERESTS THAN U.S. PERSONS WHO ARE SHAREHOLDERS OF A U.S. CORPORATION.

       The Companies Act, which applies to Endurance Holdings and Endurance
Bermuda, differs in certain material respects from laws generally applicable to
U.S. corporations and their shareholders. In order to highlight those
differences, set forth below is a summary of certain significant provisions of
the Companies Act, including, where relevant, information on Endurance Holdings'
bye-laws, which differ in certain respects from provisions of Delaware corporate
law. Because the following statements are summaries, they do not discuss all
aspects of Bermuda law that may be relevant to Endurance Holdings and our
shareholders.

       Interested Directors.  Under Bermuda law and Endurance Holdings'
bye-laws, we cannot void any transaction we enter into in which a director has
an interest, nor can such director be accountable to us for any benefit realized
pursuant to such transaction, provided the nature of the interest is disclosed
at the first opportunity at a meeting of directors, or in writing, to the
directors. In addition, Endurance Holdings' bye-laws allow a director to be
taken into account in determining whether a quorum is present and to vote on a
transaction in which he has an interest, but the resolution with respect to such
transactions will fail unless it is approved by a majority of the disinterested
directors voting on such a transaction. Under Delaware law such transaction
would not be voidable if:

       -     the material facts as to such interested director's relationship or
             interests were disclosed or were known to the board of directors
             and the board had in good faith authorized the transaction by the
             affirmative vote of a majority of the disinterested directors;

       -     such material facts were disclosed or were known to the
             shareholders entitled to vote on such transaction and the
             transaction were specifically approved in good faith by vote of the
             majority of shares entitled to vote thereon; or

       -     the transaction were fair as to the corporation as of the time it
             was authorized, approved or ratified.

       Under Delaware law, the interested director could be held liable for a
transaction in which the director derived an improper personal benefit.

       Business Combinations with Large Shareholders or Affiliates.  As a
Bermuda company, Endurance Holdings may enter into business combinations with
its large shareholders or one or more wholly-owned subsidiaries, including asset
sales and other transactions in which a large shareholder or a wholly-owned
subsidiary receives, or could receive, a financial benefit that is greater than
that received, or to be received, by other shareholders or other wholly-owned
subsidiaries, without obtaining prior approval from our shareholders and without
special approval from our board of directors. Under Bermuda law, amalgamations
require the approval of the board of directors, and in some instances,
shareholder approval. However, when the affairs of a Bermuda company are being
conducted in a manner which is oppressive or prejudicial to the interests of
some shareholders, one or more shareholders may apply to a Bermuda court, which
may make such order as it sees fit, including an order regulating the conduct of
the company's affairs in the future or ordering the purchase of the shares of
any shareholders by other shareholders or the company. If we were a Delaware
company, we would need prior approval from our board of directors or a
supermajority of our shareholders to enter into a business combination with an
interested shareholder for a period of three years from the time the person
became an interested shareholder, unless we opted out of the relevant Delaware
statute. Bermuda law or Endurance Holdings' bye-laws would require board
approval and in some instances, shareholder approval, of such transactions.

       Shareholders' Suits.  The rights of shareholders under Bermuda law are
not as extensive as the rights of shareholders in many United States
jurisdictions. Class actions and derivative actions are
                                        20
generally not available to shareholders under Bermuda law. However, the Bermuda
courts ordinarily would be expected to follow English case law precedent, which
would permit a shareholder to commence a derivative action in the name of a
company where the act complained of is alleged to be beyond the corporate power
of the company, is illegal or would result in the violation of Endurance
Holdings' memorandum of association or bye-laws. Furthermore, consideration
would be given by the court to acts that are alleged to constitute a fraud
against the minority shareholders or where an act requires the approval of a
greater percentage of our shareholders than actually approved it. The successful
party in such an action generally would be able to recover a portion of
attorneys' fees incurred in connection with such action. Endurance Holdings'
bye-laws provide that shareholders waive all claims or rights of action that
they might have, individually or in the right of Endurance Holdings, against any
director or officer for any action or failure to act in the performance of such
director's or officer's duties, except such waiver shall not extend to any
claims or rights of action that would render the waiver void pursuant to the
Companies Act, that arise out of fraud or dishonesty on the part of such
director or officer or with respect to the recovery of any gain, personal profit
or advantage to which the officer or director is not legally entitled.

       Class actions and derivative actions generally are available to
shareholders under Delaware law for, among other things, breach of fiduciary
duty, corporate waste and actions not taken in accordance with applicable law.
In such actions, the court has discretion to permit the winning party to recover
attorneys' fees incurred in connection with such action.

       Indemnification of Directors and Officers.  Under Bermuda law and
Endurance Holdings' bye-laws, Endurance Holdings will indemnify its directors or
officers or any person appointed to any committee by the board of directors and
any resident representative (and their respective heirs, executors or
administrators) against all actions, costs, charges, liabilities, loss, damage
or expense, to the fullest extent permitted by law, incurred or suffered by such
officer, director or other person by reason of any act done, conceived in or
omitted in the conduct of the company's business or in the discharge of his/her
duties; provided that such indemnification shall not extend to any matter
involving any fraud or dishonesty on the part of such director, officer or other
person. Under Delaware law, a corporation may indemnify a director or officer of
the corporation against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in defense of an
action, suit or proceeding by reason of such position if such director or
officer acted in good faith and in a manner he or she reasonably believed to be
in or not be opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, such director or officer had no reasonable
cause to believe his or her conduct was unlawful.

       For more information on the differences between Bermuda and Delaware
corporate laws, see "Description of Share Capital -- Differences in Corporate
Law."

ANTI-TAKEOVER PROVISIONS IN OUR BYE-LAWS COULD IMPEDE AN ATTEMPT TO REPLACE OR
REMOVE OUR DIRECTORS, WHICH COULD DIMINISH THE VALUE OF OUR ORDINARY SHARES.

       Endurance Holdings' bye-laws contain provisions that may entrench
directors and make it more difficult for shareholders to replace directors even
if the shareholders consider it beneficial to do so. In addition, these
provisions could delay or prevent a change of control that a shareholder might
consider favorable. For example, these provisions may prevent a shareholder from
receiving the benefit from any premium over the market price of our ordinary
shares offered by a bidder in a potential takeover. Even in the absence of an
attempt to effect a change in management or a takeover attempt, these provisions
may adversely affect the prevailing market price of our ordinary shares if they
are viewed as discouraging changes in management and takeover attempts in the
future.

       Examples of provisions in our bye-laws that could have such an effect
include:

       -     election of our directors is staggered, meaning that the members of
             only one of four classes of our directors are elected each year;

       -     the total voting power of any shareholder owning more than 9.5% of
             our ordinary shares will be reduced to 9.5% of the total voting
             power of our ordinary shares;

                                        21
-     our directors may, in their discretion, decline to record the
             transfer of any ordinary shares on our share register, unless the
             instrument of transfer is in favor of less than five persons
             jointly or if they are not satisfied that all required regulatory
             approvals for such transfer have been obtained; and

       -     we have the option, but not the obligation, to require a
             shareholder to sell its ordinary shares to us, to our other
             shareholders or to third parties at fair market value if we
             determine, based on the advice of legal counsel, that failure to
             exercise our option would result in adverse tax consequences to us
             or certain U.S. Persons as to which the shares held by such
             shareholder constitute controlled shares.

IT MAY BE DIFFICULT TO ENFORCE SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
AGAINST US AND OUR OFFICERS AND DIRECTORS.

       Endurance Holdings is a Bermuda company and certain of its officers and
directors are residents of various jurisdictions outside the United States. A
substantial portion of its assets and its officers and directors, at any one
time, are or may be located in jurisdictions outside the United States. Although
Endurance Holdings has irrevocably appointed CT Corporation System as an agent
in New York, New York to receive service of process with respect to actions
against Endurance Holdings arising out of violations of the U.S. federal
securities laws in any federal or state court in the United States relating to
the transactions covered by this prospectus, it may be difficult for investors
to effect service of process within the United States on our directors and
officers who reside outside the United States or to enforce against us or our
directors and officers judgments of U.S. courts predicated upon civil liability
provisions of the U.S. federal securities laws.

       We have been advised by Appleby Spurling & Kempe, our Bermuda counsel,
that there is no treaty in force between the United States and Bermuda providing
for the reciprocal recognition and enforcement of judgments in civil and
commercial matters. As a result, whether a United States judgment would be
enforceable in Bermuda against us or our directors and officers depends on
whether the U.S. court that entered the judgment is recognized by the Bermuda
court as having jurisdiction over us or our directors and officers, as
determined by reference to Bermuda conflict of law rules. A judgment debt from a
U.S. court that is final and for a sum certain based on U.S. federal securities
laws will not be enforceable in Bermuda unless the judgment debtor had submitted
to the jurisdiction of the U.S. court, and the issue of submission and
jurisdiction is a matter of Bermuda (not United States) law.

       In addition to and irrespective of jurisdictional issues, the Bermuda
courts will not enforce a United States federal securities law that is either
penal or contrary to public policy. Certain remedies available under the laws of
U.S. jurisdictions, including certain remedies under U.S. federal securities
laws, would not be available under Bermuda law or enforceable in a Bermuda
court, as they would be contrary to Bermuda public policy. Further, no claim may
be brought in Bermuda against us or our directors and officers in the first
instance for violation of U.S. federal securities laws because these laws have
no extraterritorial jurisdiction under Bermuda law and do not have force of law
in Bermuda. A Bermuda court may, however, impose civil liability on us or our
directors and officers if the facts alleged in a complaint constitute or give
rise to a cause of action under Bermuda law.

                           RISKS RELATED TO TAXATION

WE MAY BECOME SUBJECT TO TAXES IN BERMUDA AFTER MARCH 28, 2016, WHICH MAY HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION.

       The Bermuda Minister of Finance, under the Exempted Undertakings Tax
Protection Act 1966, as amended, of Bermuda, has given Endurance Holdings and
Endurance Bermuda an assurance that if any legislation is enacted in Bermuda
that would impose tax computed on profits or income, or computed on any capital
asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of any such tax will not be applicable to
Endurance Holdings, Endurance Bermuda or any of
                                        22
their respective operations, shares, debentures or other obligations until March
28, 2016. See "Material Tax Considerations -- Certain Bermuda Tax
Considerations." We cannot assure you that we will not be subject to any Bermuda
tax after that date.

WE AND OUR SUBSIDIARIES MAY BE SUBJECT TO U.S. TAX.

       Endurance Holdings and Endurance Bermuda are Bermuda companies and
Endurance U.K. is an English company. We believe that Endurance Holdings,
Endurance Bermuda and Endurance U.K. will each operate in such a manner that
none of these companies will be subject to U.S. tax (other than U.S. excise tax
on reinsurance premiums and withholding tax on certain investment income from
U.S. sources) because they will not be engaged in a trade or business conducted
within the United States. Nevertheless, because definitive identification of
activities which constitute being engaged in a trade or business in the United
States is not provided by the Code, or regulations or court decisions, the
Internal Revenue Service, or the IRS, might contend that any of Endurance
Holdings, Endurance Bermuda and/or Endurance U.K. are/is engaged in a trade or
business in the United States. If Endurance Holdings, Endurance Bermuda and/or
Endurance U.K. were engaged in a trade or business in the United States, and if
Endurance U.K. or Endurance Bermuda were to qualify for benefits under the
applicable income tax treaty with the United States, but such trade or business
were attributable to a "permanent establishment" in the United States (or in the
case of Endurance Bermuda, with respect to investment income, arguably even if
such income were not attributable to a "permanent establishment"), Endurance
Holdings, Endurance U.K. and/or Endurance Bermuda would be subject to U.S.
federal income tax at regular corporate rates on the income that is effectively
connected with the U.S. trade or business, plus an additional 30% "branch
profits" tax in certain circumstances, in which case our results of operations
and your investment could be materially adversely affected. See "Material Tax
Considerations -- Certain United States Federal Income Tax
Considerations -- United States Taxation of Endurance Holdings, Endurance
Bermuda, Endurance U.K. and Endurance U.S."

       Endurance Holdings and/or any of its subsidiaries could be subject to
U.S. tax on a portion of its income that is earned from U.S. sources if any of
them are considered to be a personal holding company, or a PHC, for U.S. federal
income tax purposes. This status will depend on the portion of our shareholder
base, based on value, that consists of or is deemed to consist of individuals
and the percentage of our income, or the income of our subsidiaries, as
determined for U.S. federal income tax purposes, that consists of "personal
holding company income." We believe that neither we nor any of our subsidiaries
will be considered a PHC, but we cannot assure you that this will be the case or
that the amount of U.S. tax that would be imposed if it were not the case would
be immaterial. See "Material Tax Considerations -- Certain United States Federal
Income Tax Considerations -- United States Taxation of Endurance Holdings,
Endurance Bermuda, Endurance U.K. and Endurance U.S. -- Personal Holding
Companies."

WE AND OUR SUBSIDIARIES MAY BE SUBJECT TO U.K. TAX.

       Endurance Holdings and Endurance Bermuda are incorporated in Bermuda and
Endurance U.S. is a company incorporated in the United States. Accordingly,
because they are not incorporated in the United Kingdom, none of Endurance
Holdings, Endurance Bermuda or Endurance U.S. will be treated as being resident
in the United Kingdom unless their central management and control is exercised
in the United Kingdom. The concept of central management and control is
indicative of the highest level of control of a company, which is wholly a
question of fact. The directors of Endurance Holdings, Endurance Bermuda and
Endurance U.S. intend to manage their affairs so that none of them are resident
in the United Kingdom for tax purposes.

       A company not resident in the United Kingdom for corporation tax purposes
can nevertheless be subject to U.K. corporation tax if it carries on a trade
through a branch or agency in the United Kingdom but the charge to U.K.
corporation tax is limited to profits (including revenue profits and capital
gains) connected with such branch or agency. The directors of Endurance
Holdings, Endurance Bermuda and Endurance U.S. intend that each will operate in
such a manner that none of these companies carry on a

                                        23
trade through a branch or agency in the United Kingdom. Nevertheless, because
neither case law nor U.K. statute definitively defines the activities that
constitute trading in the United Kingdom through a branch or agency, the U.K.
Inland Revenue might contend that any of Endurance Holdings, Endurance Bermuda
and/or Endurance U.S. are/is trading in the United Kingdom through a branch or
agency in the United Kingdom. If Endurance U.S. were trading in the U.K. through
a branch or agency and Endurance U.S. were to qualify for benefits under the
applicable income tax treaty between the United Kingdom and the United States,
only those profits which were attributable to a permanent establishment in the
United Kingdom would be subject to U.K. corporation tax. The United Kingdom has
no income tax treaty with Bermuda.

       If Endurance Holdings, Endurance Bermuda or Endurance U.S. were treated
as being resident in the United Kingdom for U.K. corporation tax purposes, or as
carrying on a trade in the United Kingdom through a branch or agency, our
earnings and your investment could be materially adversely affected.

IF YOU ACQUIRE 10% OR MORE OF ENDURANCE HOLDINGS' ORDINARY SHARES, "CONTROLLED
FOREIGN CORPORATION" ("CFC") RULES MAY APPLY TO YOU.

       Each "10% U.S. Shareholder" of a foreign corporation that is a CFC for an
uninterrupted period of 30 days or more during a taxable year, and who owns
shares in the CFC directly or indirectly through foreign entities on the last
day of the CFC's taxable year, must include in its gross income for U.S. federal
income tax purposes its pro rata share of the CFC's "subpart F income," even if
the subpart F income is not distributed. A foreign corporation is considered a
CFC if "10% U.S. Shareholders" own more than 50% of the total combined voting
power of all classes of voting stock of such foreign corporation, or the total
value of all stock of such corporation. A 10% U.S. Shareholder is a U.S. Person
who owns at least 10% of the total combined voting power of all classes of stock
entitled to vote of the foreign corporation. For purposes of taking into account
insurance income, a CFC also includes a foreign corporation in which more than
25% of the total combined voting power of all classes of stock (or more than 25%
of the total value of the stock) is owned by 10% U.S. Shareholders, on any day
during the taxable year of such corporation, if the gross amount of premiums or
other consideration for the reinsurance or the issuing of insurance or annuity
contracts exceeds 75% of the gross amount of all premiums or other consideration
in respect of all risks. For purposes of determining whether a corporation is a
CFC, and therefore whether the 50% (or 25%, in the case of insurance income) and
10% ownership tests have been satisfied, "own" means owned directly, indirectly
through foreign entities or is considered as owned by application of certain
constructive ownership rules. Endurance Holdings believes that it is currently,
and after the offering, that it could be, considered a CFC under the 25%
ownership test. Endurance Holdings believes, however, that due to the
anticipated dispersion of its share ownership among holders, its bye-law
provisions that impose limitations on the concentration of voting power of its
ordinary shares, authorize the board to purchase such shares under certain
circumstances, and other factors, no U.S. Person that owns shares in Endurance
Holdings directly or indirectly through foreign entities should be subject to
treatment as a 10% U.S. Shareholder of a CFC. There can be no assurance,
however, that the IRS will not challenge the effectiveness of these provisions
or that a court will not sustain such a challenge. See "Material Tax
Considerations -- United States Taxation of Holders of Ordinary
Shares -- Shareholders Who Are U.S. Persons."

U.S. PERSONS WHO HOLD ORDINARY SHARES MAY BE SUBJECT TO U.S. INCOME TAXATION ON
THEIR PRO RATA SHARE OF OUR "RELATED PARTY INSURANCE INCOME" ("RPII").

       If Endurance U.K.'s or Endurance Bermuda's RPII were to equal or exceed
20% of Endurance U.K.'s or Endurance Bermuda's gross insurance income in any
taxable year and direct or indirect insureds (and persons related to such
insureds) own (or are treated as owning directly or indirectly) 20% or more of
the voting power or value of the shares of Endurance U.K. or Endurance Bermuda,
a U.S. Person who owns ordinary shares of Endurance Holdings directly or
indirectly through foreign entities on the last day of the taxable year would be
required to include in its income for U.S. federal income tax purposes the
shareholder's pro rata share of Endurance U.K.'s or Endurance
                                        24
Bermuda's RPII for the entire taxable year, determined as if such RPII were
distributed proportionately to such U.S. shareholders at that date regardless of
whether such income is distributed. In addition, any RPII that is includible in
the income of a U.S. tax-exempt organization will be treated as unrelated
business taxable income. The amount of RPII earned by Endurance U.K. or
Endurance Bermuda (generally, premium and related investment income from the
direct or indirect insurance or reinsurance of any direct or indirect U.S.
shareholder of Endurance U.K. or Endurance Bermuda or any person related to such
shareholder) will depend on a number of factors, including the geographic
distribution of Endurance U.K.'s or Endurance Bermuda's business and the
identity of persons directly or indirectly insured or reinsured by Endurance
U.K. or Endurance Bermuda. Some of the factors, which determine the extent of
RPII in any period, may be beyond Endurance U.K.'s or Endurance Bermuda's
control. Consequently, Endurance U.K.'s or Endurance Bermuda's RPII could equal
or exceed 20% of its gross insurance income in any taxable year and ownership of
its shares by direct or indirect insureds and related persons could equal or
exceed the 20% threshold described above.

       The RPII rules provide that if a shareholder who is a U.S. Person
disposes of shares in a foreign insurance corporation that has RPII (even if the
amount of RPII is less than 20% of the corporation's gross insurance income or
the ownership of its shares by direct or indirect insureds and related persons
is less than the 20% threshold) and in which U.S. Persons own 25% or more of the
shares, any gain from the disposition will generally be treated as ordinary
income to the extent of the shareholder's share of the corporation's
undistributed earnings and profits that were accumulated during the period that
the shareholder owned the shares (whether or not such earnings and profits are
attributable to RPII). In addition, such a shareholder will be required to
comply with certain reporting requirements, regardless of the amount of shares
owned by the shareholder. These rules should not apply to dispositions of
ordinary shares because Endurance Holdings will not itself be directly engaged
in the insurance business and because proposed U.S. Treasury regulations appear
to apply only in the case of shares of corporations that are directly engaged in
the insurance business. However, the IRS might interpret the proposed
regulations in a different manner and the applicable proposed regulations may be
promulgated in final form in a manner that would cause these rules to apply to
dispositions of our ordinary shares. See "Material Tax Considerations -- United
States Taxation of Holders of Ordinary Shares -- Shareholders Who Are U.S.
Persons."

U.S. PERSONS WHO HOLD ORDINARY SHARES WILL BE SUBJECT TO ADVERSE TAX
CONSEQUENCES IF WE ARE CONSIDERED A PASSIVE FOREIGN INVESTMENT COMPANY (A
"PFIC") FOR U.S. FEDERAL INCOME TAX PURPOSES.

       We believe that we are not, and we currently do not expect to become, a
PFIC for U.S. federal income purposes. We cannot assure you, however, that we
will not be considered a PFIC. If we were considered a PFIC it could have
material adverse tax consequences for an investor that is subject to U.S.
federal income taxation, including subjecting the investor to a greater tax
liability than might otherwise apply or subjecting the investor to tax on
amounts in advance of when tax would otherwise be imposed. There are currently
no regulations regarding the application of the PFIC provisions to an insurance
company. New regulations or pronouncements interpreting or clarifying these
rules may be forthcoming. We cannot predict what impact, if any, such guidance
would have on a shareholder that is subject to U.S. federal income taxation. See
"Material Tax Considerations -- United States Taxation of Holders of Ordinary
Shares -- Shareholders Who Are U.S. Persons."

U.S. PERSONS WHO HOLD ORDINARY SHARES WILL BE SUBJECT TO ADVERSE TAX
CONSEQUENCES IF WE OR ANY OF OUR SUBSIDIARIES ARE CONSIDERED A "FOREIGN PERSONAL
HOLDING COMPANY" ("FPHC") FOR U.S. FEDERAL INCOME TAX PURPOSES.

       We believe that neither we nor any of our subsidiaries are, and we
currently do not expect any of them or us to become, a FPHC for U.S. federal
income tax purposes. We cannot assure you, however, that we will not be
considered a FPHC. If we were considered a FPHC it could have material adverse
tax consequences for an investor that is subject to U.S. federal income taxation
including subjecting the investor to a greater tax liability than might
otherwise apply and subjecting the investor to tax on amounts

                                        25
in advance of when tax would otherwise be imposed. See "Material Tax
Considerations -- United States Taxation of Holders of Ordinary
Shares -- Shareholders Who Are U.S. Persons."

CHANGES IN U.S. FEDERAL INCOME TAX LAW COULD MATERIALLY ADVERSELY AFFECT
SHAREHOLDERS' INVESTMENT.

       Legislation has been introduced in the U.S. Congress intended to
eliminate certain perceived tax advantages of companies (including insurance
companies) that have legal domiciles outside the United States but have certain
U.S. connections. While there is no currently pending legislative proposal
which, if enacted, would have a material adverse effect on us, our subsidiaries
or our shareholders, it is possible that broader-based legislative proposals
could emerge in the future that could have an adverse impact on us, our
subsidiaries or our shareholders.

                                        26
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

       Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus may include
forward-looking statements which reflect our 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.

       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 industry
             consolidation and development of competing financial products;

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

       -     the effects of terrorist related insurance legislation and laws;

       -     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;

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

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

       -     uncertainties in our reserving process;

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

       -     acceptance of our products and services, including new products and
             services;

       -     changes in the availability, cost or quality of reinsurance or
             RETROCESSIONAL COVERAGE;

       -     loss of key personnel;

       -     political stability of Bermuda;

       -     changes in accounting policies or practices; and

       -     changes in general economic conditions, including inflation,
             foreign currency exchange rates and other factors which could
             affect our investment portfolio.

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 this prospectus. We undertake no obligation to publicly update or
review any forward-looking statement, whether as a result of new information,
future developments or otherwise.

                                        27
USE OF PROCEEDS

       Assuming our ordinary shares are offered at an initial public offering
price of $          (the midpoint of the range stated on the cover page of this
prospectus), the net proceeds from this offering after deducting the estimated
underwriting discount and our estimated offering expenses are estimated to be
approximately $          million (assuming no exercise of the underwriters'
over-allotment option) or approximately $          million (assuming the full
exercise of the underwriters' over-allotment option). We intend to use these
proceeds to provide additional capital to our subsidiaries, to repay a portion
of the outstanding debt under our credit facilities and for other general
corporate purposes.

       As of September 30, 2002, we had $100 million of principal outstanding
under our term loan facility. These borrowings were used to repurchase the
interests in the Company owned by Zurich. Endurance Holdings borrowed the
remaining $92 million available under the term loan facility on November 21,
2002 to make a capital contribution to Endurance Bermuda, which in turn made
contributions to Endurance U.S. and Endurance U.K. as part of their initial
capitalization.

       Currently, the $100 million outstanding under the term loan facility
bears interest at the rate of 2.81% per annum; the remaining $92 million
outstanding under the term loan facility bears interest at 2.50% per annum.
Under the current terms of the term loan facility, we must apply 50% of the cash
proceeds of any sale of equity securities we or any of our subsidiaries may
issue to the repayment of outstanding principal of term loans outstanding under
the term loan facility. The amounts outstanding under the term loan must be
repaid in three installments: the first installment equals 20% of all
outstanding principal and is due one year after the initial borrowing under the
term loan facility or September 30, 2003, whichever occurs first. The second
installment equals 40% of all outstanding principal and is due two years after
the initial borrowing or September 30, 2004, whichever occurs first. The final
installment equals all remaining outstanding principal and is due three years
after the initial borrowing or September 30, 2005, whichever occurs first.

                                        28
DIVIDEND POLICY

       Our board of directors has not yet determined its intention regarding the
payment of dividends on our ordinary shares. Any determination to pay dividends
will be at the discretion of our board of directors and will be dependent upon
our results of operations and cash flows, our financial position and capital
requirements, general business conditions, legal, tax, regulatory and any
contractual restrictions on the payment of dividends and any other factors our
board of directors deems relevant.

       Endurance Holdings is a holding company and has no direct operations. The
ability of Endurance Holdings to pay dividends or distributions will depend
almost exclusively on the ability of its subsidiaries to pay dividends to
Endurance Holdings. 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 other distributions. Endurance U.K. is subject to significant
regulatory restrictions limiting its ability to pay dividends. In addition,
Endurance U.S. has agreed with the New York Department to not pay a dividend for
two years after its license is issued without prior regulatory approval. For a
further description of the restrictions on the ability of our subsidiaries to
pay dividends, see "Regulatory Matters -- Bermuda -- Minimum Solvency Margin and
Restrictions on Dividends and Distributions," "-- U.K. Regulation --
Restrictions on Dividend Payments" and "-- U.S. Regulation -- New York State
Dividend Limitations." In addition, our credit facilities prohibit Endurance
Holdings from declaring or paying any dividends if a default or event of default
has occurred and is continuing at the time of such declaration or payment or
would result from such declaration or payment. See "Certain Indebtedness."

       As of September 30, 2002, the maximum amount of distributions that
Endurance Bermuda could pay to Endurance Holdings under applicable insurance and
Companies Act regulations without prior regulatory approval was approximately
$112 million. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."

                                        29
CAPITALIZATION

       The following table sets forth our consolidated capitalization as of
September 30, 2002:

       -     on an actual basis, as adjusted for the share premium issuance
             effected in December 2002, and

       -     as adjusted to give effect to the sale of ordinary shares offered
             by us in this offering at an assumed initial public offering price
             of $     per share, the midpoint of the range set forth on the
             cover page of this prospectus, with net proceeds of approximately
             $          million (assuming no exercise of the underwriters'
             over-allotment option) after deducting the estimated underwriting
             discount and our estimated offering expenses.

       You should read this table in conjunction with "Selected Consolidated
Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and related
notes that are included elsewhere in this prospectus.
AS OF SEPTEMBER 30, 2002
                                                              ------------------------
                                                                ACTUAL     AS ADJUSTED
                                                              ----------   -----------
                                                                   (IN THOUSANDS)
DEBT OUTSTANDING:
Bank debt(a)................................................  $  100,000     $

SHAREHOLDERS' EQUITY(b):
Ordinary shares (par value $1.00); 54,061,185 shares
  outstanding(c)............................................      54,061
Class A shares (par value $1.00); 938,815 shares
  outstanding(c)............................................         939
Additional paid-in capital..................................   1,007,000
Accumulated other comprehensive income......................      48,608
Retained earnings...........................................      63,800
                                                              ----------     ------
  Total shareholders' equity................................  $1,174,408     $
                                                              ----------     ------
TOTAL CAPITALIZATION........................................  $1,274,408     $
                                                              ==========     ======
------------

(a) On November 21, 2002, Endurance Holdings borrowed the remaining $92 million
    available under its term loan facility. For a full description of the
    Company's credit facilities, see "Certain Indebtedness."

(b) As of September 30, 2002, the Company had 120,000,000 common shares of $1.00
    par value authorized. This table does not give effect to warrants currently
    exercisable for 6,641,960 ordinary shares, class A warrants currently
    exercisable for 600,930 class A shares and options to purchase 438,640
    ordinary shares that were fully vested at September 30, 2002.

(c) For a description of the terms of our ordinary shares and class A shares,
    see "Description of Share Capital." Our outstanding non-voting class A
    shares are convertible into ordinary shares and are currently held by one of
    our lead investors.

                                        30
DILUTION

       As of September 30, 2002, our net book value was $1.17 billion, or $21.35
per common share, assuming 55,000,000 common shares outstanding. As used below,
our net book value per common share represents shareholders' equity divided by
the number of common shares outstanding. After giving effect to the issuance of
               of our ordinary shares at an assumed initial public offering
price of $     per ordinary share (the midpoint of the range set forth on the
cover page of this prospectus) and after deducting the estimated underwriting
discount and our estimated offering expenses (assuming that the underwriters'
over-allotment option is not exercised), and the application of the estimated
net proceeds therefrom, our net book value as of September 30, 2002 would have
been $ million, or $     per common share. This amount represents an immediate
increase of $     per common share to the existing shareholders and an immediate
dilution of $     per common share issued to the new investors purchasing shares
offered hereby at the assumed public offering price. The following table
illustrates this per share dilution:
Assumed initial public offering price per ordinary share....   $
  Net book value per common share before the offering.......    21.35
  Increase attributable to the offering.....................
Net book value per common share after the offering..........
Dilution per common share to new investors(a)...............   $
------------

(a) If the underwriters' overallotment option is exercised in full, dilution per
    common share to new investors will be $          .

       The following table sets forth as of September 30, 2002 the number of our
common shares issued, the total consideration paid and the average price per
common share paid by all of our existing shareholders (assuming the exchange of
class A shares for           ordinary shares) and by new investors, after giving
effect to the issuance of                ordinary shares in the offering at an
assumed initial public offering price of $     per share (the midpoint of the
range set forth on the cover page of this prospectus, before deducting the
estimated underwriting discount and our estimated offering expenses and assuming
that the underwriters' over-allotment option is not exercised).
COMMON SHARES ISSUED     TOTAL CONSIDERATION      AVERAGE PRICE
                             --------------------   ------------------------    PER COMMON
                               NUMBER     PERCENT       AMOUNT       PERCENT       SHARE
                             ----------   -------   --------------   -------   -------------
Existing shareholders......  55,000,000     100%    $1,100,000,000     100%       $20.00
                             ----------     ---     --------------     ---        ------
New investors..............
                             ----------     ---     --------------     ---        ------
     Total.................
                             ==========     ===     ==============     ===        ======
This table does not give effect to warrants currently exercisable for
6,641,960 ordinary shares, class A warrants currently exercisable for 600,930
class A shares and options to purchase 438,640 ordinary shares that were fully
vested at September 30, 2002.

                                        31
SELECTED CONSOLIDATED FINANCIAL INFORMATION

       The following table sets forth our selected consolidated financial
information for the periods ended and as of the dates indicated. As described in
Note 1 to our consolidated financial statements included elsewhere in this
prospectus, our consolidated financial statements include the accounts of both
Endurance Holdings and Endurance Bermuda (our only operating subsidiary as of
September 30, 2002). Endurance Bermuda was incorporated on November 30, 2001 and
commenced operations on December 17, 2001. Endurance Holdings was incorporated
on June 27, 2002 and effected an exchange offer in July 2002 with the
shareholders of Endurance Bermuda. The exchange offer was accounted for as a
business combination of companies under common control.

       We derived the following selected consolidated financial and additional
data for the period from November 30, 2001(inception) through December 31, 2001
from our audited consolidated financial statements and related notes. We derived
the following selected consolidated financial and additional data for the nine
months ended September 30, 2002 from unaudited financial statements, which
include all adjustments, consisting of normal recurring accruals, which we
consider necessary for a fair presentation of the financial position and the
results of operations for this period. These historical results are not
necessarily indicative of results to be expected from any future period and the
results presented below are not necessarily indicative of our full year
performance.

       You should read the following selected consolidated financial information
along with the information contained in this prospectus, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere in
this prospectus.
PERIOD ENDED            NINE MONTHS ENDED
                                                            DECEMBER 31, 2001         SEPTEMBER 30, 2002
                                                           --------------------      ---------------------
                                                           (IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
SELECTED INCOME STATEMENT DATA:
Gross premiums written and acquired(a)...................        $   376                   $623,472
Net premiums written and acquired(b).....................            376                    590,513
Net premiums earned......................................              1                    204,282
Net investment income....................................            838                     29,355
Net realized gains on sales of investments...............             --                      3,688
Losses and loss expenses.................................             --                    115,146
Acquisition expenses.....................................             --                     33,304
General and administrative expenses......................            527                     26,494
Net income...............................................            312                     63,488

PER SHARE DATA:
Basic earnings per share.................................        $  0.01                   $   1.06
Diluted earnings per share...............................        $  0.01                   $   1.06
Weighted average number of common shares outstanding
  Basic..................................................         39,630                     59,945
  Diluted................................................         39,630                     60,088
32
AS OF SEPTEMBER 30, 2002
                                                           AS OF         ---------------------------
                                                     DECEMBER 31, 2001     ACTUAL     AS ADJUSTED(C)
                                                     -----------------   ----------   --------------
                                                                          (IN THOUSANDS, EXCEPT PER
                                                                                 SHARE DATA)
SELECTED BALANCE SHEET DATA:
Cash and investments...............................     $1,162,498       $1,453,234
Total assets.......................................      1,165,099        1,853,083
Reserve for losses and loss expenses...............             --          114,779
Reserve for unearned premiums......................            375          402,803
Bank debt(d).......................................             --          100,000
Total shareholders' equity.........................      1,162,312        1,174,408

PER SHARE DATA:
Book value per share(e)............................     $    19.37       $    21.35
Diluted book value per share(f)....................     $    19.37       $    21.10

SELECTED NON-U.S. GAAP DATA:
Net operating income(g)............................     $      312       $   59,800
NINE MONTHS ENDED
                                                              SEPTEMBER 30, 2002
                                                              ------------------
Loss ratio(h)...............................................         56.4%
Acquisition expense ratio(i)................................         16.3%
General and administrative expense ratio(j).................         13.0%
                                                                     ----
Combined ratio(k)...........................................         85.7%
                                                                     ====
------------

(a)  Gross premiums written and acquired for the nine months ended September 30,
     2002 include $89 million of gross premiums acquired in the LaSalle
     transaction. See "Management's Discussion and Analysis of Financial
     Condition and Results of Operations."

(b) Net premiums written and acquired for the nine months ended September 30,
    2002 include $67 million of net premiums acquired in the LaSalle
    transaction. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations."

(c)  The as adjusted summary balance sheet data as of September 30, 2002
     reflects the application of the net proceeds of the sale of
     ordinary shares in this offering at an assumed initial public offering
     price of $          , the midpoint of the range set forth on the cover of
     this prospectus (assuming no exercise of the underwriters' over-allotment
     option) after deducting the estimated underwriting discount and our
     estimated offering expenses. See "Use of Proceeds."

(d) On November 21, 2002, Endurance Holdings borrowed the remaining $92 million
    available under its term loan facility. For a full description of the
    Company's credit facilities, see "Certain Indebtedness."

(e)  Book value per share is based on total shareholders' equity divided by
     basic common shares outstanding of 60,000,000 at December 31, 2001 and
     55,000,000 at September 30, 2002.

(f)  Diluted book value per share is based on total shareholders' equity divided
     by the number of common shares and common share equivalents outstanding at
     the end of the period, using the treasury stock method. Common share
     equivalents include options and warrants which are dilutive when the book
     value of the Company exceeds the exercise price of the options or warrants.
     Diluted shares outstanding at December 31, 2001 were 60,000,000, and at
     September 30, 2002 were 55,667,170.

(g)  Net operating income for the nine months ended September 30, 2002 is
     calculated by subtracting net realized gains on sales of investments of
     $3.7 million from net income of $63.5 million. Net operating income was
     equal to net income for the period ended December 31, 2001.

(h) The loss ratio is calculated by dividing losses and loss expenses by net
    premiums earned.

(i)  The acquisition expense ratio is calculated by dividing acquisition
     expenses by net premiums earned.

(j)  The general and administrative expense ratio is calculated by dividing
     general and administrative expenses by net premiums earned.

(k) The combined ratio is the sum of the loss ratio, the acquisition expense
    ratio and the general and administrative expense ratio.

                                        33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

       The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this prospectus.
Some of the information contained in this discussion and analysis or set forth
elsewhere in this prospectus, including information with respect to our plans
and strategy for our business, includes forward-looking statements that involve
risk and uncertainties. Please see the "Cautionary Statement Regarding
Forward-Looking Statements" for more information. You should review the "Risk
Factors" set forth elsewhere in this prospectus 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.

       Our results of operations are affected by the following business and
accounting factors and critical accounting policies:

REVENUES

       We derive our revenues primarily from premiums from our insurance
policies and reinsurance contracts and, to a lesser extent, income from our
investment portfolio. Insurance and reinsurance premiums are a function of the
amount and type of policies and contracts we write, as well as prevailing market
prices.

EXPENSES

       Our expenses consist primarily of losses and loss expenses, acquisition
expenses and general and administrative expenses. Losses and loss expenses are
estimated by management and reflect our best estimate of ultimate losses and
costs arising during the reporting period and revisions of prior period
estimates. We record losses and loss expenses based on an actuarial analysis of
the estimated losses we expect to be reported on policies and contracts written.
We reserve for catastrophe losses as soon as a loss event is known to have
occurred. The ultimate losses and loss expenses will depend on the actual costs
to settle claims. Acquisition expenses consist principally of commissions and
brokerage expenses that are typically a percentage of the premiums on insurance
policies or reinsurance contracts written. General and administrative expenses
consist primarily of personnel expenses, general operating expenses and interest
expense.

CRITICAL ACCOUNTING POLICIES

       Our consolidated financial statements contain certain amounts that are
inherently subjective in nature and require management to make assumptions and
best estimates to determine the reported values. If factors such as those
described in the "Risk Factors" section of this prospectus cause actual events
or results to differ materially from management's underlying assumptions or
estimates, there could be a material adverse effect on our results of operations
and financial condition and liquidity.

       We believe that the following critical accounting policies affect
significant estimates used in the preparation of our consolidated financial
statements.

       Premiums.  Premiums written and assumed are earned on a pro-rata basis
over the terms of the underlying contracts and policies. Reinsurance contracts
and insurance policies written on a LOSSES OCCURRING BASIS cover losses which
occur during the term of the contract or policy, typically 12 months.
Accordingly, the premium is earned evenly over the term. Reinsurance contracts
written on a POLICIES ATTACHING BASIS cover losses which attach to the
underlying insurance policies written during the terms of the contracts.
Premiums earned on a policies attaching basis usually extend beyond the original
term of the reinsurance contract, typically resulting in recognition of premiums
earned over a 24 month period rather than the traditional 12 month period.
Policies attaching contracts accounted for 34% of our gross premiums written and
acquired during the nine-month period ended September 30, 2002.

                                        34
Premiums written and assumed include estimates based on information
received from brokers, ceding companies and insureds, and any subsequent
differences arising on such estimates are recorded in the periods in which they
are determined. Premiums on our excess of loss and proportional reinsurance
contracts are estimated by management when the business is underwritten. For
excess of loss contracts, the minimum and deposit premium, as defined in the
contract, is generally considered to be the best estimate of the contract's
written premium at inception. Accordingly, this is the amount we generally
record as written premium in the period the underlying risks incept. Estimates
of premiums assumed under proportional contracts, primarily written on a
policies attaching basis, are recorded in the period in which the underlying
risks are expected to incept and are based on information provided by brokers
and ceding companies and estimates of the underlying economic conditions at the
time the risk is underwritten. As actual premiums are reported by the ceding
companies, management evaluates the appropriateness of the premium estimate and
any adjustment to this estimate is recorded in the period in which it becomes
known. Adjustments to original premium estimates could be material and such
adjustments may directly and significantly impact earnings in the period they
are determined because the subject premium may be fully or substantially earned.

       Reserve for Losses and Loss Expenses.  The reserve for losses and loss
expenses includes reserves for unpaid reported losses and losses INCURRED BUT
NOT REPORTED ("IBNR"). The reserve for unpaid reported losses and loss expenses
is established by management based on reports from brokers, ceding companies and
insureds and consultations with independent legal counsel, and represents the
estimated ultimate cost of events or conditions that have been reported to or
specifically identified by the Company. The reserve for incurred but not
reported losses and loss expenses is established by management based on
estimates of ultimate losses and loss expenses.

       Reserves for losses and loss expenses are based in part upon the
estimation of losses resulting from catastrophic events. Estimation of the
losses and loss expenses resulting from catastrophic events based upon the
Company's historical claim experience is inherently difficult because of the
Company's short operating history and the possible severity of catastrophe
claims. Therefore, the Company utilizes both proprietary and commercially
available models, as well as historical reinsurance industry catastrophe claims
experience, for purposes of evaluating future trends and providing an estimate
of ultimate claims costs.

       Several aspects of the Company's casualty insurance and reinsurance
operations complicate the actuarial reserving techniques for loss reserves as
compared to other insurance and reinsurance operations. Among these aspects are
the differences in the Company's policy forms from more traditional forms, the
lack of complete historical data for losses of the same type intended to be
covered by the policies and contracts written by the Company, and the
expectation that losses in excess of the Company's attachment levels will be low
frequency and high severity in nature, limiting the utility of claims experience
of other insurers and reinsurers for similar claims.

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
reporting of a loss to the Company and the settlement of the Company's liability
may be several years. During this period, additional facts and trends will be
revealed. As these factors become apparent, CASE RESERVES will be adjusted,
sometimes requiring an increase in the overall reserves of the Company, and at
other times requiring a reallocation of IBNR reserves to specific case reserves.
These estimates are reviewed regularly, and such adjustments, if any, are
reflected in earnings in the period in which they become known. The
establishment of new reserves or the adjustment of previously recorded reserves
could result in significant upward or downward changes to our financial
condition for any particular period. While management believes that it has made
a reasonable estimate of ultimate losses, the ultimate claims experience may not
be as reliably predicted as may be the case with other insurance and reinsurance
operations, and there can be no assurance that losses and loss expenses will not
exceed the total reserves.

       Accordingly, ultimate losses and loss expenses may differ materially from
the amounts recorded in our consolidated financial statements. These estimates
are reviewed regularly and, as experience develops

                                        35
and new information becomes known, the reserves are adjusted as necessary. Such
adjustments, if any, are reflected in earnings in the period in which they are
determined.

       Stock-based Employee Compensation Plans.  Stock-based compensation is
accounted for using the intrinsic value-based method in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." As the exercise price of the options granted exceeded the fair value
of the underlying stock on the date of grant, no stock compensation expense has
been recognized in the Company's financial statements.

       The Company is evaluating the impact of adopting the fair value method of
recording stock-based compensation as contained in Statement of Financial
Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation"
("SFAS No. 123"). Under SFAS No. 123, employee stock option grants and other
stock-based compensation will be expensed and included in general and
administrative expenses over the vesting period based on the estimated fair
value at the date the stock-based compensation is granted. The Financial
Accounting Standards Board has issued an exposure draft, which, if finalized as
drafted, would allow companies adopting the fair value method permitted under
SFAS No. 123 to choose from three alternative transition methods. The Company
will evaluate these alternatives and select an appropriate transition method
after the issuance of the final standard, which is expected later in 2002. The
ultimate impact on the Company's financial statements will depend upon the
transition method selected.

RESULTS OF OPERATIONS

       The following is a discussion and analysis of the Company's consolidated
results of operations for the period from November 30, 2001 (inception) to
December 31, 2001 and separately for the nine months ended September 30, 2002.

  PERIOD ENDED DECEMBER 31, 2001

       During the period from November 30, 2001 to December 31, 2001, the
Company wrote a small volume of business, with gross premiums written of $0.4
million and an immaterial amount of earned premiums. The Company did not incur
any losses during this period. Net investment income resulting from the
investment of the proceeds from our private placement contributed $0.8 million
to our earnings. General and administrative expenses for the period were $0.5
million and net income was $0.3 million.

  NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written and acquired were $623.5 million. Gross premiums written and acquired
were comprised of gross premiums written of $534.9 million and gross premiums
acquired from LaSalle of $88.6 million. Reinsurance premiums ceded for the nine
months ended September 30, 2002 were $33.0 million. These premiums consisted
primarily of $21.5 million of reinsurance protection provided to the Company in
conjunction with the LaSalle transaction and $10.6 million of reinsurance
purchased in August 2002. Endurance Bermuda purchased such reinsurance in August
to manage its exposure to certain identified catastrophic losses in its property
and property catastrophe segments. Net premiums earned for the nine months ended
September 30, 2002 were $204.3 million.

       Net Investment Income.  Net investment income for the nine months ended
September 30, 2002 was $29.4 million, and was primarily comprised of interest on
coupon paying bonds partially offset by investment management fees for the
period of $0.9 million.

       The Company invested its assets in cash and cash equivalents until the
end of February 2002. In March 2002, the Company and its asset managers embarked
on a program to invest in a broader array of assets based upon the Company's
investment guidelines. The Company reached its target level of investment by
June 30, 2002.

                                        36
The annualized 2002 book yield (which is the average yield of the
invested portfolio after adjusting for accretion and amortization from the
purchase dates of its aggregate assets) and total return (which is the implied
yield attributable to the accretion in market value of the invested portfolio)
were 4.49% and 6.63% for the nine months ended September 30, 2002, respectively.
Total return includes unrealized gains and losses.

       Net Realized Investment Gains.  Net realized investment gains for the
nine months ended September 30, 2002 were $3.7 million, and were primarily due
to gains realized from the sale of fixed maturity securities, executed as part
of the ongoing management of our investment portfolio.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $115.1 million. The loss ratio for the nine months
ended September 30, 2002 was 56.4%. The overall loss reserves were established
by the Company's actuaries and reflect the best estimate of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $33.3 million. The acquisition expense ratio for the
nine months ended September 30, 2002 was 16.3%.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $26.5 million, and were
comprised of $14.9 million in personnel costs, $4.8 million relating to the
implementation of the Company's structure and commencement of business and $6.8
million in other expenses. The general and administrative expense ratio for the
nine months ended September 30, 2002 was 13.0%.

       Net Income.  Net income for the nine months ended September 30, 2002 was
$63.5 million, comprised of net underwriting income of $29.3 million, net
investment income of $29.4 million, net realized investment gains of $3.7
million and net foreign exchange gains of $1.1 million.

       Comprehensive Income.  Comprehensive income for the nine months ended
September 30, 2002 was $112.1 million, which was comprised of the net income of
$63.5 million described above and a net increase in unrealized investment gains
of $48.6 million.

UNDERWRITING RESULTS BY OPERATING SEGMENTS

       The determination of the Company's business segments was based on how the
Company monitors the performance of its underwriting operations. Management
measures segment 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 does not
manage its assets by segment; accordingly, investment income and total assets
are not allocated to the individual segments. General and administrative
expenses are allocated to segments based on each segment's proportional share of
gross premiums written and acquired.

                                        37
The following table summarizes the underwriting results and associated
ratios for our six business segments for the nine months ended September 30,
2002.
PROPERTY PER     PROPERTY
                                     RISK TREATY     CATASTROPHE    CASUALTY TREATY
                                     REINSURANCE     REINSURANCE      REINSURANCE
(IN THOUSANDS)                       ------------    -----------    ---------------
REVENUES
Gross premiums written and
  acquired.........................    $123,585       $170,185         $143,481
                                       --------       --------         --------
Net premiums written and
  acquired.........................     123,585        138,099          143,481
                                       --------       --------         --------
Net premiums earned................      28,448         77,257           35,405
                                       --------       --------         --------

EXPENSES
Losses and loss expenses...........      14,657         45,937           20,820
Acquisition expenses...............       6,019         11,419            8,452
General and administrative
  expenses.........................       5,252          7,232            6,097
                                       --------       --------         --------
Total Expenses.....................      25,928         64,588           35,369
                                       --------       --------         --------

UNDERWRITING INCOME................    $  2,520       $ 12,669         $     36
                                       ========       ========         ========

RATIOS
Loss ratio.........................        51.5%          59.5%            58.8%
Acquisition expense ratio..........        21.2%          14.8%            23.9%
General and administrative expense
  ratio............................        18.5%           9.4%            17.2%
                                       --------       --------         --------
Combined ratio.....................        91.2%          83.7%            99.9%
                                       ========       ========         ========
PROPERTY
                                       INDIVIDUAL      CASUALTY            OTHER
                                          RISK      INDIVIDUAL RISK   SPECIALTY LINES    TOTAL
(IN THOUSANDS)                         ----------   ---------------   ---------------   --------
REVENUES
Gross premiums written and
  acquired...........................   $50,989         $66,289           $68,943       $623,472
                                        -------         -------           -------       --------
Net premiums written and acquired....    50,116          66,289            68,943        590,513
                                        -------         -------           -------       --------
Net premiums earned..................    19,263          21,525            22,384        204,282
                                        -------         -------           -------       --------

EXPENSES
Losses and loss expenses.............     4,661          16,425            12,646        115,146
Acquisition expenses.................     1,909           1,894             3,611         33,304
General and administrative
  expenses...........................     2,167           2,817             2,929         26,494
                                        -------         -------           -------       --------
Total Expenses.......................     8,737          21,136            19,186        174,944
                                        -------         -------           -------       --------

UNDERWRITING INCOME..................   $10,526         $   389           $ 3,198       $ 29,338
                                        =======         =======           =======       ========

RATIOS
Loss ratio...........................      24.2%           76.3%             56.5%          56.4%
Acquisition expense ratio............       9.9%            8.8%             16.1%          16.3%
General and administrative expense
  ratio..............................      11.2%           13.1%             13.1%          13.0%
                                        -------         -------           -------       --------
Combined ratio.......................      45.3%           98.2%             85.7%          85.7%
                                        =======         =======           =======       ========
38
PROPERTY PER RISK TREATY REINSURANCE

       Our Property Per Risk Treaty Reinsurance business segment reinsures
individual property risks of ceding companies on a treaty basis. Our property
per risk reinsurance contracts cover claims from individual insurance policies
written by our ceding company clients and include both personal lines and
commercial lines exposures.

  NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  For the nine months ended September 30, 2002, gross premiums
written were $123.6 million and net premiums earned were $28.4 million. The
ratio of net premiums earned to net premiums written during this period was 23%
due to 57% of the premiums in this segment having been written on a policies
attaching basis. The majority of the policies attaching contracts have a
24-month risk period and, as such, the premiums are earned over that risk
period.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $14.7 million and the loss ratio was 51.5%.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $6.0 million or 21.2% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $5.3 million.

PROPERTY CATASTROPHE REINSURANCE

       Our Property Catastrophe Reinsurance business segment reinsures
catastrophic perils for ceding companies on a treaty basis. Our property
catastrophe reinsurance contracts provide protection for most catastrophic
losses that are covered in the underlying insurance policies written by our
ceding company clients. Protection under property catastrophe treaties is
provided on an occurrence basis, allowing our ceding company clients to combine
losses that have been incurred in any single event from multiple underlying
policies.

  NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  For the nine months ended September 30, 2002, gross premiums
written and acquired were $170.2 million, representing gross premiums written of
$81.6 million and gross premiums acquired from LaSalle of $88.6 million. The
majority of the contracts associated with this segment are written on a losses
occurring basis. Accordingly, the premium is earned evenly over the term.
Reinsurance premiums ceded during this period were approximately $32.1 million
and were comprised of $21.5 million of reinsurance protection assumed by
Endurance Bermuda in conjunction with the LaSalle transaction and $10.6 million
of reinsurance purchased in August 2002. This reinsurance was purchased to
reduce Endurance Bermuda's exposure to catastrophic losses.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $45.9 million. The loss ratio of 59.5% was
principally attributable to the small number of catastrophe losses experienced
in the nine months ended September 30, 2002. Results in this segment were
adversely impacted by approximately $30 million of losses from the August 2002
flooding in Central Europe which were partially offset by light catastrophic
loss activity in other regions. The losses and loss expenses recorded have not
resulted in any recoveries under the reinsurance protection purchased.
Accordingly, no losses recoverable have been recorded.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $11.4 million or 14.8% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $7.2 million.

                                        39
CASUALTY TREATY REINSURANCE

       Our Casualty Treaty Reinsurance business segment reinsures third party
liability exposures from ceding companies on a treaty basis. The exposures that
we reinsure include AUTOMOBILE LIABILITY, PROFESSIONAL LIABILITY, DIRECTORS' AND
OFFICERS' LIABILITY, UMBRELLA LIABILITY and WORKERS' COMPENSATION. We focus on
business that is exposed to severity losses and not expected to produce high
levels of claims frequency.

         NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $143.5 million and net premiums earned were $35.4 million. For the
nine months ended September 30, 2002, 70% of premiums in this segment were
written on a policies attaching basis. The majority of the policies attaching
contracts have a 24-month risk period, and as such, the premiums are earned over
the risk period.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $20.8 million and the loss ratio was 58.8%. The
losses and loss expenses of $20.8 million, established by the Company's
actuaries, reflect management's best estimate of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $8.5 million or 23.9% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $6.1 million.

PROPERTY INDIVIDUAL RISK

       Our Property Individual Risk business segment is comprised of the
insurance and FACULTATIVE REINSURANCE of commercial properties. The policies
written in this segment provide coverage for one insured for each policy. The
types of risks insured are generally commercial properties with sufficiently
large values to require multiple insurers and reinsurers to accommodate their
insurance capacity needs.

         NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $51.0 million and net premiums earned were $19.3 million. The ratio
of net premiums earned to net premiums written during this period was 38.4%. The
earned premium percentage reflects the fact that staffing in this operating
segment increased substantially during 2002. On January 1, 2002 this operating
segment had one underwriter while at September 30, 2002 there were six
underwriters. As the number of underwriters increased, the volume of premiums
written increased. Policies written in this segment are written on a losses
occurring basis and typically earn over the 12-month period of the contract.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $4.7 million, and the loss ratio was 24.2%. As of
September 30, 2002, we had not received any notices of losses for this segment.
Accordingly, the losses and loss expenses of $4.7 million were established by
the Company's actuaries based on historical industry reporting patterns and
qualitative factors and represent management's best estimate of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $1.9 million or 9.9% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $2.2 million.

                                        40
CASUALTY INDIVIDUAL RISK

       Our Casualty Individual Risk business segment is comprised of the
insurance and facultative reinsurance of third party liability exposures. This
includes third party general liability insurance, directors' and officers'
liability insurance, errors and omissions insurance and employment practices
liability insurance, all written for a wide range of industry groups, as well as
medical professional liability insurance which is written for large
institutional healthcare providers. Our clients in this segment typically employ
sophisticated risk management practices and retain significant portions of their
own risk in addition to purchasing large insurance limits.

        NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $66.3 million and net premiums earned were $21.5 million. The ratio
of net premiums earned to net premiums written during this period was 32.5%. The
majority of the policies were written subsequent to March 31, 2002, and all
premiums written by this segment are earned ratably over the terms of the
insurance policies. At March 31, 2002, two underwriters were employed in this
business segment and at September 30, 2002, there were seven underwriters on the
team. As the number of underwriters has increased, the amount of premiums
written also has increased.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $16.4 million, and the loss ratio was 76.3%. We
have received only a limited number of notices of potential losses for this
segment, none of which have yet reached a level which would result in our paying
a claim. Accordingly, the losses and loss expenses of $16.4 million were
established by the Company's actuaries based on historical industry loss data
and program specific loss information, and represent management's best estimate
of ultimate losses.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $1.9 million or 8.8% of net premiums earned.

       General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $2.8 million.

OTHER SPECIALTY LINES

       Our Other Specialty Lines business segment is comprised of the insurance
and reinsurance of unique opportunities, including Aerospace, Self Insured Risks
and a limited number of other reinsurance programs such as surety, marine,
energy, personal accident, terrorism and others. Aerospace includes aviation
hull, aircraft liability and aircraft products coverage, and the space business
includes satellite launch and in-orbit coverage. Our Self Insured Risks business
provides traditional property and casualty insurance products to entities that
are able to bear a significant portion of their own risk. The coverages we
provide include general liability, automobile liability, workers' compensation
and property insurance. We provide both insurance and reinsurance coverages,
with the reinsurance written both in the form of facultative and treaty
reinsurance.

        NINE MONTHS ENDED SEPTEMBER 30, 2002

       Premiums.  In the nine months ended September 30, 2002, gross premiums
written were $68.9 million and net premiums earned were $22.4 million. For the
nine months ended September 30, 2002, 57% of premiums were written on a policies
attaching basis. The majority of the policies attaching contracts have a
24-month risk period, and as such, the premiums are earned over the risk period.

       Losses and Loss Expenses.  Losses and loss expenses for the nine months
ended September 30, 2002 were $12.6 million, and the loss ratio was 56.5%.

       Acquisition Expenses.  Acquisition expenses for the nine months ended
September 30, 2002 were $3.6 million or 16.1% of net premiums earned.

                                        41
General and Administrative Expenses.  General and administrative expenses
for the nine months ended September 30, 2002 were $2.9 million.

SIGNIFICANT TRANSACTIONS

       On May 16, 2002, Endurance Bermuda completed a transaction with LaSalle,
and LaSalle's parent, Trenwick Group Ltd. The transaction was structured as a
quota share retrocession agreement effective as of April 1, 2002, a purchase of
renewal rights, a transfer and purchase agreement and an administrative services
agreement. Endurance Bermuda did not assume any of LaSalle's historical
reinsurance liabilities. The primary reasons for the transaction were to
increase the Company's presence in the property catastrophe marketplace and to
increase the Bermuda-based staff of the Company. The transaction was accounted
for as a purchase method business combination in accordance with SFAS No. 141
"Business Combinations."

       At closing, Endurance Bermuda agreed to pay a 25.0% ceding commission on
the net unearned premiums, to be paid as premiums are collected under the
assumed contracts, and Endurance Bermuda assumed $67.1 million of net unearned
premium, comprised of $88.6 million of gross unearned premiums and $21.5 million
of prepaid reinsurance premiums. Endurance Bermuda is also required to pay a
renewal commission of 12.5% on all net reinsurance premiums renewed and
collected during the first twelve months of the quota share retrocession
agreement, subject to a minimum renewal fee of $8 million which was paid to
LaSalle at the closing. In addition to the initial purchase price, Endurance
Bermuda may be required to pay additional amounts. Such contingent amounts are
based on the profitability during 2002 of the April 1, 2002 in-force contracts
acquired and will be recorded in the period in which they are determined to be
payable.

       On August 13, 2002, the Company entered into a $192 million three-year
term loan agreement and a $108 million 364 day revolving credit facility with a
syndicate of commercial banks. See "Certain Indebtedness." Proceeds from the
three-year term loan agreement may be utilized by the Company for general
corporate purposes and working capital requirements. The revolving credit
facility also provides for the issuance of standby letters of credit. The
revolving credit facility will terminate on August 11, 2003, at which point any
revolving credit balance can be converted into a six-month term loan. Costs
associated with the establishment of the debt facility were capitalized and are
included in other assets. These capitalized costs will be amortized ratably over
the term of the debt facility commitment periods.

       As of September 30, 2002, the Company had drawn down $100 million under
the term loan facility, and letters of credit totaling $2.8 million were
outstanding under the revolving credit facility. The term loan borrowing
occurred on September 27, 2002, when Endurance Holdings drew down $100 million
to repurchase 5,000,000 ordinary shares from subsidiaries of Zurich for $100
million. On November 21, 2002, Endurance Holdings borrowed the remaining $92
million under the term loan facility. Proceeds from the second term loan
borrowing were used to provide additional capital to Endurance Bermuda and
subsequently used by Endurance Bermuda to capitalize Endurance U.K. and
Endurance U.S. Such borrowings currently carry interest at LIBOR plus 1.0%,
2.81% per annum on the first term loan borrowing and 2.50% per annum on the
second term loan borrowing, and are subject to principal amortization of 20%,
40% and 40% by September 30, 2003, 2004 and 2005, respectively.

       Endurance U.K. was incorporated on April 10, 2002. On December 4, 2002,
Endurance U.K. was authorized by the FSA to begin writing insurance and
reinsurance in the United Kingdom. On November 27, 2002, Endurance Bermuda
contributed L100 million to Endurance Worldwide Holdings Limited which, in turn,
subsequently contributed such amount to capitalize Endurance U.K.

       Endurance U.S. was incorporated on September 5, 2002. On December 4,
2002, Endurance Bermuda contributed $335 million in cash and invested assets to
Endurance U.S. Holdings Corp., which in turn, subsequently contributed such
amount as statutory surplus of Endurance U.S. On December 18, 2002, Endurance
U.S. received a license to write certain lines of insurance and reinsurance
business from the New York Department.

                                        42
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, including Endurance Bermuda, Endurance U.K.
and Endurance U.S. 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 common shares. There
are restrictions on the payment of dividends by Endurance Bermuda, Endurance
U.K. and Endurance U.S. to Endurance Holdings, which are described in more
detail below.

       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, 2002, Endurance Bermuda could
pay a dividend or return additional paid-in capital totaling approximately $112
million without prior regulatory approval based upon insurance and Companies Act
regulations. See "Regulatory Matters -- Bermuda -- Minimum Solvency Margin and
Restrictions on Dividends and Distributions."

       We have agreed with the New York Department to not take a dividend from
Endurance U.S. for two years after its license is issued without prior
regulatory approval. Endurance U.K. is subject to significant regulatory
restrictions limiting its ability to pay dividends. Accordingly, we do not
currently intend to seek a dividend from Endurance U.K.

       Our aggregate invested assets as of September 30, 2002 totaled
approximately $1.4 billion. The increase of cash and invested assets since
December 14, 2001 resulted from collections of premiums on insurance policies
and reinsurance contracts and investment income, offset by acquisition expenses
paid, reinsurance premiums paid, general and administrative expenses paid and
payments related to the LaSalle transaction. Total net cash flow from operations
from December 17, 2001 through September 30, 2002 was approximately $223
million.

       We have $38.4 million in principal payments due and payable by September
30, 2003 for outstanding borrowings on our term loan facility. We anticipate
using a combination of the proceeds from this offering and dividends from
Endurance Bermuda to make such principal payments.

       We expect that the proceeds of this offering, together with the capital
base we established in the private placement and under our credit facilities,
will permit us to continue to implement our business strategy. On an ongoing
basis, we expect our internally generated funds, together with borrowings
available under our credit facilities and our capital base established by this
offering and the private placement, to be sufficient to operate our business.
There can be no assurance that we will not be required to incur other
indebtedness to implement our business strategy or pay claims.

QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

       We believe that we are principally exposed to three types of market risk:
interest rate risk, foreign currency risk and credit risk.

       Interest Rate Risk.  Our primary market risk exposure is to changes in
interest rates. Our fixed maturity portfolio is exposed to interest rate risk.
Fluctuations in interest rates have a direct impact on the market valuation of
these securities. As interest rates rise, the market value of our fixed maturity
portfolio falls, and the converse is also true. We expect to manage interest
rate risk through an active portfolio management strategy that involves the
selection, by our managers, of investments with appropriate characteristics,
such as duration, yield, currency and liquidity, that are tailored to the
anticipated cash outflow characteristics of our liabilities.

                                        43
As of September 30, 2002, assuming parallel shifts in interest rates, the
impact of an immediate 100 basis point increase in market interest rates on our
investment portfolio of $1.4 billion would have been an estimated decrease in
market value of 2.7% or approximately $39 million, and the impact on our
investment portfolio of an immediate 100 basis point decrease in market interest
rates would have been an estimated increase in market value of 2.3% or
approximately $33 million.

       Foreign Currency Risk.  We will attempt to manage our foreign currency
risk by seeking to match our liabilities under insurance and reinsurance
contracts that are payable in foreign currencies with investments that are
denominated in such currencies. Furthermore, we may use forward foreign currency
exchange contracts in an effort to hedge against movements in the value of
foreign currencies relative to the U.S. dollar. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specified
currency at a future date at a price set at the time of the contract. Foreign
currency exchange contracts will not eliminate fluctuations in the value of our
assets and liabilities denominated in foreign currencies, but rather allow us to
establish a rate of exchange for a future point in time. We do not expect to
enter into such contracts with respect to a material amount of our assets.

       Credit Risk.  We have exposure to credit risk primarily as a holder of
fixed maturity securities. Our risk management strategy and investment policy is
to invest in debt instruments of high credit quality issuers and to limit the
amount of credit exposure with respect to particular ratings categories and any
one issuer. We attempt to limit our credit exposure by purchasing fixed income
investments rated A-/A3 or higher. In addition, we have limited our exposure to
any single corporate issuer to 1% or less of our total portfolio.

CURRENCY

       Our functional currency is U.S. dollars for Endurance Bermuda and
Endurance U.S. and British Sterling for Endurance U.K. The reporting currency
for all entities is U.S. dollars. We maintain a portion of our investments and
liabilities in currencies other than the U.S. dollar. We have made a significant
investment in the capitalization of Endurance U.K. Endurance U.K. is subject to
the FSA 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. We may, from time to time,
experience losses resulting from fluctuations in the values of foreign
currencies, which could have a material adverse effect on our results of
operations.

EFFECTS OF INFLATION

       The effects of inflation could cause the severity of claims to rise in
the future. Our 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, we will be
required to increase reserves for losses and loss expenses with a corresponding
reduction in our earnings in the period in which the deficiency is identified.

RESERVES FOR LOSSES AND LOSS EXPENSES

       As of September 30, 2002, the Company had been notified of only a small
number of potential claims under its insurance policies and reinsurance
contracts. Of these notifications, management expects a limited number of the
claims to penetrate layers in which we provide coverage; however, case reserves
have been established for these expected losses. 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 currently a valid means for
estimating ultimate obligations.

       At the time each insurance policy or reinsurance contract is written, the
underwriter, generally working in conjunction with an actuary or a risk analyst,
estimates a target or expected loss ratio for the contract. The estimate may be
based on the prior experience of the insured or ceding company, current
                                        44
exposure profiles, analogous exposures under similar contracts with other
insureds or ceding companies, modeled long-term expected losses and/or some
combination of these factors. These target loss ratios are utilized along with
other factors including industry experience and the judgment of our actuaries in
establishing loss ratios by line of business.

CEDED REINSURANCE

       Endurance Bermuda's ceded premiums consisted primarily of reinsurance
protection in conjunction with the LaSalle transaction and additional
reinsurance purchased in August 2002. Total premiums ceded under these contracts
were approximately $33 million for the nine months ended September 30, 2002. The
reinsurance agreements principally provide Endurance Bermuda with protection
related to certain identified catastrophes in its property and catastrophe
segments.

       The Company remains obligated for amounts ceded in the event that its
reinsurers or retrocessionaires do not meet their obligations. Accordingly, the
Company has evaluated the reinsurers and retrocessionaires that are providing
reinsurance and retrocessional protection and will continue to monitor the
stability of its reinsurers and retrocessionaires. At September 30, 2002, the
Company had not recorded any reinsurance recoverables.

INTANGIBLE ASSETS

       Goodwill and other intangibles that arise from business combinations are
accounted for in accordance with SFAS No. 141 "Business Combinations" and SFAS
No. 142 "Goodwill and Other Intangible Assets." These standards require that
identifiable intangible assets are amortized in accordance with their useful
lives and goodwill and intangible assets with indefinite useful lives should not
be amortized but should be tested for impairment at least annually. As a result
of its acquisition of the property catastrophe business of LaSalle during the
nine months ended September 30, 2002, the Company recorded goodwill of $0.9
million and other acquisition related intangibles of $25.7 million. The other
acquisition related intangibles are being amortized over periods of up to ten
years.

FOREIGN EXCHANGE

       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 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.

                                        45
INDUSTRY BACKGROUND

INDUSTRY CONDITIONS AND TRENDS

       The property and casualty insurance and reinsurance industry has
historically been a cyclical business. During periods of excess underwriting
capacity, competition generally results in lower pricing and less favorable
policy terms and conditions for insurers and reinsurers. During periods of
diminished underwriting capacity, industry-wide pricing and policy terms and
conditions become more favorable for insurers and reinsurers. Underwriting
capacity, as defined by capital available to the industry, is affected by a
number of factors, including:

       -     loss experience for the industry in general, and for specific lines
             of business or risks, in particular;

       -     natural and man-made disasters, such as hurricanes, windstorms,
             earthquakes, floods, fires and acts of terrorism;

       -     court decisions expanding insurance coverage and granting of large
             awards;

       -     investment results including realized and unrealized gains and
             losses on investment portfolios and annual investment yields; and

       -     ratings and financial strength of competitors.

       In recent years, the insurance and reinsurance industry has gone from a
period of excess capacity to one of more constrained capacity. From 1994 until
1999, the market faced increasing excess capital capacity, producing
year-over-year rate decreases and coverage increases. Since 2000, an
accumulation of losses from asbestos liability, under-reserving, poor investment
performance and losses from the World Trade Center tragedy have significantly
reduced the industry's capital base.

       The events of September 11, 2001 altered the insurance and reinsurance
market landscape dramatically. While the full impact of the losses related to
these events is still unknown, a wide range of industry experts estimate
ultimate losses at approximately $40 billion. Prior to the World Trade Center
tragedy, the largest insured catastrophic event was Hurricane Andrew, with
approximately $20 billion of losses. Over the past twelve months, a number of
major property and casualty insurers and reinsurers have announced charges of
several hundred million dollars or more. The majority of these charges are
related to adverse developments, particularly for underpriced business written
from 1997 to 2001, and large asbestos claims losses.

            TEN LARGEST GLOBAL CATASTROPHIC EVENTS BY INSURED LOSSES
                                 (IN BILLIONS)
[BAR GRAPH]
World Trade Center                                                               40.20
Hurricane Andrew                                                                 19.60
Northbridge Earthquake                                                           16.30
Typhoon Mireille                                                                  7.10
Windstorm Daria                                                                   6.10
Windstorm Lothar                                                                  6.00
Hurricane Hugo                                                                    5.90
1987 European Storm and Floods                                                    4.60
Windstorm Vivian                                                                  4.20
Typhoon Bart                                                                      4.20
There were 31 downgrades of U.S. property and casualty insurers in 2001,
followed by 24 downgrades in 2002 by early November. Since the beginning of
2002, there have been 47 downgrades and only three upgrades among the 150
largest reinsurers.

                                        46
As a result of these capital reductions and ratings downgrades, a number
of traditional insurance and reinsurance competitors have exited key markets and
pricing has increased significantly across many lines of business and policy
terms and conditions have improved dramatically.

       Consequently, new capital has entered the insurance and reinsurance
industry to take advantage of favorable market conditions. However, by midyear
2002, the U.S. industry's supply of capital to support underwriting activity had
declined about 15% from a high of $334 billion at year-end 1999, despite the
vigorous capital-raising activity in the months that followed September 11,
2001.

THE BERMUDA INSURANCE MARKET

       Over the past 15 years, Bermuda has become one of the world's leading
insurance and reinsurance markets. Bermuda's favorable regulatory and tax
environment, which minimizes governmental involvement for those companies that
meet certain solvency and liquidity requirements, creates an attractive platform
for insurance and reinsurance companies.

       There are a number of other factors that have made Bermuda the venue of
choice for us and other new property and casualty companies over the last
several years, including:

       -     a highly reputable business center;

       -     excellent professional and other business services;

       -     a well-developed captive insurance industry;

       -     political and economic stability; and

       -     ease of access to global insurance markets.

       Notwithstanding the positive operating environment, a challenge faced by
Bermuda-domiciled companies is the limited number of trained underwriting and
professional staff in Bermuda. Many companies have addressed this issue by
importing appropriately trained employees into Bermuda. Endurance Bermuda has
successfully hired approximately 100 employees through September 30, 2002,
through both its recruiting efforts and as a result of the LaSalle transaction,
and believes it is adequately staffed.

       Most Bermuda-domiciled insurance and reinsurance companies have also
pursued business diversification and international expansion. Although most of
the Bermudian insurers were established as monoline specialist underwriters, in
order to achieve long-term growth and better risk exposure, virtually all of
these companies have diversified their operations, either across property and
liability lines, into new international markets, or through a combination of
both of these methods.

       Bermuda is now recognized as one of the leading reinsurance and insurance
markets, currently serving as the headquarters for an increasing number of
global reinsurance and insurance companies. Bermuda's strong industry position
solidified after the events of September 11, 2001, as approximately $13 billion
of capital flowed into Bermuda, which represented more than 50% of the new
capital raised. Much of these new proceeds went to a variety of Bermuda-based
start-up companies. At the end of 2001, over 1,600 international insurers were
registered in Bermuda, of which 18 were Class 4 insurers.

                                        47
BUSINESS

OVERVIEW

       Endurance Holdings is a holding company domiciled in Bermuda. Through our
operating subsidiaries based in Bermuda, the United Kingdom and the United
States, we focus on writing specialty lines of commercial property and casualty
insurance and reinsurance on a global basis. We define specialty lines as those
lines of insurance and reinsurance that require dedicated, specialized
underwriting skills and resources in order to be profitably underwritten. Our
portfolio of specialty lines of business is organized into the following
segments: property per risk treaty reinsurance, property catastrophe
reinsurance, casualty treaty reinsurance, property individual risk, casualty
individual risk and other specialty lines.

       We seek to create a portfolio of specialty lines which are profitable and
have limited correlation with one another. We believe that a well constructed
portfolio of diversified risks will produce less volatile results than each of
the individual lines of business independently and will provide a superior
risk-adjusted return on our capital. We identify and underwrite attractive
insurance and reinsurance business through our experienced underwriting staff
and apply a centralized quantitative framework of risk analysis across all of
our business segments. We produce our business through the leading worldwide
insurance and reinsurance brokers and intermediaries.

       We began operations on December 17, 2001 after Endurance Bermuda
completed a private placement of $1.2 billion of its equity securities. Initial
investors in Endurance Bermuda included Aon, Zurich, THL, TPG, Capital Z, Perry
Capital, Metro Center Investments Pte Ltd, GM, Lightyear Capital, Credit Suisse
First Boston, Golden Gate Capital, Reservoir Capital and TIAA-CREF.

       Since our founding and initial private placement, we have been able to
achieve significant success in the development of our business. Our
accomplishments include recruiting a highly experienced management team and
building a staff of over 100; forming and licensing insurance subsidiaries in
Bermuda, the United Kingdom and the United States; acquiring the property
catastrophe business of LaSalle; establishing a $300 million credit facility;
and repurchasing the equity interests in the Company owned by Zurich. For the
nine months ended September 30, 2002, we had $623 million in gross premiums
written and acquired and $63 million in net income. At September 30, 2002, we
had $1.9 billion in total assets and $1.2 billion in shareholders' equity.

       Current conditions in the global insurance and reinsurance markets
present an attractive opportunity for us to deploy our capital. Many global
property and casualty insurers and reinsurers are currently experiencing
significantly reduced capital resulting from several years of excessively
competitive pricing, expanding coverage terms, significant increases in losses
from asbestos liability, under-reserving, poor investment performance and losses
from the World Trade Center tragedy. This reduction in capacity has resulted in
considerable increases in pricing and in terms and conditions that are
significantly more favorable for insurers and reinsurers. We believe that the
additional capital provided through this offering, combined with our business
strategy, experienced management team and unencumbered balance sheet, will
enhance our ability to benefit from this market environment.

  Endurance U.K.

       Endurance U.K. was incorporated on April 10, 2002. On December 4, 2002,
Endurance U.K. was authorized by the FSA to begin writing certain lines of
insurance and reinsurance in the United Kingdom. Endurance U.K., which is
headquartered in London, would be able to operate throughout the European Union,
subject to compliance with certain notification requirements of the FSA and in
some cases, certain local regulatory requirements, and will focus on the
origination of property and casualty insurance and reinsurance from non-North
American markets. Endurance U.K. also serves as a representative office in
London to refer certain business which meets our underwriting criteria to
Endurance Bermuda. We have capitalized Endurance U.K. with L100 million of
initial capital. Endurance U.K. is headed by Mark Boucher.

                                        48
Endurance U.S.

       Endurance U.S. was incorporated on September 5, 2002. On December 18,
2002, Endurance U.S. received a license in the State of New York from the New
York Department to conduct business as a property and casualty reinsurer.
Certain reinsurance business, known as WORKING LAYER, is characterized by higher
frequency and lower severity of losses as compared to the type of reinsurance
business targeted by Endurance Bermuda. We believe that this business, which
requires a higher degree of client contact including underwriting, claims,
actuarial and accounting reviews, would be difficult to underwrite from a
Bermuda location. Endurance U.S. will initially focus on such working layer
business and will provide us with access to classes of reinsurance business and
types of reinsurance clients which we would not otherwise be able to effectively
access from Bermuda. We have initially capitalized Endurance U.S. with $335
million in capital. Endurance U.S. is headed by Steven W. Carlsen.

OUR COMPETITIVE STRENGTHS

       We believe certain characteristics distinguish us from our competitors,
including:

-     Extensive Specialized Underwriting and Risk Management Capabilities.  We
      have made significant initial investments in our technical capabilities,
      including hiring 38 experienced underwriters, an actuarial staff of seven,
      and a risk analysis and modeling staff of six. We extensively integrate
      our underwriting decisions with actuarial analysis, developing our own
      view as to the adequacy of the pricing in the insurance and reinsurance
      business which we underwrite.

-     Experienced Management Team.  Our senior management team averages over 20
      years of experience in the insurance and reinsurance industry. Our senior
      management, underwriting and technical professionals participate in our
      stock option plan that ties compensation to the achievement of goals
      aligned with those of our shareholders.

-     Strong Market Relationships.  The underwriting expertise and extensive
      industry relationships previously developed by our senior management team
      and underwriters have allowed us to quickly establish our presence in the
      global insurance and reinsurance markets. We have strong relationships
      with major insurance and reinsurance brokers, including: Aon, Marsh,
      Willis, Benfield and A.J. Gallagher. To date, we have written business
      with approximately 550 clients.

-     Bermuda-Based Operations.  Bermuda is our principal base of operations. As
      one of the leading centers of the global insurance industry, Bermuda
      provides us with ready access to clients who increasingly seek
      Bermuda-based capacity to meet their insurance and reinsurance needs.
      Bermuda also has a well developed network of insurance and reinsurance
      brokers, an experienced pool of employees with significant insurance
      expertise and a very responsive regulatory environment which allows for
      rapid innovation in insurance and reinsurance products.

-     Conservative Investment Policy.  We have a conservative investment policy
      aimed at minimizing the volatility of our investment results. At September
      30, 2002, 100% of our invested assets were held in cash equivalents and
      fixed maturity securities, 86% of which were rated AAA and 100% were rated
      A or better, with an average duration of 2.6 years.

-     Unencumbered Capital Base.  We have statutory capital and surplus of
      approximately $1.2 billion. As a newly formed company, we are unencumbered
      by any historical losses relating to asbestos liabilities, the World Trade
      Center tragedy and other historical liability exposures currently
      affecting many of our competitors. By choosing to form and license new
      subsidiaries rather than assuming unknown liabilities through the
      acquisition of existing licensed "shell" companies, we have no risk that
      loss reserve development relating to historical exposures prior to our
      formation will negatively impact our future financial results. We believe
      that our unencumbered capital will allow us to distinguish ourselves from
      many of our competitors and help to attract clients who are seeking long-
      term financial stability from their insurers and reinsurers.

                                        49
BUSINESS STRATEGY

       Our goal is to generate a superior long-term return on capital by
leveraging our competitive strengths and executing our strategy. The key
elements of our strategy are:

-     Maintain a Portfolio of Profitable Specialty Lines.  We believe that there
      are significant opportunities in a number of lines of business in the
      current market environment. We participate in those specific specialty
      lines which we believe have the potential to offer the highest
      risk-adjusted return on capital and in which we believe we can establish a
      competitive advantage through our specialized teams of expert
      underwriters. We intend to use our ability to participate in multiple
      lines of business to deploy capital and resources to the most attractive
      business lines at the most opportune times.

-     Utilize Monoline Level of Expertise in Each Line of Business.  We have
      formed teams of highly experienced professionals to manage each of our
      specific lines of business. Each team is led by a senior executive with
      extensive experience in the distinct business line for which the team is
      responsible and is supported by highly experienced underwriting personnel
      who are specialists in their unique business line.

-     Apply Extensive Technical Analysis to Our Underwriting.  We manage our
      portfolio of risks through the utilization of catastrophe modeling and
      dynamic financial analysis techniques that provide a quantitative basis
      for the management of risk aggregation and correlation. We license a broad
      array of catastrophe modeling products available from AIR and RMS. We have
      also launched our own proprietary underwriting risk management system and
      are building a proprietary suite of individual contract, portfolio and
      market risk management and price monitoring tools around this system. We
      intend to proactively monitor market trends to look for competitive
      threats to the lines of business in which we are operating as well as
      analyze potential new lines that may provide attractive opportunities.

      We require significant amounts of data in our underwriting process. We
      avoid writing business for which we believe sufficient data is not
      available, and therefore, to date have written no qualifying quota shares
      and only a limited amount of retrocessional business. We also limit the
      use of retrocessional protection, relying upon our underwriting analysis
      for risk management purposes.

-     Maintain an Efficient Expense Structure.  We believe an efficient expense
      structure will allow us to produce more profitable results and more easily
      deploy our resources to those lines of business that become more
      attractive as market conditions change. Several factors contribute to our
      low cost structure, including our utilization of variable cost brokerage
      distribution, our presence in the Bermuda market which targets large
      insurance and reinsurance programs for clients, our current focus on high
      severity, low frequency lines which can be underwritten by relatively
      small teams, and our centralized risk management structure which limits
      redundant expenses and systems.

-     Proactively Manage Our Capital Base.  We actively manage our capital by
      allocating resources to underwriting opportunities which we believe will
      offer the highest risk-adjusted return on capital. Over the long-term, we
      will seek to return excess capital to our shareholders rather than use
      excess capital to underwrite business at unattractive pricing levels. We
      believe the acquisition of the LaSalle property catastrophe business and
      the repurchase of the Zurich equity stake in the Company demonstrates two
      different aspects of our proactive capital management.

BUSINESS SEGMENTS

       Our commitment to specialized underwriting requires market knowledge,
analytic capabilities and experience more typically found in monoline companies.
Accordingly, we have organized our company by business segment, under the
direction of managers for each line of business who are recognized leaders in
their respective fields and average 22 years of relevant experience. We support
these managers with

                                        50
centralized and state of the art analytic expertise and technology. Our six
business segments and the related gross premiums written and acquired for the
nine months ended September 30, 2002 are as follows:
GROSS PREMIUMS
                                                               WRITTEN AND
                                                                 ACQUIRED      % OF
BUSINESS SEGMENT                                              (IN MILLIONS)    TOTAL
----------------                                              --------------   -----
Property Per Risk Treaty Reinsurance........................      $123.6        19.8%
Property Catastrophe Reinsurance............................       170.2        27.3
Casualty Treaty Reinsurance.................................       143.5        23.0
Property Individual Risk....................................        51.0         8.2
Casualty Individual Risk....................................        66.3        10.6
Other Specialty Lines.......................................        68.9        11.1
                                                                  ------       -----
Total.......................................................      $623.5       100.0%
                                                                  ======       =====
These segments and their associated lines of business are described in greater
detail below.

       Property Per Risk Treaty Reinsurance.  Our Property Per Risk Treaty
Reinsurance business segment reinsures individual property risks of ceding
companies on a treaty basis. This segment is comprised of a highly diversified
portfolio of property per risk reinsurance contracts covering claims from
individual insurance policies issued by our ceding company clients and including
both personal lines and commercial exposures (principally covering buildings,
structures, equipment, contents and time element coverages). Loss exposures in
this segment include the perils of fire, explosion, collapse, riot, vandalism,
wind, tornado, flood and earthquake. This segment is comprised of proportional
and excess of loss REINSURANCE AGREEMENTS. Our current mix of business, as
measured by gross premiums written during the nine months ended September 30,
2002, is approximately 58% excess of loss and 42% proportional. Currently, over
90% of the exposures reinsured in this segment are in the United States,
although we expect this percentage to gradually decline as we expand our
activities in Europe and the United Kingdom through Endurance U.K.

       Because the reinsurance contracts written in this segment are exposed to
losses on an individual policy basis, we underwrite and price the agreements
based on anticipated claims frequency. We use actuarial techniques to examine
our ceding companies' underwriting results as well as the underwriting results
from the ceding companies with comparable books of business and pertinent
industry results. These experience analyses are compared against actuarial
exposure analyses to refine our pricing assumptions. Our pricing also takes into
account our variable and fixed expenses and our assessment of an appropriate
return on the capital required to support each individual contract relative to
our portfolio of risks.

       Reinsurance contracts that provide coverage through individual underlying
insurance policies may contain significant risk of accumulation of exposures,
both to natural and other perils. Our underwriting process explicitly recognizes
these exposures. Natural perils, such as windstorm, earthquake and flood, are
analyzed through our catastrophe modeling systems. Other perils, such as fire
and terrorism events, are considered on a contract-by-contract basis and
monitored for cumulative aggregate exposure. All of our excess of loss
agreements have occurrence limits and many have limited REINSTATEMENT rights.
Proportional contracts can be particularly prone to accumulations of exposure
and losses in catastrophic events. Most of our proportional contracts in effect
at September 30, 2002 were also subject to occurrence limits. The only
exceptions made to our occurrence limits requirements are a result of explicit
approval by executive management and have been based on complete and ongoing
disclosures by our ceding companies of the underlying policies. We do not
currently write any qualified QUOTA SHARE AGREEMENTS emanating from Lloyd's or
the London market.

       This business segment operates as a subscription market, with the
reinsurance intermediaries seeking participation for specific treaties among a
number of reinsurers. Those reinsurers that ultimately subscribe to any given
treaty participate at substantially the same pricing and terms and conditions.
Our

                                        51
average ATTACHMENT POINT is approximately $30 million. Our maximum limits
capacity on any one program is $30 million on any one risk and our average
commitment has been approximately $4 million.

       Our Property Per Risk Treaty Reinsurance business is produced principally
by Aon, Benfield, Willis and Marsh. Our principal competitors in this segment
include Arch Capital Group Ltd. ("Arch"), Converium Holding AG ("Converium"),
GeneralCologne Re ("General Re"), Montpelier Re Holdings Ltd. ("Montpelier Re"),
Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft ("Munich Re"),
PartnerRe Ltd. ("PartnerRe"), Transatlantic Reinsurance Company ("Transatlantic
Re") and XL Capital Ltd ("XL").

       Property Catastrophe Reinsurance.  Our Property Catastrophe Reinsurance
business segment reinsures catastrophic perils for ceding companies on a treaty
basis. Our property catastrophe reinsurance contracts provide protection for
most catastrophic losses that are covered in the underlying insurance policies
written by our ceding company clients. The principal perils in our portfolio
include hurricane, typhoon, earthquake, flood, tornado, hail and fire. This
segment is comprised of reinsurance contracts which incur losses only when
events occur that impact more than one risk or insured. Coverage for other
perils may be negotiated on a case-by-case basis. Protection under property
catastrophe treaties is provided on an occurrence basis, allowing our ceding
company clients to combine losses that have been incurred in any single event
from multiple underlying policies. The multiple claimant nature of property
catastrophe reinsurance requires careful monitoring and control of cumulative
aggregate exposure.

       We have licensed catastrophe modeling software from RMS and AIR. These
software tools use exposure data provided by our ceding company clients to
simulate catastrophic losses. We have high standards for the quality and level
of detail of such exposure data and have an expressed preference for data at the
zip code or postal code level or finer. Data provided at more summary levels,
such as counties or CRESTA ZONES, is conservatively modeled and effectively
surcharged for increased uncertainty. Our commitment to detailed exposure data
precludes significant involvement as a retrocessionaire in the current market.
To date, less than 5% of our gross written premiums have been derived from other
reinsurers, with over 95% coming from the catastrophe programs of insurance
companies.

       Data output from both sets of software described above is incorporated in
a proprietary model for multiple purposes. First, the data output is used to
estimate the amount of reinsurance premium that is required to pay the long-term
expected losses under the proposed contracts. Second, the data output is used to
estimate correlation among the contracts we have written. The degree of
correlation is used to estimate the incremental capital required to support our
participation on each proposed contract. Finally, the data output is used to
monitor and control the Company's cumulative exposure to individual perils
across all of our businesses.

       Our pricing of property catastrophe reinsurance contracts is based on a
combination of modeled loss estimates, actual ceding company loss history,
surcharges for potential unmodeled exposures, fixed and variable expense
estimates and profit requirements. The profit requirements are based on
incremental capital usage estimates described above and the Company's required
return on consumed capital.

       Similar to the Property Per Risk Treaty Reinsurance segment, the Property
Catastrophe Reinsurance market operates on a subscription basis with all
subscribing reinsurers participating at substantially the same pricing and terms
and conditions. Our average attachment point is approximately $185 million.
Generally, our maximum capacity on any one program is $30 million per event.

       Our property catastrophe business is diversified geographically.
Approximately 67% of our property catastrophe premium is associated with
exposures in the United States and the remainder from over 20 other countries
around the world. Our principal exposures outside the United States are in the
United Kingdom, Europe, Australia, Canada and Japan. Our estimates of exposures
to the major perils in each of these territories are provided in the "Risk
Management" section below.

       Our Property Catastrophe Reinsurance business is produced primarily by
Aon, Marsh, Willis and Benfield. Our principal competitors in this segment
include ACE Limited ("ACE"), Arch, AXIS

                                        52
Specialty Limited ("AXIS"), IPC Holdings Ltd. ("IPC"), Montpelier Re, PartnerRe,
Renaissance Re Holdings Ltd. ("Renaissance Re") and XL.

       The Property Per Risk Treaty Reinsurance and Property Catastrophe
Reinsurance segments are led by RobLee Womack, under the direction of Thomas
Bell. Mr. Womack has over 19 years of experience in the industry and leads an
underwriting team consisting of eight underwriters who work together with six
modelers and the seven members of our actuarial team.

       Casualty Treaty Reinsurance.  Our Casualty Treaty Reinsurance business
segment reinsures third party liability exposures from ceding companies on a
treaty basis. This segment is almost exclusively focused on exposures in the
United States and is virtually all written on an excess of loss basis. Our
excess of loss positions come most commonly from layered reinsurance structures
with underlying ceding company retentions, but we also make use of proportional
reinsurance contracts that are applied to portfolios of excess of loss insurance
policies. The exposures that we reinsure include automobile liability,
professional liability, directors' and officers' liability, umbrella liability
and workers' compensation. We focus on business that is exposed to severity
losses and not expected to produce high levels of claims frequency. The average
attachment point for our Casualty Treaty Reinsurance segment is just under $25
million.

       Our Casualty Treaty Reinsurance segment may be further separated into
three categories: treaties that are exposed to loss under individual underlying
insurance policies, treaties that are exposed to loss only through a combination
of claims from more than one underlying insurance policy (referred to as clash
reinsurance), and workers' compensation catastrophe reinsurance.

       Our workers' compensation catastrophe business is written only at levels
that would require multiple deaths or injuries to result in a loss. The treaties
include limitations on the maximum amount of coverage for any one person and our
attachment points are multiples of these stipulated maximum coverage limits.
There is a potential for events that trigger property catastrophe claims to also
result in injuries and deaths. Examples would include acts of terrorism, but
also events such as catastrophic earthquakes. We closely monitor the potential
for accumulation with our property businesses and are especially cautious about
terrorism exposures. Inclusion of any level of terrorism coverage requires
approval by executive management.

       Our customer base includes national, regional and specialty insurance
companies. Due to the potential for long claims payment patterns in the
underlying business, we target ceding companies with strong financial positions.
We look for sophisticated actuarial capabilities, the demonstrated ability to
monitor and react to shifts in pricing levels and coverage changes, experienced
claims management capabilities and substantial net retentions from our clients.
We also favor companies and management teams that have worked through prior
property and casualty insurance market cycles.

       The maximum capacity available for casualty treaty programs that are
exposed to loss by individual policy limits is $25 million, but we rarely
allocate capacity over $10 million. Our average capacity commitment in this
segment as of September 30, 2002 was $6.4 million per program.

       Our Casualty Treaty Reinsurance business is produced primarily by Aon,
Marsh, Willis and A.J. Gallagher. Our principal competitors in this segment are
American Re, Converium, General Re, Munich Re, Swiss Reinsurance Company ("Swiss
Re"), Transatlantic Re and XL.

       Our casualty treaty business requires significant involvement by our
actuarial team in conjunction with a highly experienced group of underwriters.
The segment is managed by Ronald Koch, who has over 20 years of casualty treaty
underwriting experience. Mr. Koch works with two additional underwriters who
average 20 years of experience with similar books of specialty casualty
business. The casualty treaty underwriting team works together with the seven
members of our actuarial team.

       Property Individual Risk.  Our Property Individual Risk business segment
is comprised of the insurance and facultative reinsurance of commercial
properties. The policies written in this segment provide coverage for one
insured for each policy. The types of risks insured are generally properties
with

                                        53
sufficiently large values to require multiple insurers and reinsurers to
accommodate their insurance capacity needs.

       Our risks in this business segment are all well diversified across a
range of industries with no one industry exceeding 25%. These industries include
real estate, manufacturing, chemicals, financial, utilities, telecommunications,
construction and civil engineering, municipalities/institutional properties and
other industries.

       As of September 30, 2002, approximately half of the insured risks are
located in the United States and half in the rest of the world, including
multi-national exposures which include U.S. based risks. We expect the
proportion of business written outside of the United States to increase as we
expand our capabilities in Endurance U.K. Approximately 2/3 of the business in
this segment is written on an excess of loss basis and 1/3 is written on a
PROPORTIONAL BASIS. The proportional policies are typically written with large
DEDUCTIBLES or SELF-INSURED retentions.

       Our average attachment point overall is slightly over $140 million. We
offer gross limits capacity of up to $40 million on any one risk in the United
States and $30 million on any one risk outside of the United States. We limit
these lines to no more than $10 million on any one risk on risks located in
active catastrophe zones. We have arranged a reinsurance facility for risks
located in the United States that provides up to $10 million of proportional
reinsurance protection to us. We do not retain more than $30 million on any one
risk. To date, our average participation has been approximately $17 million on
any one risk.

       Our Property Individual Risk business is produced primarily by Marsh, Aon
and Jardine Lloyd Thompson. Our competitors in this segment include a large
number of insurance and reinsurance companies. Among our most frequent
competitors are ACE, Allianz AG ("Allianz"), Allied World Assurance Company Ltd.
("AWAC"), Arch, FM Global, Montpelier Re, Munich Re, Swiss Re, XL and Zurich.

       Our Property Individual Risk segment is under the direction of Louis
Adanio. Mr. Adanio leads a dedicated team of six underwriters and four support
staff. The underwriters all have experience as primary insurance company
underwriters and average over 20 years of experience. The underwriting team is
supported by our catastrophe modeling team in order to perform comprehensive
analyses of our cumulative catastrophe peril exposure.

       Casualty Individual Risk.  Our Casualty Individual Risk business segment
is comprised of the insurance and facultative reinsurance of third party
liability exposures. This segment is comprised of three lines of business:
Excess Casualty Insurance, Professional Lines Insurance and Healthcare. For the
nine months ended September 30, 2002, these lines of business represented
approximately 33%, 7% and 60% of the gross written premiums for this segment,
respectively.

       The Excess Casualty Insurance line of business provides third party
liability insurance for a wide range of industry groups. Our clients are
typically Fortune 1000 companies with sophisticated risk management practices
who generally retain large portions of their own risk and purchase large
insurance limits. Our target clients within this group are in strong financial
positions, have formal, well-developed risk management programs and proactive
claims detection and management procedures. As of September 30, 2002,
approximately 8% of our insured risks in this line of business were solely
located in the United States and the remainder represented worldwide exposures,
including the United States.

       Our minimum attachment point for the Excess Casualty Insurance line of
business is $25 million and our average attachment point is approximately $230
million. In all cases, we carefully review and approve our policy forms and
endorsements to ensure we are fully comfortable with the scope of coverage we
provide. Our maximum line in this category is $25 million and our average line
is approximately $24 million.

       The business in the Excess Casualty Insurance line of business is
produced primarily by Marsh, Aon and Jardine Lloyd Thompson. Our principal
competitors in this line of business include ACE, Arch,

                                        54
AWAC, Kemper Insurance Companies ("Kemper"), Lloyd's of London ("Lloyd's"),
Starr Excess Liability Insurance Company, Ltd ("Starr Excess"), XL and Zurich.

       David Cabral leads the underwriting team for our Excess Casualty
Insurance business. He has four underwriting colleagues, all based in Bermuda,
who average 15 years of underwriting experience. The underwriting team is
supported by the seven members of our actuarial team.

       Our Professional Lines Insurance line of business includes a limited
range of products: directors' and officers' liability insurance, errors and
omissions insurance and employment practices liability insurance. Our clients
include both for-profit and non-profit entities. We target clients with strong,
stable financial positions, paying particular attention to liquidity, solvency
margins and profitability. As of September 30, 2002, approximately 25% of our
insured risks in this line of business were located within the United States,
with the remainder representing worldwide risks, including the United States.

       We require a minimum attachment point of $25 million and our average
attachment point has been approximately $250 million. We have maximum limits
capacity of up to $25 million but only selectively commit more than $10 million
on any one program. As of September 30, 2002, our average program participation
was approximately $10 million. Business in this segment is written almost
exclusively on a CLAIMS-MADE BASIS and all of the business is written on an
excess of loss basis.

       Our Professional Lines Insurance business is produced primarily by Aon,
Jardine Lloyd Thompson and Marsh. Our principal competitors in this line of
business include ACE, Arch, AWAC, The Chubb Corporation, Lloyd's, Starr Excess,
XL and Zurich.

       Our Professional Lines Insurance line of business is also led by David
Cabral. Mr. Cabral works with two additional underwriters dedicated to this line
of business. His colleagues average over 15 years of experience in this field.

       Our Healthcare business is focused on one narrow niche within the medical
professional liability market: hospital malpractice insurance. Within this
market, we target large institutional healthcare providers such as hospital
groups, university teaching hospitals and integrated healthcare delivery
systems. We do not work with smaller entities having 250 beds or less, nor do we
seek risks that are principally from long-term-care facilities. We do not insure
stand-alone individual physicians, physician groups, or other healthcare
professionals. We estimate that the large institutional healthcare niche
currently represents approximately $500 million in annual premiums. As of
September 30, 2002, all of our healthcare insureds were based in the United
States.

       All of the business in our Healthcare line of business is written on an
excess of loss basis. Currently, our average attachment point is approximately
$35 million. Nearly all of this business is written on a claims-made basis
although we can consider occurrence coverage after review with and approval by
executive management. We do not write any multi-year policies, or programs with
profit sharing or swing-rating plans. Our average program participation is
approximately $22 million.

       Our principal underwriting considerations from this line of business are
based on evaluations of risk management policies and procedures, historical
claims activity, current exposures and operating jurisdictions. Every account is
evaluated in conjunction with our actuarial team. Pricing is determined based on
account-specific experience and exposure ratings. We incorporate the insight
that we have gained from a proprietary database of over 100,000 claims.

       Our Healthcare business is produced primarily by Marsh, Aon, Jardine
Lloyd Thompson and A.J. Gallagher. Our principal competitors in this line of
business are American International Group, Inc. ("AIG"), CNA Financial
Corporation, Employers Reinsurance Corporation ("Employers Re") and Zurich.

       Our Healthcare line of business is led by Judy Hart, who has over 30
years of experience, and one senior underwriter. The two underwriters are
supported by our seven person actuarial team.

                                        55
Other Specialty Lines.  Our Other Specialty Lines business is comprised
of the insurance and reinsurance of unique opportunities, including Aerospace,
Self Insured Risks and a limited number of other treaty reinsurance programs
such as surety, marine, energy, personal accident, terrorism and others.

       Our Aerospace line of business is comprised of aviation and space
business. The aviation business includes hull, aircraft liability and aircraft
products coverages. Currently, approximately 20% of the exposures insured in
this line of business are in the United States with the remaining amount being
distributed throughout the world, including the United States. We write these
exposures both as insurance and reinsurance, with the reinsurance written both
in the form of facultative reinsurance and treaty reinsurance. In all cases, we
track our exposures by original insured in order to monitor our maximum
exposures by major airline and by major manufacturer. Our maximum commitments
are limited to up to 3% of the hull and liability programs of the major
airlines, up to 13% of the regional airlines, up to 3% of the airframe and
engine manufacturers and up to 20% of the component part manufacturers. We
currently do not write hull war risk, primary general aviation business or
workers' compensation for this category. Our average attachment point is $25
million. Our average commitment has been approximately $6 million per program.

       Our expertise in the aviation category stems from the more than 30 years
of experience of our Aerospace team leader, Daniel Izard, and an extensive
database of historical aviation claims and program structures. Individual
account decisions are based on a combination of qualitative evaluations of the
risk management programs of the original insureds and quantitative examinations
of our clients' track records and the records of peer and comparable operations.

       The space business includes satellite launch and in-orbit coverage. We
have chosen to write space business through industry recognized leaders, and
currently support three organizations on a treaty reinsurance basis only.

       Our Aerospace business is produced primarily by Aon, Marsh and Willis.
Our principal competitors in this line of business are Converium, Hannover
Ruckversicherungs-Aktiengesellschaft and Lloyd's.

       Our Self Insured Risks line of business provides traditional property and
casualty insurance products to entities that are able to bear a significant
portion of their own risk. These entities include government organizations,
education institutions, non-profit organizations, groups of homogeneous risks
and large, sophisticated corporations. The coverages we provide include general
liability, automobile liability, workers' compensation and PROPERTY INSURANCE.
All of the coverage in this line of business is written on an excess of loss
basis. As of September 30, 2002, our average attachment point was approximately
$28 million. We offer limits capacity of up to $25 million, while our average
program participation has been approximately $15 million. Approximately 80% of
the insured risks are located in the United States, with the remainder
multinational risks.

       Our Self Insured Risks business is produced primarily by A.J. Gallagher,
Aon and Marsh. Our principal competitors in this line of business are ACE, AIG,
Kemper, General Re and Munich Re.

       Our Self Insured Risks line of business is led by Ralph Serio. Mr. Serio
works with one additional underwriter who has over 20 years of experience.

       Special Accounts comprise a limited number of other reinsurance programs
underwritten directly by our executive management. Business within this category
includes surety, marine, energy, personal accident, terrorism, nuclear, credit
and political risk. Each of the approximately 20 existing programs has been
underwritten by Thomas Bell, Steven Carlsen or Kenneth LeStrange.

       Approximately 65% of our Special Accounts business is written on an
excess of loss basis and the remaining 35% is written on a proportional basis.
The average attachment point is approximately $40 million with our average
program participation at approximately $6 million. Approximately 20% of the
insured risks are located in the United States and 80% on a worldwide basis
including the United States.

       Our Special Accounts business is produced primarily by Aon, Willis and
Benfield. Our principal competitors in this line of business are Arch, AXIS and
Lloyd's.

                                        56
DISTRIBUTION

       We are a BROKER-MARKET PARTICIPANT and conduct business almost
exclusively through insurance and reinsurance brokers around the world. The
brokerage distribution channel provides us with access to an efficient, variable
cost, and global distribution system without the significant time and expense
which would be incurred in creating wholly owned distribution networks.

       Aon is our largest distributor of our reinsurance lines while Marsh is
our largest distributor of our insurance lines. A breakdown of our distribution
by broker is provided in the table below.
PERCENTAGE OF GROSS
                                                                  PREMIUMS WRITTEN
                                                              FOR THE NINE MONTHS ENDED
BROKER                                                          SEPTEMBER 30, 2002(1)
------                                                        -------------------------
Aon.........................................................             42.6%
Marsh.......................................................             28.1
Willis......................................................              9.4
Benfield....................................................              6.0
A.J. Gallagher..............................................              5.5
All Other...................................................              8.4
                                                                        -----
     Total..................................................            100.0%
------------

(1) Excludes gross premiums acquired from LaSalle.

CLAIMS MANAGEMENT

       We have experienced a relatively low number of reported claims due to our
recent formation. Notwithstanding the lack of significant claims activity to
date, we have a well developed process in place for identifying, tracking and
settling potential claims. The Claims Department is headed by William Fawcett,
who has over 15 years of loss adjusting, claims management and litigation
experience. The responsibilities of the claims department include reviewing loss
reports, monitoring claims handling activities of clients, requesting additional
information where appropriate, establishing initial CASE RESERVES and approving
payment of individual claims. We have established authority levels for all
individuals involved in the reserving and settlement of claims.

       When we receive notification of a potential claim, a member of our staff
logs the potential claim into our systems. An initial review is conducted by the
underwriter and underwriting manager responsible for the program in coordination
with our claims department. Once the validity of the given claim is established,
responsibility for management of the claim is transferred to our claims
department. As the claim develops, the claims department is empowered to draw on
those resources, both internal and external, it deems appropriate to settle the
claim appropriately. To date, the Company has worked to establish a network of
external legal and claims experts to augment our own in-house team. This has
included individuals with hospital malpractice insurance expertise as well as
various skilled independent claims professionals.

       In addition to managing reported claims and conferring with ceding
companies on claims matters, the claims department will conduct periodic audits
of specific claims and the overall claims procedures of our clients at the
offices of ceding companies. Through these audits, we will be able to evaluate
ceding companies' claims-handling practices, including the organization of their
claims departments, their fact-finding and investigation techniques, their loss
notifications, the adequacy of their reserves, their negotiation and settlement
practices and their adherence to claims-handling guidelines.

CEDED REINSURANCE

       With the exception of property and property catastrophe coverage, we
retain all of our direct and assumed underwriting exposure on a NET BASIS.

                                        57
Reinsurance premiums ceded for the nine months ended September 30, 2002
were approximately $33 million. We purchased this reinsurance to manage exposure
to catastrophic losses in the Property Per Risk Treaty Reinsurance, the Property
Catastrophe Reinsurance and Property Individual Risk business segments.

       Going forward, we intend to reduce our purchase of retrocessional
protection, relying more heavily on our internal risk management and portfolio
management processes to control our exposures. However, we will monitor the
reinsurance market and, if the purchase of reinsurance transactions would be
financially attractive to us, we would consider entering into such transactions.

RESERVE FOR LOSSES AND LOSS EXPENSES

       We are required by applicable insurance laws and regulations and U.S.
GAAP to establish reserves for losses and loss expenses that arise from our
products. These reserves are balance sheet liabilities representing estimates of
future amounts required to pay losses and loss expenses for insured or reinsured
claims which have occurred at or before the balance sheet date, whether already
known to us or not yet reported. It is our policy to establish these losses and
loss reserves prudently after reflecting all information known to us as of the
date they are recorded.

       Loss reserves fall into two categories: case reserves for reported losses
and loss expenses associated with a specific reported insured claim and reserves
for incurred but not reported, or IBNR, losses and loss expenses. These two
categories of loss reserve are established as follows:

       -     Upon receipt of a notice of claim from an insured, broker or ceding
             company, we establish a case reserve for the estimated amount of
             the ultimate settlement. Case reserves are usually based upon the
             amount of reserves reported and may subsequently be supplemented or
             reduced as deemed necessary by our claims department.

       -     We also estimate and establish reserves for loss amounts incurred
             but not yet reported, including expected development of reported
             claims. These IBNR reserves will include estimated legal and other
             loss expenses. We calculate IBNR reserves by using generally
             accepted actuarial techniques. We utilize actuarial tools that rely
             on historical pricing information and statistical models as well as
             our pricing analyses. We revise these reserves for losses and loss
             expenses as additional information becomes available and as claims
             are reported and paid.

       Loss reserves represent our best estimate, at a given point in time, of
the ultimate settlement and administration cost of claims incurred, and it is
possible that the ultimate liability may exceed or be less than such estimates.
The process of estimating loss reserves requires significant judgment due to a
number of variables. These variables are affected by both internal and external
events such as changes in claims handling procedures, inflation, judicial trends
and legislative changes. Many of these items are not directly quantifiable,
particularly on a prospective basis. Additionally, there may be significant
reporting lags between the occurrence of the insured event and the time it is
actually reported to the Company.

       Several aspects of the Company's casualty insurance and reinsurance
operations further complicate the actuarial reserving techniques for loss
reserves as compared to other insurance and reinsurance operations. Among these
aspects are the differences in policy forms from more traditional forms, the
lack of complete historical data for losses of the same type intended to be
covered by the policies and contracts and the expectation that losses in excess
of the Company's attachment levels will be characterized by low frequency and
high severity, limiting the utility of claims experience of other insureds for
similar claims.

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
reporting of a loss to the Company and the settlement of the Company's liability
may be several years. During this period additional facts and trends will be
revealed. As these factors become apparent, case reserves will be adjusted,
sometimes requiring an increase in the overall reserves of the Company, and at
other times requiring a reallocation of incurred but not reported reserves to
specific case reserves.
                                        58
Reserves for losses and loss expenses are based in part upon the
estimation of losses resulting from catastrophic events. Estimation by the
Company of losses resulting from catastrophic events based upon its own
historical claim experience is inherently difficult because of the Company's
short operating history and the possible severity of property catastrophe
claims. Therefore, the Company utilizes commercially available models, as well
as historical reinsurance industry property catastrophe claims experience, for
purposes of evaluating future trends and providing an estimate of ultimate
claims costs.

       Under U.S. GAAP, we are not permitted to establish loss reserves until
the occurrence of an actual loss event. Once such an event occurs, we establish
reserves based upon estimates of total LOSSES INCURRED by the ceding insurers as
a result of the event and our estimate of the portion of such loss we have
reinsured. As a result, only loss reserves applicable to losses incurred up to
the reporting date may be set aside, with no allowance for the provision of a
contingency reserve to account for expected future losses. Losses arising from
future events will be estimated and recognized at the time the loss is incurred
and could be substantial.

       To assist us in establishing appropriate reserves for losses and loss
expense, we analyze a significant amount of insurance industry information with
respect to the pricing environment and loss settlement patterns. In combination
with our individual pricing analyses, this industry information is used to guide
our loss and loss expense estimates. These estimates are reviewed regularly, and
such adjustments, if any, are reflected in earnings in the periods in which they
are determined. Our losses and loss expense reserves are reviewed annually by
our outside actuarial specialists.

       While management believes that it has made a reasonable estimate of
ultimate losses, the ultimate claims experience may not be as reliably predicted
as may be the case with other insurance and reinsurance operations, and there
can be no assurance that losses and loss expenses will not exceed the total
reserves.

UNDERWRITING AND RISK MANAGEMENT

       Internal underwriting controls are exercised through Kenneth J.
LeStrange, our Chief Executive Officer. Underwriting authority is delegated to
the managers of our lines of business and to underwriters in accordance with
prudent practice and an understanding of each individual's capabilities.
Detailed letters of underwriting authority are issued to each of our
underwriters. These letters contain our operating guidelines, a description of
the analytic process to be followed, referral requirements broken down by
sources of business, terms and conditions, situations and the limits capacity
and annual premium for any one contract authority grants. Our profitability
guidelines are attached to each such letter as an exhibit and are stated in
terms of maximum combined ratio targets, excluding our general and
administrative expenses, by line of business. Our profitability guidelines are
regularly reviewed to reflect changes in market conditions, interest rates,
capital structure and market-expected returns.

       We have a disciplined approach to underwriting and risk management that
relies heavily upon the collective underwriting expertise of our management and
staff. This expertise is in turn guided by the following underwriting
principles:

       -     We will underwrite and accept only those risks we know and
             understand;

       -     We will perform our own independent pricing or risk review on all
             risks we accept;

       -     We will make consistent use of peer review -- no risk will be
             accepted without being reviewed and agreed to by at least two
             qualified individuals;

       -     We will accept only those risks that are expected to earn a level
             of profit commensurate with the risk they present; and

       -     We will limit our accepted business to be consistent with our
             corporate risk objectives.

       Before we review any program proposal, we consider the appropriateness of
the client, including the quality of its management and its risk management
strategy. In addition, we require each program to

                                        59
include significant information on the nature of the perils to be included and
detailed aggregate information as to the location or locations of the risks
covered. We further request information on the client's loss history for the
perils being reinsured, together with relevant underwriting considerations. If a
program meets the preceding underwriting criteria, we then evaluate the proposal
in terms of its risk/reward profile to assess the adequacy of the proposed
pricing and its potential impact on our overall return on capital as well as our
corporate risk objectives.

       It is our corporate objective to limit the risk of a significant loss to
the following levels:

       -     We seek to limit the POTENTIAL ECONOMIC LOSS from a single
             one-in-100-year catastrophe event to no more than 10% of our total
             statutory capital and surplus after the recognition of all
             retrocessional protections that may exist, as well as appropriate
             premiums and reinstatement premiums received by the Company.

       -     We seek to limit the potential economic loss from a one-in-100-year
             accumulation of events to no more than 20% of our total statutory
             capital and surplus after the recognition of all retrocessional
             protections that may exist, as well as appropriate premiums and
             reinstatement premiums received by the Company.

       -     As of September 30, 2002, our potential economic loss from a single
             one-in-100 year catastrophe event for our Property Catastrophe
             Reinsurance business segment was $138 million, and our potential
             economic loss from a one-in-100-year accumulation of events for our
             Property Catastrophe Reinsurance business segment was $259 million.

       -     As of September 30, 2002, our PROBABLE MAXIMUM LOSS from a single
             one-in-100-year catastrophe event for our Property Catastrophe
             Reinsurance business segment from our largest exposures was $215
             million for Atlantic hurricane, $238 million for European wind, and
             $154 million for U.S. earthquake.

       To achieve the above objectives, we utilize a variety of proprietary and
commercially available tools to quantify and monitor the various risks we accept
as a company.

       Our proprietary systems include those for modeling risks associated with
property catastrophe, hospital professional liability, and workers' compensation
business, various casualty and specialty pricing models as well as our prototype
portfolio risk model. These systems allow us to monitor our pricing and risk on
a contract by contract basis across the Company's lines of business.

       We have fully integrated our internal actuarial staff into the
underwriting and decision making process. We use in-depth actuarial and risk
analysis to evaluate and approve all contracts prior to any authorization. In
addition to internal actuaries and risk professionals, we make use of outside
consultants as necessary to develop the appropriate analysis for pricing. We
require significant amounts of data from our clients and turn down business in
which we feel the data provided to us is insufficient for us to make an
appropriate analysis.

       To monitor the catastrophe and correlation risk of our direct property
and treaty property business, we have subscribed to and utilize three separate
natural catastrophe modeling tools (ALM and DLM licensed by RMS and CATRADER
licensed by AIR). We take an active role in the evaluation of these commercial
catastrophe pricing models, providing feedback to the modeling companies to
improve the efficiencies of these models. We also supplement the model output in
certain territories with the results of our proprietary models. We use modeling
not just for the underwriting of individual risks but also to optimize the total
return and risk of our underwriting portfolio.

       Separate from our natural catastrophe exposed businesses, we underwrite
and accept casualty and specialty insurance and reinsurance business. We apply
the same standards with respect to actuarial and risk analysis to these
businesses using commercial data and models licensed from the Insurance Services
Office, Inc. ("ISO"), the National Council on Compensation Insurance, Inc.
("NCCI"), the Reinsurance Association of America ("RAA"), A.M. Best, Airclaims
Ltd., Bloomberg, and various professional service firms. As with our natural
catastrophe exposed businesses, we seek to identify those casualty and specialty
                                        60
exposures that are most likely to be simultaneously influenced by significant
events. These exposures are then jointly tracked to ensure that we do not
develop an excessive accumulation of exposure to that particular type of event.

       While we are working to develop a realistic event based approach to apply
to our casualty and specialty business, we are also dedicating significant
resources to developing our various pricing and price monitoring tools. It is
management's belief that the single greatest risk associated with the casualty
and specialty lines of business is pricing risk -- the risk that one misjudges
the actuarially appropriate price of a contract. Recent history has shown that
both reinsurers and insurers are highly prone to this error and as a consequence
much of our actuarial resources are dedicated to this issue.

       In addition to the above technical and analytical practices, our
underwriters use a variety of means, including specific contract terms, to
manage the Company's exposure to loss. Substantially all business written
contains aggregate limits in the contract, with limited reinstatements permitted
to restore the original limit under the contract after the occurrence limit has
been depleted by losses incurred on that contract. Additionally, underwriters
use appropriate exclusions, terms and conditions to further eliminate particular
risks or exposures that our underwriting team deems to be significant.
Accordingly, our Bermuda underwriting location provides us with a particular
advantage in this regard because there are no limitations upon our use of
coverage restrictions.

INVESTMENTS

       We follow a conservative investment strategy designed to emphasize the
preservation of our invested assets and provide sufficient liquidity for the
prompt payment of claims. In determining our investment decisions, we consider
the impact of various catastrophic events, particularly those to which our
insurance and reinsurance portfolio may be exposed, on our invested assets to
protect our financial position. As of September 30, 2002, our portfolio consists
of high investment grade rated, liquid, fixed maturity securities of short to
medium term duration. We have no investments in equity securities, less than
investment grade securities, real estate, or other classes of alternative
investments.

       As of September 30, 2002, our aggregate invested assets totaled
approximately $1.4 billion. Invested assets include cash and cash equivalents
managed by our investment managers. The portfolio is 100% fixed maturity and is
primarily managed by BlackRock, Inc. ("BlackRock") and Wellington Management
Company ("Wellington"). The average credit quality of our investments is
AAA/Aaa, with no investments in securities rated below A-/A3 as determined by
S&P and Moody's Investor Services ("Moody's") respectively. Short-term
instruments must be rated a minimum of A-1/P-1. The target duration is 3.0 years
and the portfolio has an income versus total return orientation. At September
30, 2002, the average duration of our invested assets was 2.6 years. There have
been no credit losses to date. At September 30, 2002, there were approximately
$49 million in unrealized gains in the portfolio.

       The following table sets forth the types of securities in our fixed
maturity portfolio, excluding cash equivalents, and their fair values and
amortized costs as of September 30, 2002 (in thousands):
AMORTIZED    UNREALIZED   UNREALIZED
TYPE OF INVESTMENT                              COSTS        GAINS        LOSSES     FAIR VALUE
------------------                            ----------   ----------   ----------   ----------
U.S. government and agencies................    $395,023    $15,732        $ (6)     $  410,749
Corporate securities........................     191,437     15,589          --         207,026
Asset-backed securities.....................     162,917      5,397          (1)        168,313
Mortgage-backed securities..................     522,674     11,933         (36)        534,571
                                              ----------    -------        ----      ----------
Total.......................................  $1,272,051    $48,651        $(43)     $1,320,659
                                              ==========    =======        ====      ==========
U.S. Government and Agencies.  U.S. government and agency securities are
comprised of bonds issued by the U.S. Treasury, the Federal Home Loan Bank, the
Federal Home Loan Mortgage Corporation, and the Federal National Mortgage
Association ("Fannie Mae").

                                        61
Corporate Securities.  Corporate securities are comprised of bonds issued
by corporations and foreign governmental entities rated A-/A3 or higher and are
diversified across a wide range of issuers and industries. The principal risk of
corporate securities is the potential loss of income and potential realized and
unrealized principal losses due to insolvencies or deteriorating credit. The
largest corporate credit in the Company's portfolio represented 0.3% of total
invested assets at September 30, 2002. We actively monitor our corporate credit
exposures and have had no realized credit related losses to date. Our investment
guidelines call for the sale of any bond which becomes rated less than the lower
of A- or A3 from S&P or Moody's.

       Asset-Backed Securities.  Asset-backed securities are purchased both to
diversify the overall risks of our fixed maturity portfolio and to provide
attractive returns. Our asset-backed securities are diversified both by type of
asset and by issuer and are comprised of AAA-rated bonds backed by pools of
automobile loan receivables and credit card receivables originated by a variety
of financial institutions.

       The principal risks in holding asset-backed securities are structural,
credit and capital market risks. Structural risks include the security's
priority in the issuer's capital structure, the adequacy of and ability to
realize proceeds from the collateral and the potential for prepayments. Credit
risks include consumer or corporate credits such as credit card holders and
corporate obligors. Capital market risks include the general level of interest
rates and the liquidity for these securities in the market place.

       Mortgage-Backed Securities.  Mortgage-backed securities are purchased to
diversify our portfolio risk characteristics from primarily corporate credit
risk to a mix of credit risk and cash flow risk. The majority of the
mortgage-backed securities in our investment portfolio have relatively low cash
flow variability.

       The principal risks inherent in holding mortgage-backed securities are
prepayment and extension risks, which will affect the timing of when cash flow
will be received. Our active monitoring of our mortgage-backed securities
mitigates exposure to losses from cash flow risk associated with interest rate
fluctuations. Our mortgage-backed securities are principally comprised of
AAA-rated pools of residential mortgages originated by Fannie Mae and the
Government National Mortgage Association.

       The investment ratings (provided by major rating agencies) for fixed
maturity securities held as of September 30, 2002 and the percentage of our
invested assets they represented at such date were as follows (in thousands):
RATINGS                                                       FAIR VALUE   PERCENTAGE
-------                                                       ----------   ----------
U.S. government and government agencies.....................  $  410,749      31.1%
AAA/Aaa.....................................................     715,957      54.2%
AA/Aa.......................................................      53,281       4.0%
A/A.........................................................     140,672      10.7%
                                                              ----------     -----
Total.......................................................  $1,320,659     100.0%
                                                              ==========     =====
The maturity distribution for fixed maturity securities held as of September 30,
2002 was as follows (in thousands):
AMORTIZED
MATURITY                                                        COSTS      FAIR VALUE
--------                                                      ----------   ----------
Due within one year.........................................  $   --       $   --
Due after one year through five years.......................     422,368      440,716
Due after five years through ten years......................     118,950      129,989
Due after ten years.........................................      45,142       47,070
Mortgage-backed securities..................................     522,674      534,571
Asset-backed securities.....................................     162,917      168,313
                                                              ----------   ----------
Total.......................................................  $1,272,051   $1,320,659
                                                              ==========   ==========
62
Our investment returns for the nine months ended September 30, 2002 were as
follows (in thousands):
Net investment income.......................................  $29,355
Net realized gains on sales of investments..................    3,688
Net increase in unrealized gains............................   48,608
                                                              -------
Total net investment return.................................  $81,651
                                                              =======
Total return(1).............................................    6.63%
------------

(1) Total return for our investment portfolio is calculated using beginning and
    ending market values adjusted for external cash flows and includes
    unrealized gains and losses.

       Our investment committee establishes investment guidelines and supervises
our investment activity. The investment committee regularly monitors our overall
investment results, reviews compliance with our investment objectives and
guidelines, and ultimately reports our overall investment results to the board
of directors. Our investment guidelines specify minimum criteria on the overall
credit quality and liquidity characteristics of the portfolio. They include
limitations on the size of certain holdings as well as restrictions on
purchasing certain types of securities or investing in certain industries.
Currently our investment guidelines restrict the purchase of financial futures,
options, swaps, and other derivatives for investment purposes, subject to
approval of our investment committee and our board of directors. Our investment
managers may be instructed to invest some of the investment portfolio in
currencies other than U.S. dollars based upon the business we have written, the
currency in which our loss reserves are denominated on our books or regulatory
requirements.

       We have engaged BlackRock and Wellington to provide investment advisory
and management services. We have agreed to pay investment management fees based
on the month-end market values held under their respective custody. The fees,
which vary depending on the amount of assets under management, are included in
net investment income. These agreements may be terminated by either party upon
30 days written notice. In the nine months ended September 30, 2002, fees of
$0.6 million were earned by BlackRock and Wellington.

RATINGS

       Ratings have become an increasingly important factor in establishing the
competitive position of insurance and reinsurance companies. A.M. Best assigned
to each of Endurance Bermuda and Endurance U.K. a financial strength rating of
"A-" (Excellent), which is the fourth highest of fifteen rating levels. The
objective of A.M. Best's rating system is to provide an opinion of an insurer's
or reinsurer's financial strength and ability to meet ongoing obligations to its
policyholders. These ratings reflect A.M. Best's opinion of Endurance Bermuda's
and Endurance U.K.'s initial capitalization, management and sponsorship, and is
not an evaluation directed to investors in our ordinary shares and is not a
recommendation to buy, sell or hold our ordinary shares. These ratings are
subject to periodic review by, and may be revised downward or revoked at the
sole discretion of A.M. Best.

       Our other insurance subsidiary, Endurance U.S., has not yet received a
rating from any rating agency.

COMPETITION

       The insurance and reinsurance industries are mature and highly
competitive. Insurance and reinsurance companies compete on the basis of many
factors, including premium charges, general reputation and perceived financial
strength, the terms and conditions of the products offered, ratings assigned by
independent rating agencies, speed of claims payments and reputation and
experience in the particular risk to be underwritten.

                                        63
We expect to compete directly with numerous other parties, including
established global insurance and reinsurance companies, other start-up insurance
and reinsurance entities, as well as potential capital markets and
securitization structures aimed at managing catastrophe and other risks.

       Many of these entities have significantly larger amounts of capital and
more employees than the Company.

EMPLOYEES

       As of December 2, 2002, we had 104 full-time employees. 87 of these
employees are employed by Endurance Bermuda. We believe that our employee
relations are satisfactory. None of our employees are subject to collective
bargaining agreements.

PROPERTIES

       We currently lease office space in Hamilton, Bermuda at two locations.
One property of approximately 12,547 square feet is governed by a three-year
sub-lease that extends until September 29, 2005 and the other space, comprising
approximately 8,995 square feet, operates under a month to month extension of a
six-year lease that extends until January 31, 2004.

       Endurance U.S. Holdings Corp. leases temporary space in Tarrytown, New
York for a term ending on February 1, 2003. Endurance U.S. Holdings Corp. has
entered into a tentative agreement for the lease of office space located in
White Plains, New York.

       Endurance Worldwide Holdings Limited leases office space in London,
England under two leases, one that expires on August 26, 2003 and a second that
expires on November 7, 2003.

LEGAL PROCEEDINGS

       We are not currently aware of any pending or threatened material
litigation. In the normal course of business, we may become involved in various
claims and legal proceedings.

                                        64
REGULATORY MATTERS

GENERAL

       The business of insurance and reinsurance is regulated in most countries,
although the degree and type of regulation varies significantly from one
jurisdiction to another. Reinsurers are generally subject to less direct
regulation than primary insurers. In Bermuda, we operate under relatively less
intensive regulatory regimes. However, in the United States and in the United
Kingdom licensed insurers and reinsurers must comply with financial supervision
standards comparable to those governing primary insurers. Accordingly, Endurance
U.S. will be subject to extensive financial regulation under applicable statutes
once it is licensed in the U.S. Endurance U.K. is already licensed in the U.K.
and therefore subject to U.K. regulation.

       We are aware of new legislative changes that may impact the worldwide
demand for insurance and reinsurance. In response to the tightening of supply in
certain insurance and reinsurance markets resulting from, among other things,
the World Trade Center tragedy, the Terrorism Risk Insurance Act of 2002 was
enacted to ensure the availability of insurance coverage for terrorist acts in
the United States. This law establishes a federal assistance program through the
end of 2005 to help the commercial property and casualty insurance industry
cover claims related to future terrorism related losses and regulates the terms
of insurance relating to terrorism coverage. This law could adversely affect our
business by increasing underwriting capacity for our competitors as well as by
requiring that coverage for terrorist acts be offered by insurers. We are in the
process of evaluating this legislation and have not yet determined how it will
affect our future operations. We are currently unable to predict the extent to
which the foregoing new initiative may affect the demand for our products or the
risks which may be available for us to consider underwriting.

BERMUDA

       The Insurance Act 1978 of Bermuda and related regulations, as amended
(the "Insurance Act"), regulates the insurance business of Endurance Bermuda and
provides that no person may carry on any insurance business in or from within
Bermuda unless registered as an insurer by the BMA under the Insurance Act.
Endurance Bermuda has been registered as a Class 4 insurer by the BMA; however,
as a holding company, Endurance Holdings is not subject to Bermuda insurance
regulations. Insurance as well as reinsurance is regulated under the Insurance
Act. The BMA, in deciding whether to grant registration, has broad discretion to
act as it thinks fit in the public interest. The BMA is required by the
Insurance Act to determine whether the applicant is a fit and proper body to be
engaged in the insurance business and, in particular, whether it has, or has
available to it, adequate knowledge and expertise to operate an insurance
business. The continued registration of an applicant as an insurer is subject to
it complying with the terms of its registration and such other conditions as the
BMA may impose from time to time.

       An Insurance Advisory Committee appointed by the Bermuda Minister of
Finance advises the BMA on matters connected with the discharge of the BMA's
functions. Sub-committees of the Insurance Advisory Committee supervise and
review the law and practice of insurance in Bermuda, including reviews of
accounting and administrative procedures. The day-to-day supervision of insurers
is the responsibility of the BMA.

       The Insurance Act also imposes on Bermuda insurance companies solvency
and liquidity standards and auditing and reporting requirements and grants the
BMA powers to supervise, investigate, require information and the production of
documents and intervene in the affairs of insurance companies. Certain
significant aspects of the Bermuda insurance regulatory framework are set forth
below.

  CLASSIFICATION OF INSURERS

       The Insurance Act distinguishes between insurers carrying on long-term
business and insurers carrying on general business. There are four
classifications of insurers carrying on general business, with Class 4 insurers
subject to the strictest regulation. Endurance Bermuda, which is incorporated to
carry on
                                        65
general insurance and reinsurance business, is registered as a Class 4 insurer
in Bermuda and is regulated as such under the Insurance Act. Endurance Bermuda
is not licensed to carry on long-term business.

  CANCELLATION OF INSURER'S REGISTRATION

       An insurer's registration may be canceled by the Supervisor of Insurance
of the BMA on certain grounds specified in the Insurance Act, including failure
of the insurer to comply with its obligations under the Insurance Act or if, in
the opinion of the BMA after consultation with the Insurance Advisory Committee,
the insurer has not been carrying on business in accordance with sound insurance
principles.

  PRINCIPAL REPRESENTATIVE

       An insurer is required to maintain a principal office in Bermuda and to
appoint and maintain a principal representative in Bermuda. For the purpose of
the Insurance Act, Endurance Bermuda's principal office is its executive offices
in Hamilton, Bermuda, and Endurance Bermuda's principal representative will be
James Kroner. Without a reason acceptable to the BMA, an insurer may not
terminate the appointment of its principal representative, and the principal
representative may not cease to act as such, unless 30 days' notice in writing
to BMA is given of the intention to do so. It is the duty of the principal
representative, within 30 days of reaching the view that there is a likelihood
that the insurer will become insolvent or that a reportable "event" has, to the
principal representative's knowledge, occurred or is believed to have occurred,
to make a report in writing to the BMA setting forth all the particulars of the
case that are available to the principal representative. For example, the
failure by the insurer to comply substantially with a condition imposed upon the
insurer by the BMA relating to a solvency margin or a liquidity or other ratio
would be a reportable "event."

  INDEPENDENT APPROVED AUDITOR

       Every registered insurer must appoint an independent auditor who will
audit and report annually on the statutory financial statements and the
statutory financial return of the insurer, both of which, in the case of
Endurance Bermuda, are required to be filed annually with the BMA. Endurance
Bermuda's independent auditor must be approved by the BMA and may be the same
person or firm that audits Endurance Holdings' consolidated financial statements
and reports for presentation to its shareholders.

  LOSS RESERVE SPECIALIST

       As a registered Class 4 insurer, Endurance Bermuda is required to submit
an opinion of its approved loss reserve specialist with its statutory financial
return in respect of its losses and loss expenses provisions. The loss reserve
specialist, who will normally be a qualified casualty actuary, must be approved
by the BMA. David Cash, a Fellow of the Casualty Actuaries Society, our Chief
Actuary and our Chief Risk Officer, has been approved to act as Endurance
Bermuda's loss reserve specialist.

  STATUTORY FINANCIAL STATEMENTS

       An insurer must prepare annual statutory financial statements. The
Insurance Act prescribes rules for the preparation and substance of these
statutory financial statements (which include, in statutory form, a balance
sheet, an income statement, a statement of capital and surplus and notes
thereto). The insurer is required to give detailed information and analyses
regarding premiums, claims, reinsurance and investments. The statutory financial
statements are not prepared in accordance with U.S. GAAP and are distinct from
the financial statements prepared for presentation to the insurer's shareholders
under the Companies Act, which financial statements, in the case of the Company,
will be prepared in accordance with U.S. GAAP. As a general business insurer,
Endurance Bermuda is required to submit the annual statutory financial
statements as part of the annual statutory financial return. The statutory
financial statements and the statutory financial return do not form part of the
public records maintained by BMA. Since Endurance Bermuda was capitalized on
December 14, 2001 and had only a two-week operating history for the calendar
year ended December 31, 2001, it obtained approval from the BMA to adopt a

                                        66
thirteen month fiscal year for statutory reporting purposes for its first year.
Accordingly, Endurance Bermuda's first official insurance filing with the
Bermuda insurance regulators will be for the period beginning November 30, 2001
and ending December 31, 2002, and therefore, it did not close its books for
insurance regulatory purposes on December 31, 2001.

  ANNUAL STATUTORY FINANCIAL RETURN

       Endurance Bermuda is required to file with the BMA a statutory financial
return no later than four months after its financial year end (unless
specifically extended upon application to the BMA). The statutory financial
return for a Class 4 insurer includes, among other matters, a report of the
approved independent auditor on the statutory financial statements of the
insurer, solvency certificates, the statutory financial statements, the opinion
of the loss reserve specialist and a schedule of reinsurance ceded. The solvency
certificates must be signed by the principal representative and at least two
directors of the insurer certifying that the minimum solvency margin has been
met and whether the insurer complied with the conditions attached to its
certificate of registration. The independent approved auditor is required to
state whether, in its opinion, it was reasonable for the directors to make these
certifications. If an insurer's accounts have been audited for any purpose other
than compliance with the Insurance Act, a statement to that effect must be filed
with the statutory financial return.

  MINIMUM SOLVENCY MARGIN AND RESTRICTIONS ON DIVIDENDS AND DISTRIBUTIONS

       Under the Insurance Act, the value of the general business assets of a
Class 4 insurer, such as Endurance Bermuda, must exceed the amount of its
general business liabilities by an amount greater than the prescribed minimum
solvency margin.

       Endurance Bermuda:

                1.     is required, with respect to its general business, to
                       maintain a minimum solvency margin equal to the greatest
                       of:

                     a.     $100,000,000;

                     b.     50% of net premiums written (being gross premiums
                            written less any premiums ceded by Endurance
                            Bermuda, but Endurance Bermuda may not deduct more
                            than 25% of gross premiums when computing net
                            premiums written); and

                     c.     15% of net losses and loss expense reserves;

                2.     is prohibited from declaring or paying any dividends
                       during any financial year if it is in breach of its
                       minimum solvency margin or minimum liquidity ratio or if
                       the declaration or payment of such dividends would cause
                       it to fail to meet such margin or ratio (and if it has
                       failed to meet its minimum solvency margin or minimum
                       liquidity ratio on the last day of any financial year,
                       Endurance Bermuda will be prohibited, without the
                       approval of the BMA, from declaring or paying any
                       dividends during the next financial year);

                3.     is prohibited from declaring or paying in any financial
                       year dividends of more than 25% of its total statutory
                       capital and surplus (as shown on its previous financial
                       year's statutory balance sheet) unless it files with the
                       BMA (at least 7 days before payment of such dividends) an
                       affidavit stating that it will continue to meet the
                       required margins;

                4.     is prohibited, without the approval of the BMA, from
                       reducing by 15% or more its total statutory capital as
                       set out in its previous year's financial statements, and
                       any application for such approval must include an
                       affidavit stating that it will continue to meet the
                       required margins; and

                                        67
5.     is required, at any time it fails to meet its solvency
                       margin, within 30 days (45 days where total statutory
                       capital and surplus falls to $75 million or less) after
                       becoming aware of that failure or having reason to
                       believe that such failure has occurred, to file with the
                       BMA a written report containing certain information.

       Additionally, under the Companies Act, Endurance Holdings and Endurance
Bermuda may only declare or pay a dividend if Endurance Holdings or Endurance
Bermuda, as the case may be, has no reasonable grounds for believing that it is,
or would after the payment be, unable to pay its liabilities as they become due,
or if the realizable value of its assets would not be less than the aggregate of
its liabilities and its issued share capital and share premium accounts.

  MINIMUM LIQUIDITY RATIO

       The Insurance Act provides a minimum liquidity ratio for general business
insurers, like Endurance Bermuda. An insurer engaged in general business is
required to maintain the value of its relevant assets at not less than 75% of
the amount of its relevant liabilities. Relevant assets include, but are not
limited to, cash and time deposits, quoted investments, unquoted bonds and
debentures, first liens on real estate, investment income due and accrued,
accounts and premiums receivable and reinsurance balances receivable. There are
certain categories of assets which, unless specifically permitted by the BMA, do
not automatically qualify as relevant assets, such as unquoted equity
securities, investments in and advances to affiliates and real estate and
collateral loans. The relevant liabilities are total general business insurance
reserves and total other liabilities less deferred income tax and sundry
liabilities (by interpretation, those not specifically defined).

  SUPERVISION, INVESTIGATION AND INTERVENTION

       The BMA may appoint an inspector with extensive powers to investigate the
affairs of Endurance Bermuda if the BMA believes that such an investigation is
in the best interests of its policyholders or persons who may become
policyholders. In order to verify or supplement information otherwise provided
to the BMA, the BMA may direct Endurance Bermuda to produce documents or
information relating to matters connected with its business. If it appears to
the BMA that there is a risk of Endurance Bermuda becoming insolvent, or that
Endurance Bermuda is in breach of the Insurance Act or any conditions imposed
upon its registration, the BMA may, among other things, direct Endurance Bermuda
(i) not to take on any new insurance business, (ii) not to vary any insurance
contract if the effect would be to increase its liabilities, (iii) not to make
certain investments, (iv) to liquidate certain investments, (v) to maintain in,
or transfer to the custody of a specified bank, certain assets, (vi) not to
declare or pay any dividends or other distributions or to restrict the making of
such payments and/or (vii) to limit Endurance Bermuda's premium income. The BMA
intends to meet with each Class 4 insurance company on a voluntary basis, every
two years.

  DISCLOSURE OF INFORMATION

       In addition to powers under the Insurance Act to investigate the affairs
of an insurer, the BMA may require certain information from an insurer (or
certain other persons) to be produced to them. Further, the BMA has been given
powers to assist other regulatory authorities, including foreign insurance
regulatory authorities, with their investigations involving insurance and
reinsurance companies in Bermuda but subject to restrictions. For example, the
BMA must be satisfied that the assistance being requested is in connection with
the discharge of regulatory responsibilities of the foreign regulatory
authority. Further, the BMA must consider whether cooperation is in the public
interest. The grounds for disclosure are limited and the Insurance Act provides
sanctions for breach of the statutory duty of confidentiality.

  CERTAIN OTHER BERMUDA LAW CONSIDERATIONS

       Endurance Holdings and Endurance Bermuda will each also need to comply
with the provisions of the Companies Act regulating the payment of dividends and
making of distributions from contributed

                                        68
surplus. A company is prohibited from declaring or paying a dividend, or making
a distribution out of contributed surplus, if there are reasonable grounds for
believing that: (a) the company is, or would after the payment be, unable to pay
its liabilities as they become due; or (b) the realizable value of the company's
assets would thereby be less than the aggregate of its liabilities and its
issued share capital and share premium accounts.

       Although Endurance Bermuda is incorporated in Bermuda, it is classified
as a non-resident of Bermuda for exchange control purposes by the BMA. Pursuant
to its non-resident status, Endurance Bermuda may engage in transactions in
currencies other than Bermuda dollars and there are no restrictions on its
ability to transfer funds (other than funds denominated in Bermuda dollars) in
and out of Bermuda or to pay dividends to United States residents who are
holders of its ordinary shares.

       Under Bermuda law, exempted companies are companies formed for the
purpose of conducting business outside Bermuda from a principal place of
business in Bermuda. As "exempted" companies, Endurance Holdings and Endurance
Bermuda may not, without the express authorization of the Bermuda legislature or
under a license or consent granted by the Minister of Finance, participate in
certain business transactions, including: (1) the acquisition or holding of land
in Bermuda (except that held by way of lease or tenancy agreement which is
required for its business and held for a term not exceeding 50 years, or which
is used to provide accommodation or recreational facilities for its officers and
employees and held with the consent of the Bermuda Minister of Finance, for a
term not exceeding 21 years); (2) the taking of mortgages on land in Bermuda to
secure an amount in excess of $50,000; or (3) the carrying on of business of any
kind for which it is not licensed in Bermuda, except in certain limited
circumstances such as doing business with another exempted undertaking in
furtherance of Endurance Holdings' business or Endurance Bermuda's business (as
the case may be) carried on outside Bermuda. Endurance Bermuda is a licensed
insurer in Bermuda, and so may carry on activities from Bermuda that are related
to and in support of its insurance business.

       Ordinary shares may be offered or sold in Bermuda only in compliance with
the provisions of the Investment Business Act of 1998 of Bermuda which regulates
the sale of securities in Bermuda. In addition, the BMA must approve all
issuances and transfers of shares of a Bermuda exempted company. Before the
offering contemplated by this prospectus, we expect the BMA will have issued
their permission for the issue and free transferability of the ordinary shares
being offered pursuant to this prospectus, as long as the shares are listed on
the NYSE, to and among persons who are non-residents of Bermuda for exchange
control purposes. In addition, we will deliver to and file a copy of this
prospectus with the Registrar of Companies in Bermuda in accordance with Bermuda
law. The BMA and the Registrar of Companies accept no responsibility for the
financial soundness of any proposal or for the correctness of any of the
statements made or opinions expressed in this prospectus.

       The Bermuda government actively encourages foreign investment in
"exempted" entities like Endurance Holdings and Endurance Bermuda that are based
in Bermuda, but do not operate in competition with local businesses. As well as
having no restrictions on the degree of foreign ownership, Endurance Holdings
and Endurance Bermuda are not currently subject to taxes computed on profits or
income or computed on any capital asset, gain or appreciation, or any tax in the
nature of estate duty or inheritance tax or to any foreign exchange controls in
Bermuda. See "Material Tax Considerations -- Certain Bermuda Tax
Considerations."

       Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may
not engage in any gainful occupation in Bermuda without an appropriate
governmental work permit. Work permits may be granted or extended by the Bermuda
government upon showing that, after proper public advertisement in most cases,
no Bermudian (or spouse of a Bermudian) is available who meets the minimum
standard requirements for the advertised position. The Bermuda government
recently announced a new policy limiting the duration of work permits to six
years, with certain exemptions for key employees. All of our Bermuda-based
professional employees who require work permits have been granted permits by the
Bermuda government. The terms of these permits range from three to five years
depending on the individual.

                                        69
U.K. REGULATION

  GENERAL

       On December 1, 2001, the FSA assumed its full powers and responsibilities
as the single statutory regulator responsible for regulating the financial
services industry in respect of the carrying on of "regulated activities"
(including deposit taking, insurance, investment management and most other
financial services business by way of business in the U.K.), with the purpose of
maintaining confidence in the U.K. financial system, providing public
understanding of the system, securing the proper degree of protection for
consumers and helping to reduce financial crime. It is a criminal offense for
any person to carry on a regulated activity in the U.K. unless that person is
authorized by the FSA and has been granted permission to carry on that regulated
activity or falls under an exemption.

       Insurance business (which includes reinsurance business) is authorized
and supervised by the FSA. Insurance business in the United Kingdom is divided
between two main categories: long-term insurance (which is primarily
investment-related) and general insurance. It is not possible for an insurance
company to be authorized in both long-term and general insurance business. These
two categories are both divided into "classes" (for example: permanent health
and pension fund management are two classes of long-term insurance; damage to
property and motor vehicle liability are two classes of general insurance).
Under FSMA, effecting or carrying out contracts of insurance, within a class of
general or long-term insurance, by way of business in the United Kingdom,
constitutes a regulated activity requiring individual authorization. An
authorized insurance company must have permission for each class of insurance
business it intends to write.

       Endurance U.K. has received authorization from the FSA to effect and
carry out in the United Kingdom contracts of insurance in all classes of general
business (limited in the case of credit and suretyship to reinsurance only)
except sickness, legal expenses and assistance business. As an authorized
insurer in the United Kingdom, Endurance U.K. would be able to operate
throughout the E.U., subject to certain regulatory requirements of the FSA and
in some cases, certain local regulatory requirements. An insurance company with
FSA authorization to write insurance business in the United Kingdom can seek
consent from the FSA to allow it to provide cross-border services in other
member states of the E.U. As an alternative, FSA consent may be obtained to
establish a branch office within another member state.

       As an FSA authorized insurer, the insurance and reinsurance businesses of
Endurance U.K. will be subject to close supervision by the FSA. The FSA is
currently seeking to strengthen its requirements for senior management
arrangements, systems and controls of insurance and reinsurance companies under
its jurisdiction and intends to place an increased emphasis on risk
identification and management in relation to the prudential regulation of
insurance and reinsurance business in the United Kingdom. There are a number of
proposed changes to the FSA's rules that will affect insurance and reinsurance
companies authorized in the U.K. For example, the FSA is currently in
consultation on a number of proposals, including the regulation of the sale of
general insurance, insurance mediation and proposals aimed at ensuring adequate
diversification of an insurer's or reinsurer's exposures to any credit risks of
its reinsurers. Changes in the scope of the FSA's regulation may have an adverse
impact on the business of Endurance U.K.

  SUPERVISION

       The FSA carries out the prudential supervision of insurance companies
through a variety of methods, including the collection of information from
statistical returns, review of accountants' reports, visits to insurance
companies and regular formal interviews.

       The FSA has adopted a risk-based approach to the supervision of insurance
companies. Under this approach the FSA performs a formal risk assessment of
insurance companies or groups carrying on business in the U.K. periodically,
which varies in length according to the risk profile of the insurer. The FSA
performs the risk assessment by analyzing information which it receives during
the normal course of its supervision, such as regular prudential returns on the
financial position of the insurance company, or

                                        70
which it acquires through a series of meetings with senior management of the
insurance company. After each risk assessment, the FSA will inform the insurer
of its views on the insurer's risk profile. This will include details of any
remedial action that the FSA requires and the likely consequences if this action
is not taken.

  SOLVENCY REQUIREMENTS

       The Interim Prudential Sourcebook for Insurers requires that insurance
companies maintain a margin of solvency at all times in respect of any general
insurance undertaken by the insurance company, the calculation of which in any
particular case depends on the type and amount of insurance business a company
writes. The method of calculation of the solvency margin is set out in the
Interim Prudential Sourcebook for Insurers, and for these purposes, all
insurer's assets and liabilities are subject to specific valuation rules which
are set out in the Interim Prudential Sourcebook for Insurers. Failure to
maintain the required solvency margin is one of the grounds on which wide powers
of intervention conferred upon the FSA may be exercised.

       Each insurance company writing property, credit insurance business,
aviation, marine, business interruption or nuclear insurance or reinsurance
business is required by the Interim Prudential Sourcebook for Insurers to
maintain an equalization reserve in respect of business written in the financial
years ending on or after December 23, 1996 calculated in accordance with the
provisions of the Interim Prudential Sourcebook for Insurers where the amount of
premiums for such classes exceed the minimum threshold set forth in the
provisions.

       These solvency requirements are likely to be amended when the Interim
Prudential Sourcebook for Insurers is replaced by the proposed Integrated
Prudential Sourcebook.

       In addition, an insurer (other than a pure reinsurer) that is part of a
group, is required to perform and submit to the FSA a solvency margin
calculation return in respect of its ultimate parent undertaking, in accordance
with the FSA's rules. This return is not part of an insurer's own solvency
return and hence will not be publicly available. Although there is no
requirement for the parent undertaking solvency calculation to show a positive
result, the FSA is required to take action where it considers that the solvency
of the insurance company is or may be jeopardized due to the group solvency
position. Further, an insurer is required to report in its annual returns to the
FSA all material related party transactions (e.g., intra group reinsurance,
whose value is more than 5% of the insurer's general insurance business amount).

  RESTRICTIONS ON DIVIDEND PAYMENTS

       U.K. company law prohibits Endurance U.K. from declaring a dividend to
its shareholders unless it has "profits available for distribution." The
determination of whether a company has profits available for distribution is
based on its accumulated realized profits less its accumulated realized losses.
While the United Kingdom insurance regulatory laws impose no statutory
restrictions on a general insurer's ability to declare a dividend, the FSA
strictly controls the maintenance of each insurance company's solvency margin
within its jurisdiction. The FSA's rules require Endurance U.K., in its early
years of trading, to notify the FSA of any proposed or actual payment of a
dividend that is greater than forecast in the business plans submitted by
Endurance U.K. with its application for authorization. Any such payment or
proposal could result in regulatory intervention. In addition, the FSA requires
authorized insurance companies to notify the FSA in advance of any significant
dividend payment.

  REPORTING REQUIREMENTS

       U.K. insurance companies must prepare their financial statements under
the Companies Act of 1985 (as amended), which requires the filing with Companies
House of audited financial statements and related reports. In addition, U.K.
insurance companies are required to file with the FSA regulatory returns, which
include a revenue account, a profit and loss account and a balance sheet in
prescribed forms. Under the Interim Prudential Sourcebook for Insurers, audited
regulatory returns must be filed with the FSA within two months and 15 days (or
three months where the delivery of the return is made electronically).
                                        71
SUPERVISION OF MANAGEMENT

       The FSA closely supervises the management of insurance companies through
the approved persons regime, by which any appointment of persons to perform
certain specified "controlled functions" within a regulated entity, must be
approved by the FSA.

  CHANGE OF CONTROL

       FSMA regulates the acquisition of "control" of any U.K. insurance company
authorized under FSMA. Any company or individual that (together with its or his
associates) directly or indirectly acquires 10% or more of the shares in a U.K.
authorized insurance company or its parent company, or is entitled to exercise
or control the exercise of 10% or more of the voting power in such authorized
insurance company or its parent company, would be considered to have acquired
"control" for the purposes of the relevant legislation, as would a person who
had significant influence over the management of such authorized insurance
company or its parent company by virtue of his shareholding or voting power in
either. A purchaser of 10% or more of the ordinary shares would therefore be
considered to have acquired "control" of Endurance U.K.

       Under FSMA, any person proposing to acquire "control" over a U.K.
authorized insurance company must give prior notification to the FSA of his
intention to do so. The FSA would then have three months to consider that
person's application to acquire "control." In considering whether to approve
such application, the FSA must be satisfied that both the acquirer is a fit and
proper person to have such "control" and that the interests of consumers would
not be threatened by such acquisition of "control." Failure to make the relevant
prior application could result in action being taken against the Company by the
FSA.

  INTERVENTION AND ENFORCEMENT

       The FSA has extensive powers to intervene in the affairs of an authorized
person, culminating in the ultimate sanction of the removal of authorization to
carry on a regulated activity. FSMA imposes on the FSA statutory obligations to
monitor compliance with the requirements imposed by FSMA, and to enforce the
provisions of FSMA related rules made by the FSA. The FSA has power, among other
things, to enforce -- and take disciplinary measures in respect of -- breaches
of both the Interim Prudential Sourcebook for Insurers and breaches of the
conduct of business rules generally applicable to authorized persons.

       The FSA also has the power to prosecute criminal offenses arising under
FSMA, and to prosecute insider dealing under Part V of the Criminal Justice Act
of 1993, and breaches of money laundering regulations. The FSA's stated policy
is to pursue criminal prosecution in all appropriate cases.

U.S. REGULATION

       Endurance U.S. was organized on September 5, 2002. On December 4, 2002,
Endurance Bermuda contributed $335 million in cash and invested assets to
Endurance U.S. Holdings Corp., which in turn, subsequently contributed such
amount as statutory surplus of Endurance U.S. On December 18, 2002, Endurance
U.S. received a license to write certain lines of insurance and reinsurance
business from the New York Department.

 U.S. INSURANCE HOLDING COMPANY REGULATION OF ENDURANCE HOLDINGS

       Endurance Holdings, as the indirect parent of Endurance U.S., and
Endurance U.S. Holdings Corp., as the direct parent of Endurance U.S., are
subject to the insurance holding company laws of New York, where Endurance U.S.
is organized and domiciled. These laws generally require the insurance holding
company and each insurance company directly or indirectly owned by the holding
company to register with the New York Department and to furnish annually
financial and other information about the operations of companies within the
holding company system. Generally, all material transactions among

                                        72
companies in the holding company system affecting Endurance U.S., including
sales, loans, reinsurance agreements, service agreements and dividend payments,
must be fair and, if material or of a specified category, require prior notice
and approval or non-disapproval by the New York Superintendent.

  CHANGES OF CONTROL

       These laws may discourage potential acquisition proposals and may delay,
deter or prevent a change of control of Endurance Holdings, including through
transactions, and in particular unsolicited transactions, that some or all of
the shareholders of Endurance Holdings might consider to be desirable.

       Before a person can acquire control of a domestic insurer or reinsurer,
prior written approval must be obtained from the insurance commissioner of the
state where the domestic insurer is domiciled. Prior to granting approval of an
application to acquire control of a domestic insurer, the state insurance
commissioner where the insurer is domiciled will consider such factors as the
financial strength of the applicant, the integrity and management of the
applicant's board of directors and executive officers, the acquiror's plans for
the future operations of the domestic insurer and any anti-competitive results
that may arise from the consummation of the acquisition of control. Generally,
state statutes provide that "control" over a domestic insurer is presumed to
exist if any person, directly or indirectly, owns, controls, holds with the
power to vote, or holds proxies representing, ten percent or more of the voting
securities of the domestic insurer. Because a person acquiring ten percent or
more of Endurance Holdings' ordinary shares would indirectly acquire the same
percentage of Endurance U.S.'s common stock, the U.S. insurance change of
control laws will likely apply to such a transaction.

  STATE INSURANCE REGULATION OF ENDURANCE U.S.

       The terms and conditions of reinsurance agreements generally are not
subject to regulation by any U.S. state insurance department with respect to
rates or policy terms. This contrasts with primary insurance agreements, the
rates and policy terms of which are generally closely regulated by state
insurance departments. As a practical matter, however, the rates charged by
primary insurers do have an effect on the rates that can be charged by
reinsurers.

       State insurance authorities have broad regulatory powers with respect to
various aspects of the reinsurance business, including: licensing to transact
business, admittance of assets to statutory surplus, regulating unfair trade and
claims practices, establishing reserve requirements and solvency standards, and
regulating investments and dividends. State insurance laws and regulations
require Endurance U.S. to file financial statements with insurance departments
everywhere it will be licensed or authorized or accredited to conduct insurance
business; and the operations of Endurance U.S. are subject to examination by
those departments at any time. Endurance U.S. will prepare statutory financial
statements in accordance with STATUTORY ACCOUNTING PRACTICES and procedures
prescribed or permitted by these departments. State insurance departments also
conduct periodic examinations of the books and records, financial reporting,
policy filings and market conduct of insurance companies domiciled in their
states, generally once every three to five years. Examinations are generally
carried out in cooperation with the insurance departments of other states under
guidelines promulgated by the NAIC.

  NEW YORK STATE DIVIDEND LIMITATIONS

       Under the New York Insurance Law, the ability of Endurance U.S. to
declare or pay any dividend to us which, together with all dividends declared or
distributed by it during the next preceding twelve months, exceeds the lesser
of:

       1.     10% of Endurance U.S.'s surplus to policyholders as shown on its
              latest statement on file with the New York Superintendent; or

       2.     100% of Endurance U.S.'s adjusted net investment income during
              that period

will be subject to the prior approval of the New York Superintendent.

                                        73
The extraordinary dividend limitation imposed by the New York Insurance
Law is based on the statutory financial results of Endurance U.S. determined by
using statutory accounting practices which differ in certain respects from
accounting principles used in financial statements prepared in conformity with
U.S. GAAP. The significant differences relate to DEFERRED ACQUISITION EXPENSES,
deferred income taxes, required investment reserves, reserve calculation
assumptions and surplus notes. The Company has agreed with the New York
Department to not take a dividend from Endurance U.S. for two years after its
license is issued without prior regulatory approval.

  NEW YORK STATE RISK-BASED CAPITAL REGULATIONS

       The New York Insurance Law requires that New York insurers report their
risk-based capital ("RBC") based on a formula calculated by applying factors to
various asset, premium and reserve items. The formula takes into account the
risk characteristics of the insurer, including asset risk, insurance risk,
interest rate risk and business risk. The New York Department uses the formula
only as an early warning regulatory tool to identify possibly inadequately
capitalized insurers for purposes of initiating regulatory action, and not as a
means to rank insurers generally. The New York Insurance Law imposes broad
confidentiality requirements on those engaged in the insurance business
(including insurers, agents, brokers and others) and on the New York Department
as to the use and publication of RBC data. The New York Superintendent has
explicit regulatory authority to require various actions by, or take various
actions against, insurers whose total adjusted capital does not exceed certain
RBC levels.

  STATUTORY ACCOUNTING PRINCIPLES

       Statutory accounting, or "SAP," is a basis of accounting developed to
assist insurance regulators in monitoring and regulating the solvency of
insurance companies. It is primarily concerned with measuring an insurer's
surplus to policyholders. Accordingly, statutory accounting focuses on valuing
assets and liabilities of insurers at financial reporting dates in accordance
with appropriate insurance law and regulatory provisions applicable in each
insurer's domiciliary state.

       U.S. GAAP is concerned with a company's solvency, but it is also
concerned with other financial measurements, such as income and cash flows.
Accordingly, U.S. GAAP gives more consideration to appropriate matching of
revenue and expenses and accounting for management's stewardship of assets than
does SAP. As a direct result, different assets and liabilities and different
amounts of assets and liabilities will be reflected in financial statements
prepared in accordance with U.S. GAAP as opposed to SAP.

       Statutory accounting practices established by the NAIC and adopted, in
part, by the New York Department, determine, among other things, the amount of
statutory surplus and statutory net income of our U.S. insurance subsidiary and
thus determine, in part, the amount of funds they have available to pay
dividends to us.

  OPERATIONS OF ENDURANCE U.K. AND ENDURANCE BERMUDA

       Endurance U.K. and Endurance Bermuda are not admitted to do business in
the United States. However, the insurance laws of each state of the United
States and of many other countries regulate or prohibit the sale of insurance
and reinsurance within their jurisdictions by non-domestic insurers and
reinsurers such as Endurance U.K. and Endurance Bermuda, which are not admitted
to do business within such jurisdictions. We do not intend that Endurance
Bermuda or Endurance U.K. maintain an office or solicit, advertise, settle
claims or conduct other insurance activities in any jurisdiction other than
Bermuda -- or, in the case of Endurance U.K., London -- where the conduct of
such activities would require Endurance U.K. and Endurance Bermuda to be so
admitted.

       In addition to the regulatory requirements imposed by the jurisdictions
in which they are licensed, reinsurers' business operations are affected by
regulatory requirements in various states of the United States governing "credit
for reinsurance" which are imposed on their ceding companies. In general, a
ceding company which obtains reinsurance from a reinsurer that is licensed,
accredited or approved by the jurisdiction or state in which the reinsurer files
statutory financial statements is permitted to reflect in its
                                        74
statutory financial statements a credit in an aggregate amount equal to the
liability for unearned premiums (which are that portion of premiums written
which applies to the unexpired portion of the policy period) and loss reserves
and loss expense reserves ceded to the reinsurer. Endurance U.K. and Endurance
Bermuda are not licensed, accredited or approved in any state in the U.S. The
great majority of states, however, permit a credit to statutory surplus
resulting from reinsurance obtained from a non-licensed or non-accredited
reinsurer to be offset to the extent that the reinsurer provides a letter of
credit or other acceptable security arrangement. A few states do not allow
credit for reinsurance ceded to non-licensed reinsurers except in certain
limited circumstances and others impose additional requirements that make it
difficult to become accredited.

       We do not believe that Endurance U.K. and Endurance Bermuda are in
violation of insurance laws of any jurisdiction in the U.S. There can be no
assurance, however, that inquiries or challenges to Endurance U.K.'s or
Endurance Bermuda's reinsurance activities will not be raised in the future.

                                        75
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

       Set forth below are the names, ages and positions of the directors and
executive officers of Endurance Holdings as of the date hereof. All of our
directors hold office until the next annual meeting of our shareholders and
until their successors are duly elected and qualified. Executive officers serve
at the request of the board of directors.
NAME                                   AGE   OFFICE
----                                   ---   ------
Kenneth J. LeStrange(1)..............  45    Chairman of the Board of Directors,
                                             President, Chief Executive Officer and Director
Steven W. Carlsen....................  45    President, Endurance Reinsurance Corporation of America
James R. Kroner(2)...................  41    Chief Financial Officer and Director
David S. Cash........................  37    Chief Actuary/Chief Risk Officer
Thomas Bell..........................  47    Executive Vice President, Reinsurance Operations
William H. Bolinder(4)...............  59    Director
David L. Cole(3).....................  55    Director
Jonathan J. Coslet(4)................  38    Director
Anthony J. DiNovi(4).................  40    Director
Bryon Ehrhart(1).....................  38    Director
Charles Froland(2)...................  54    Director
Richard Perry(3).....................  47    Director
Robert A. Spass(3)...................  46    Director
Richard J. Sterne(2).................  56    Director
------------
(1) Denotes Class I Director with term expiring in 2003.
(2) Denotes Class II Director with term expiring in 2004.
(3) Denotes Class III Director with term expiring in 2005.
(4) Denotes Class IV Director with term expiring in 2006.

       Set forth below is certain information concerning our directors and
executive officers as of the date of this prospectus. At least three independent
directors will serve on our Audit Committee. No later than      months after we
are listed on the NYSE, our board of directors will appoint      additional
directors that will satisfy the requirements for independent directors contained
in the rules governing companies listed on the NYSE.

       Kenneth J. LeStrange has been our Chairman, President and Chief Executive
Officer since the Company's formation. Mr. LeStrange has over twenty-four years
of experience in property and casualty underwriting. He has significant
experience as a treaty and facultative underwriter and manager of treaty
underwriting operations at Swiss Reinsurance Company and American Re
Corporation. He began his underwriting career with Hartford Insurance Group and
held several underwriting management positions at Swiss Re. During his tenure at
American Re from 1984 to December 1997, he served as Executive Vice President of
American Re and as President of its alternative market subsidiary from 1984 to
December 1997, Am Re Managers, Inc. In December 1997, he joined Aon Corporation
as Chairman and CEO of its alternative market operations and was later named
Chairman and CEO of Aon's retail brokerage operations for the Americas. Mr.
LeStrange remained with Aon until he joined us in 2001.

       Steven W. Carlsen became the President of Endurance U.S. in November
2002. From the Company's formation until assuming this new position, Mr. Carlsen
was the Company's Chief Underwriting Officer. Mr. Carlsen began his career as a
property facultative underwriter in 1979 and later as a treaty account executive
for Swiss Reinsurance Company. He joined NAC Re in 1986, ultimately heading
their Property and Miscellaneous Treaty Department (which includes aviation,
marine, surety and

                                        76
finite business). He managed NAC Re's retrocessions and was involved in the
formation of their U.K. company. In 1994, Mr. Carlsen left NAC Re to join CAT
Limited as their Chief Underwriter-North America and in 1997 was co-founder of
CAT Limited's finite insurer, Enterprise Re. From 1999 until he joined us in
2001, Mr. Carlsen worked with three of Morgan Stanley Private Equity's insurance
ventures, including Response Insurance and Homesite Insurance in the United
States and The Underwriter Insurance Company Ltd. in the United Kingdom. He is a
director of the Underwriter Insurance Company Ltd.

       James R. Kroner has been our Chief Financial Officer and director since
December 2002, and has been our Chief Investment Officer since December 2001.
Mr. Kroner joined us from the private equity firm, Fox Paine & Co. LLC, where he
was a Managing Director since February 2000. From 1998 to 2000, Mr. Kroner
served as a Managing Director and co-head of insurance investment banking in the
Americas at JP Morgan & Co. Incorporated. From 1997 to 1998, he was a Managing
Director and head of the insurance mergers and acquisitions practice at Salomon
Smith Barney. Prior to 1997 Mr. Kroner served as Senior Vice President,
Treasurer, and a member of the executive committee of American Re Corporation.
He is a member of the board of directors of ACMI Circon Corporation and Maxxim
Medical, Inc.

       David S. Cash has been our Chief Actuary/Chief Risk Officer since
December 2001. Mr. Cash joined us from Centre Solutions Ltd. in Bermuda where he
was a Vice President focused on structured finance and insurance programs since
1996. Mr. Cash was a member of the board of directors Centre Life
Finance -- Centre Solutions' senior settlement financing company. From 1993 to
1996, Mr. Cash was Vice President and Underwriter at Zurich Re Centre. Prior to
Zurich Re, Mr. Cash served as a consulting actuary at Tillinghast-Towers Perrin
in New York. Mr. Cash received an Msc. in mathematics from Oxford University,
which he attended as a Rhodes Scholar. Mr. Cash is a Fellow of the Casualty
Actuarial Society and a Member of the American Academy of Actuaries and is a
native of Bermuda.

       Thomas Bell has been our Executive Vice President, Reinsurance Operations
since December 2001. Prior to joining the Company, Mr. Bell spent a total of 21
years at American Re Corporation beginning in 1978, where he was most recently
Senior Vice President responsible for the Regional Middle Markets Marketing
Group. During this time, he also held various posts within American Re, ranging
from property, casualty and ocean marine treaty and facultative underwriter to
Senior Vice President and Eastern Region Manager. From 1984 to 1986, he served
as a property underwriter at North American Re Insurance Company and with the
Hartford Insurance Company in various underwriting capacities from 1973 to 1978.

       William H. Bolinder has been a director since December 2001. Mr. Bolinder
is a retired Senior Executive of Zurich Financial Services Group. He was a
member of the Group Management Board and head of the Business Development
Division Corporate and Commercial for Zurich Financial Services Group. He has
been head of the business division North America (excluding US Personal Lines)
and Latin America as well as the Corporate Customer Division of Zurich Financial
Services Group since 1998. In 1994 he was elected to the Group Executive Board
at Zurich Financial Services Group's home office and became responsible for
managing the Zurich Financial Services Group companies in the United States and
Canada as well as Corporate/Industrial Insurance, Zurich International (Group)
and Risk Engineering. Mr. Bolinder joined Zurich American Insurance Company, USA
in 1986 as Chief Operating Officer and became Chief Executive Officer in 1987.

       David L. Cole has been a director since December 2001. He has served as
Chairman, President and Chief Executive Officer of Virginia Surety Company,
Inc., Aon Corporation's principal property and casualty company serving the U.S.
domestic market since March 1995. Mr. Cole also has served as Chairman of Aon
Warranty Group, which was formed to develop and take advantage of Aon's position
in the consumer extended warranty business on a global basis. In that capacity,
Mr. Cole has been responsible for Aon's expansion into foreign markets,
including Asia, Australia, Europe and South America. Mr. Cole joined Aon
Corporation in 1976 and held numerous executive positions until 1989. From 1989
to 1994, Mr. Cole served as President of Ryan Insurance Group Europe and London
General

                                        77
Insurance Company, Ltd., Aon Corporation's principal property and casualty
company serving the European market.

       Jonathan J. Coslet has been a director since December 2001. Mr. Coslet
joined Texas Pacific Group in 1993. He is now a Senior Partner responsible for
the Texas Pacific Group's generalist and healthcare investment activities. Mr.
Coslet is also a member of Texas Pacific Group's Investment Committee and
Management Committee. Prior to joining the Texas Pacific Group, Mr. Coslet was
in the Investment Banking department of Donaldson, Lufkin & Jenrette,
specializing in leveraged acquisitions and high yield finance from 1991-1993.
Mr. Coslet serves on the board of directors of Oxford Health Plans, Inc.,
Magellan Health Services, Inc., PETCO Animal Supplies, Inc. and Brite Now
Dental.

       Anthony J. DiNovi has been a director since December 2001. Mr. DiNovi is
a Managing Director of Thomas H. Lee Advisors, LLC, the general partner of
Thomas H. Lee Partners, L.P. Mr. DiNovi joined THL in 1988. Prior to joining
THL, Mr. DiNovi was in the corporate finance departments of Goldman, Sachs & Co.
and Wertheim Schroder & Co., Inc. Mr. DiNovi is currently a director of Eye Care
Centers of America, Inc., FairPoint Communications, Inc., Fisher Scientific
International, Inc., US LEC Corp., National Waterworks, Inc., Vertis, Inc. and
various private corporations.

       Bryon Ehrhart has been a director since December 2001. Mr. Ehrhart is an
Executive Vice President of Aon Re Inc., Aon's reinsurance brokerage operations
in the United States. Mr. Ehrhart is also the President of Aon Re Services,
Inc., a division of Aon Re Inc. that provides actuarial, financial advisory, tax
planning, catastrophe modeling and other services to clients of Aon Re Inc. He
is also a Managing Director of Aon Capital Markets, a division of Aon Securities
Corporation that specializes in risk transfer securitizations and contingent
capital products. Prior to joining Aon in 1994, Mr. Ehrhart practiced for eight
years in public accounting at the firm Coopers & Lybrand, and left the firm as a
senior manager.

       Charles Froland has been a director since December 2001. Mr. Froland has
been responsible for all of General Motors Investment Management Corporation's
internally and externally managed domestic and international private market
equity and debt securities since 1998. His prior responsibility at the General
Motors Asset Management was managing director of North American Fixed Income
Investments. Before joining General Motors Asset Management in 1995, Mr. Froland
was a managing director with Stanford University Management Company.

       Richard Perry has been a director since December 2001. Mr. Perry founded
Perry Capital in 1988 and since then the firm has grown to $4.5 billion under
management. Prior to 1988, Mr. Perry developed and implemented investment
strategies in the equity trading area of Goldman, Sachs & Co. He was also an
adjunct associate professor at the Stern School of Business at New York
University. He serves as chairman of the board of directors of IOS BRANDS
(formerly FTD Corporation) and FTD.COM, and a member of the boards of trustees
of the Allen Stevenson School, Milton Academy, and Facing History and Ourselves.

       Robert A. Spass has been a director since December 2001. Mr. Spass is
Chairman of the board of directors of Capital Z Partners, Ltd., the general
partner of Capital Z, and Capital Z Management, LLC, the management company of
Capital Z, and co-founded Capital Z in 1998. Prior to 1998, Mr. Spass was the
Managing Partner and co-founder of Insurance Partners, L.P. Mr. Spass also was
President and CEO of International Insurance Advisors, Inc., the management
company of International Insurance Investors, L.P. Prior to joining
International Insurance Investors, Mr. Spass was a Director of Investment
Banking at Salomon Brothers with responsibility for corporate finance
relationships with the insurance industry. He currently serves on the board of
directors of U.S.I. Holdings Corporation, Universal American Financial Corp.,
British Marine Holdings, Ceros Group, Inc., LendingTree, Inc., Highlands
Insurance Group, Inc. and Aames Financial Corporation.

       Richard J. Sterne has been a director since November 2002. Mr. Sterne has
been a managing director of Lightyear Capital, LLC since January 2001. From 1999
until joining Lightyear, he was a managing director at PaineWebber Incorporated
in the Principal Transactions Group, responsible for the

                                        78
firm's proprietary investments. From 1995 until joining PaineWebber, Mr. Sterne
was the chairman and Chief Executive Officer of Links Securities, Inc.

COMMITTEES OF THE BOARD OF DIRECTORS

       The standing committees of the board of directors are:

       Audit Committee.  The Audit Committee is comprised of Messrs. Bolinder,
Cole, Spass and Sterne and is chaired by Mr. Spass. The Audit Committee:

              (1) reviews the audit plans and findings of the independent
                  auditors and will review the audit plans and findings of our
                  internal audit and risk review staff, and the results of
                  regulatory examinations and tracks management's corrective
                  actions plans where necessary;

              (2) reviews our accounting policies and controls, compliance
                  programs, and significant tax and legal matters;

              (3) recommends to the board the annual appointment of independent
                  auditors; and

              (4) reviews our risk management processes.

       Compensation Committee.  The Compensation Committee is comprised of
Messrs. Coslet, DiNovi, Ehrhart, Froland and Spass and is chaired by Mr. DiNovi.
This committee oversees our compensation and benefit policies, including
administration of annual bonus awards and long-term incentive plans.

       Underwriting Committee.  The Underwriting Committee is comprised of
Messrs. Bolinder, Cole and Coslet and is chaired by Mr. Bolinder. This committee
oversees our underwriting policies and approves any exceptions thereto.

       Nominating Committee.  The Nominating Committee is comprised of Messrs.
Coslet, DiNovi and Ehrhart, and nominates candidates for positions on the board
of directors.

       Investment Committee.  The Investment Committee is comprised of Messrs.
DiNovi, Ehrhart, Coslet and Perry and is chaired by Mr. Perry. This committee
establishes investment guidelines and supervises our investment activity. The
Investment Committee regularly monitors our overall investment results, reviews
compliance with our investment objectives and guidelines, and ultimately reports
the overall investment results to our board of directors. These guidelines
specify minimum criteria on the overall credit quality and liquidity
characteristics of the Company's portfolio. They include limitations on the size
of certain holdings as well as restrictions on purchasing certain types of
securities or investing in certain industries.

BOARD AND BOARD COMMITTEE DESIGNATIONS UNDER THE SHAREHOLDERS AGREEMENT

       Pursuant to the terms of our shareholders agreement, certain of our
current investors have designated the following persons to the Nominating
Committee of the board of directors who have subsequently been elected as
directors and to committees of our board:

       -     David Cole, a member of our board of directors and a member of both
             the Audit Committee and the Underwriting Committee of our board of
             directors, is the Chairman, President and Chief Executive Officer
             of Combined Specialty Insurance Co., an affiliate of Aon;

       -     Jonathan Coslet, a member of our board of directors and of the
             Compensation, Nominating and Underwriting Committees of our board
             of directors, is a senior partner of TPG;

       -     Anthony J. DiNovi, a member of our board of directors, chairman of
             the Compensation Committee of our board of directors and a member
             of the Nominating Committee and Investment Committee, is a managing
             director of Thomas H. Lee Advisors, LLC, the general partner of
             THL;

                                        79
-     Bryon Ehrhart, a member of our board of directors and a member of
             the Nominating Committee, Compensation Committee and the Investment
             Committee of our board of directors, is the Executive Vice
             President of Aon Re Inc. and President of Aon Re Services, Inc.,
             each of which are affiliates of Aon;

       -     Charles Froland, a member of our board of directors and of the
             Compensation and Investment Committees of our board of directors,
             is Managing Director of GM Asset Management;

       -     Richard Perry, a member of our board of directors and the chairman
             of the Investment Committee of our board of directors, is the
             President and Chief Executive Officer of Perry Capital;

       -     Robert A. Spass, a member of our board of directors and chairman of
             the Audit Committee and a member of the Compensation Committee of
             our board of directors, is Chairman of the Board of Directors of
             Capital Z Partners, Ltd., the general partner of Capital Z; and

       -     Richard J. Sterne, a member of our board of directors and of the
             Audit Committee of our board of directors, is a managing director
             of Lightyear Capital, LLC.

       Another of our current investors, Metro Center Investments Pte Ltd., has
similar rights to designate one director to our board of directors and to
certain committees but to date has not exercised this right.

OTHER SENIOR MANAGEMENT
OTHER SENIOR MANAGEMENT                     AGE                AREAS OF RESPONSIBILITY
-----------------------                     ---                -----------------------
Louis Adanio..............................   48   Property Individual Risk
Thomas Bell...............................   47   Treaty Reinsurance Operations
Mark Boucher..............................   43   Chief Executive Officer of Endurance U.K.
David Cabral..............................   39   Excess Casualty Insurance; Professional Lines
                                                  Insurance
William Fawcett...........................   39   Claims
Judy Hart.................................   58   Healthcare
Daniel Izard..............................   58   Aerospace
Ronald Koch...............................   53   Casualty Treaty Reinsurance
Ralph Serio...............................   50   Self Insured Risks
RobLee Womack, Jr. .......................   42   Property Per Risk Treaty Reinsurance; Property
                                                  Catastrophe
Louis Adanio -- Executive Vice President, Property Individual Risk
Underwriting.  Mr. Adanio joined the Company in December 2001 from Cambridge
Risk Technical Underwriters, a Managing General Agent focused on large and
technical commercial property risks, where he served as President and Chief
Underwriting Officer from 2000 until joining us. From 1984 to 2000, Mr. Adanio
had a 16-year career at SCOR Reinsurance Company, where he served as Senior Vice
President and as a member of the Board of Directors. Prior to SCOR, Mr. Adanio
was a practicing engineer and construction manager for commercial/industrial
construction projects.

       Mark Boucher -- Chief Executive Officer of Endurance U.K. Mr. Boucher is
head of Endurance U.K. He joined us in January 2002. He has over 20 years of
commercial insurance experience. From 1998 to January 2002, he was head of Royal
& SunAlliance's London based commercial insurance operations, which had written
premiums in excess of $1 billion and had 1,300 employees. Prior to that, Mr.
Boucher was Chief Operating Officer of Alexander Howden, where he served for 13
years.

       David V. Cabral -- Executive Vice President, Excess Casualty Insurance
and Professional Lines Insurance.  Prior to joining the Company in March 2002,
Mr. Cabral was Vice President, FinPro at Marsh USA, Inc., responsible for
management, program design, marketing and coordinating daily servicing of
clients since April 2001. Before Marsh, Mr. Cabral was National Sales and
Marketing Director,

                                        80
Diversified Risk at Fireman's Fund Insurance Company where he assisted with the
creation of offshore captive facilities and developing e-commerce initiatives.
He also held management positions at Starr Excess Liability Insurance Co., Aon
Corporation and Marsh & McLennan Companies, Inc. Mr. Cabral is a native of
Bermuda.

       William F. Fawcett -- Senior Vice President, Head of Claims.  Prior to
joining us in December 2002, Mr. Fawcett was Managing Director, Deputy General
Counsel and Head of Claims for Swiss Reinsurance Corporation in Zurich which he
joined in April 2001. From 1994 to April 2001 Mr. Fawcett served in various
claims and legal positions at the St. Paul Insurance Company, including Group
Counsel. He began his private sector career as an attorney in the law firms of
Anderson, Parkinson, Weinberg & Miller and Bromley, Brown & Walsh. Mr. Fawcett
served in the United States Marine Corps, including service as Assistant Command
Judge Advocate during Desert Storm.

       Judy M. Hart -- Executive Vice President, Hospital Liability
Operations.  Ms. Hart joined us in April 2002. She spent the past four years as
Vice President, Marketing Leader Healthcare Segment with Employers Reinsurance
Corporation. She was a member of the healthcare leadership executive committee
and was responsible for strategic planning and execution of healthcare
strategies across Employers, The Medical Protective Company and IRI Healthcare.
Prior to Employers Re, she spent most of her career at Alexander & Alexander
Services Inc. ("A&A") where she was a Managing Director. Ms. Hart had a
leadership role in the development of an A&A National Healthcare Practice and
was responsible for setting healthcare strategies.

       Daniel Izard -- Executive Vice President, Aerospace.  Mr. Izard joined
the Company in July 2002. From 2000 to July 2002, Mr. Izard was a consultant
focused on aviation insurance matters. From 1974 to 2000, Mr. Izard was with
Associated Aviation Underwriters, Inc. ("AAU"), a managing general underwriter
focused on the global aviation market, where he served as President & CEO for 15
years. At AAU, Mr. Izard led the activities of one the world's leading aviation
specialist underwriters. Mr. Izard joined AAU in 1974 and held numerous
positions including, Vice President and Director of Reinsurance Purchasing,
Senior Vice President and Director of National Accounts, and Executive Vice
President and Chief Operating Officer. Mr. Izard is currently a trustee of
Embry-Riddle Aeronautical University and a member of the Board of Advisors of
Duncan Aviation, Inc.

       Ronald Koch -- Senior Vice President, Casualty Treaty Reinsurance.  Mr.
Koch joined us in December 2001. He was an underwriting consultant at Gerling
Global Financial Products, Inc. from April 2001 to September 2001. Prior to
that, he was 2nd Vice President, Casualty Treaty Underwriting at Employers
Reinsurance Corporation, where he managed a $200 million book of casualty treaty
business consisting of higher hazard working layer and excess business. Mr. Koch
also spent 18 years at Swiss Reinsurance Company, where he undertook a range of
duties, including Vice President, Casualty Treaty. He began his career in the
commercial casualty underwriting department of Home Insurance.

       Ralph Serio -- Executive Vice President, Self Insured Risks.  Mr. Serio
joined us in February 2002. From 1998 to 2001 he was the President and Chief
Operating Officer of Custom Risk Solutions LLC. Prior to Custom Risk Solutions,
he was corporate Senior Vice President of American Re Corporation and Executive
Vice President of its alternative market subsidiary, Am-Re Managers, Inc. for
five years. He led American Alternatives Insurance Company, American Re's
admitted carrier and its E&S lines carrier, Princeton Excess and Surplus Lines
Insurance Company, where he served as Chief Operating Officer for both
companies. He was also responsible for managing American Alternative Managers,
Inc. ("AAMI"), American Re's captive management company.

       RobLee Womack, Jr. -- Senior Vice President, Property Per Risk Treaty
Reinsurance and Property Catastrophe.  Mr. Womack joined us in February 2002.
From 1998 to 2002, Mr. Womack was a Senior Vice President at Lehman Re Ltd.,
where he was responsible for producing and underwriting a worldwide catastrophe
portfolio suitable for capital market solutions. In 1993, Mr. Womack relocated
to Bermuda as Senior Vice President at CNA Bermuda Services. Mr. Womack spent
ten years of his career at CNA Insurance Company. He began with CNA as Assistant
Vice President responsible for accounts, targeting working layer and catastrophe
business. He was also in charge of new product development and
                                        81
production. He was instrumental with the startup of LaSalle Re Limited, where he
was in charge of model development, system analysis and marketing and yearly
projections.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 COMPENSATION OF DIRECTORS

       Directors do not receive any compensation for their services as directors
but are reimbursed for out of pocket expenses incurred in connection with their
services to the Company.

 EXECUTIVE COMPENSATION

       Because Endurance Bermuda commenced operations on December 17, 2001, we
did not pay any executive officer compensation in excess of $100,000 during the
period from November 30, 2001 (inception) through December 31, 2001. Our Chief
Executive Officer, Kenneth J. LeStrange, was employed by us from December 14,
2001, the date of the private placement of Endurance Bermuda's securities, and
received no compensation from us during 2001.

 EMPLOYMENT AGREEMENTS

       Kenneth J. LeStrange.  Endurance Bermuda entered into an employment
agreement with Mr. LeStrange that commenced as of December 14, 2001 and extended
through December 14, 2002 (the "Original Agreement"). It is contemplated by the
Original Agreement that we will enter into a subsequent employment agreement
with Mr. LeStrange (the "Current Agreement," and, together with the Original
Agreement, the "Agreements") which will commence as of December 14, 2002. The
Current Agreement will be substantially similar to the Original Agreement,
except that it will not contain the signing bonus, option grant, relocation
allowance or ordinary share purchase requirements discussed below. We believe
that the Compensation Committee of the board of directors will meet in January
2003 to discuss and consider the Current Agreement. The following description,
insofar as it applies to the Current Agreement, reflects the terms of such
agreement as we expect will be considered by the Compensation Committee in
January 2003.

       Under the Agreements, Mr. LeStrange serves as our Chairman, President and
Chief Executive Officer. The Agreements provide that Mr. LeStrange will receive
an annual base salary of $900,000 and an annual incentive bonus not to exceed
150% of his salary. The Original Agreement also provided for a $2,500,000
signing bonus. The amount of the signing bonus was determined after taking into
account Mr. LeStrange's options and shares of his former employer, Aon, which he
forfeited upon joining the Company. In addition, we are required to provide
medical and dental coverage for Mr. LeStrange and his eligible dependents, a
suitable pension plan under Bermuda law, as well as participation in any other
employee benefit plan made generally available to our executives. The Agreements
also entitle Mr. LeStrange to travel in a private aircraft or receive
reimbursement for first class air accommodations in connection with required
business travel and participate in an air travel club. Mr. LeStrange is entitled
to receive reimbursement for reasonable relocation expenses, other reasonable
expenses incurred during the course of his employment, a housing allowance of up
to $200,000 per annum plus the reasonable cost of maintenance of the house, a
tax gross-up for any United States income taxes he incurs by virtue of the
housing allowance or private aircraft travel, and reimbursement for memberships
in a country club.

       As a condition of employment, Mr. LeStrange was required under the
Original Agreement to purchase 100,000 ordinary shares for a total price of
$2,000,000. Such shares are subject to restrictions on transfer or other
disposition. Mr. LeStrange will forfeit these shares in the event that prior to
December 14, 2006, he is terminated for serious misconduct, voluntarily
terminates his employment or does not agree to enter into a renewal employment
agreement. In addition, on an agreed date prior to December 14, 2003, we are
required to offer Mr. LeStrange the opportunity to purchase 50,000 ordinary
shares for an aggregate purchase price of $1,000,000.

                                        82
Mr. LeStrange is also entitled to participate in the Company's stock
option plan. Under the terms of the Original Agreement, Mr. LeStrange has been
granted nonqualified stock options to purchase 1,094,092 ordinary shares of the
Company at a price of $20 per share. Mr. LeStrange may exercise these options in
their entirety on December 14, 2006. If, at the end of the Current Agreement or
any subsequent employment agreement, Mr. LeStrange is not offered further
employment, his options will be treated as having become vested with respect to
20% of the ordinary shares covered thereby on December 14, 2001, and with
respect to an additional 20% on each anniversary thereof preceding his
termination of employment. Such vested options will remain exercisable for 90
days following such termination. If, prior to December 14, 2006, Mr. LeStrange
is offered but does not agree to a new employment agreement, all of his options
will terminate. If, on or after December 14, 2006, Mr. LeStrange is offered but
does not agree to a new employment agreement, he will be entitled to exercise
his options in their entirety for 90 days following his termination of
employment.

       If Mr. LeStrange's employment ceases as a result of his death or
disability, the Current Agreement automatically terminates, and Mr. LeStrange
(or in the case of Mr. LeStrange's death, his heirs, executors and
administrators) is entitled to: (i) any accrued base salary; (ii) the
continuation of any health, medical and pension benefits in accordance with
their terms; (iii) payment of base salary in accordance with our executive
payroll policy through December 14, 2006; and (iv) full vesting of his stock
options and the right to exercise them through December 14, 2007.

       If we terminate the Current Agreement as a result of serious misconduct,
all of our obligations cease, and Mr. LeStrange will be entitled to receive
accrued salary and other ancillary benefits. If we terminate the Current
Agreement as a result of repeated misconduct, Mr. LeStrange is entitled to
receive accrued salary, $450,000 during the period commencing on Mr. LeStrange's
termination of employment and ending six months thereafter, and other ancillary
benefits. In addition, Mr. LeStrange's options will be treated as having become
vested with respect to 20% of the ordinary shares covered thereby on December
14, 2001, and with respect to an additional 20% on each anniversary thereof
preceding his termination of employment. Such vested options will remain
exercisable for 90 days following such termination.

       Finally, if Mr. LeStrange voluntarily terminates his employment, he is
entitled to accrued base salary, the continuation of any health, medical and
pension benefits in accordance with the terms of the applicable plans and
programs, and his options will terminate.

       Mr. LeStrange is also subject to non-competition provisions during the
term of the agreement, a one-year post-employment covenant not to solicit
employees or customers, and ongoing confidentiality and inventions requirements.

       Mr. LeStrange is entitled to be indemnified from any claim, loss, damage
or expense arising from the performance of his duties as an officer or director
to the extent permitted by law and Endurance Holdings' bye-laws.

STOCK OPTIONS

       The following table summarizes Mr. LeStrange's options to purchase
ordinary shares as of December 31, 2001:

  Option Grants in Last Fiscal Year
PERCENTAGE OF
                        NUMBER OF ORDINARY       TOTAL                                      GRANT DATE
                        SHARES UNDERLYING       OPTIONS       EXERCISE                       PRESENT
                             OPTIONS          GRANTED(1)     BASE PRICE   EXPIRATION DATE     VALUE
                        ------------------   -------------   ----------   ---------------   ----------
Kenneth J.
  LeStrange...........      1,094,092             41%          $20.00     August 7, 2012      $5.59
---------------

(1) Represents the total number of options the Company contractually committed
    to grant as of December 31, 2001.

                                        83
2001 Aggregated Option Exercises and Year-end Option Values
NUMBER OF SHARES UNDERLYING
                                                                UNEXERCISED OPTIONS AT
                                                                   DECEMBER 31, 2001
                                                             -----------------------------
                                                             EXERCISABLE     UNEXERCISABLE
                                                             -----------     -------------
Kenneth J. LeStrange.......................................     None           1,094,092(1)
---------------

(1) Represents the total number of options the Company contractually committed
    to grant as of December 31, 2001.

       2002 Stock Option Plan.  On August 7, 2002 our board of directors
adopted, subject to approval by our shareholders, the Endurance Specialty
Holdings Ltd. 2002 Stock Option Plan (the "2002 Option Plan"). Our employees and
officers, as well as employees and officers of our subsidiaries, in each case,
who are selected by the Compensation Committee of our board of directors or its
designee, are eligible to participate in the 2002 Option Plan. The purpose of
the 2002 Option Plan is to provide a means through which we and our
subsidiaries, as applicable, may attract able persons to enter and remain in our
and our subsidiaries' employ, and to provide a means whereby those employees
upon whom the responsibilities of our successful administration and management
rest, and whose present and potential contributions to our welfare are of
importance, can acquire and maintain share ownership, thereby strengthening
their commitment to our welfare and that of our subsidiaries, and promoting an
identity of interests between our shareholders and those employees. The 2002
Option Plan authorizes the issuance of options covering up to 3,646,975 shares,
subject to adjustment in certain circumstances. As of September 30, 2002,
options to purchase 3,287,290 shares had been granted.

       Options may be either "Incentive Stock Options" as that term is defined
in Section 422 of the Code, or options which do not qualify as Incentive Stock
Options ("Non-Qualified Stock Options"). An Incentive Stock Option must expire
within ten years from the date it is granted (five years in the case of options
granted to holders of more than 10% of our shares). Incentive Stock Options are
not exercisable until one year after the date of grant. The exercise price of an
Incentive Stock Option must be at least equal to the fair market value of the
shares on the date such Incentive Stock Option is granted (110% of fair market
value in the case of options granted to holders of more than 10% of our shares)
and must be paid in cash or in shares valued at their then fair market value. In
addition, we may grant Non-Qualified Stock options, the exercise price of which
may be below, equal to or above the fair market value of our shares on the date
of grant.

       In addition to Incentive Stock Options and Non-Qualified Stock Options,
we may grant reload options in the event a participant, while in our employ,
exercises an option by the delivery of shares which the participant has held for
a period of at least six months, or in the event a participant's tax withholding
obligations upon the exercise of options are satisfied by the participant's
delivery of shares or by our withholding shares. Such reload options entitle the
participant to purchase that number of shares equal to the number of shares so
delivered to, or withheld by, us, provided that the total number of shares
covered by reload options may not exceed the number of shares subject to the
original option. The exercise price per share subject to reload options will be
the fair market value of a share on the date such reload option is granted, and
the duration or reload options will be no longer than ten years from the date of
grant of the underlying option to which the grant of the reload option relates.
Other specific terms and conditions applicable to reload options will be
determined by the Compensation Committee.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

       Our Compensation Committee designs and approves all compensation
policies. Our policies are designed with the goal of maximizing shareholder
value over the long term. The committee believes that this goal is best realized
by utilizing a compensation program which serves to attract and retain superior
executive talent by providing management with performance-based incentives and
closely aligning the financial interests of management with those of our
shareholders. The level of compensation is based on numerous factors, including
achievement of underwriting results and financial objectives established by our
Compensation Committee and our board of directors. Incentive awards provide for
the granting to our executive officers, and certain other principal employees,
of various types of incentive awards, some of which may be stock based.

                                        84
PRINCIPAL SHAREHOLDERS

       The following table sets forth information as of September 30, 2002
regarding beneficial ownership of our common shares and the applicable voting
rights attached to such share ownership in accordance with our bye-laws by:

           - each person known by us to beneficially own on an economic basis 5%
             or more of our outstanding common shares;

           - each of our directors;

           - each of our executive officers; and

           - all of our directors and executive officers as a group.
BENEFICIAL OWNERSHIP OF    BENEFICIAL OWNERSHIP OF
                                                  PRINCIPAL SHAREHOLDERS     PRINCIPAL SHAREHOLDERS
                                                 PRIOR TO THE OFFERING(1)     AFTER THE OFFERING(1)
                                                 -------------------------   -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(2)            NUMBER      PERCENTAGE     NUMBER     PERCENTAGE
---------------------------------------          -----------   -----------   ---------   -----------
Aon Corporation(3).............................  15,459,200       26.2%
Capital Z Financial Services Fund II,
  L.P.(4)......................................   6,299,600       11.0%
Perry Partners, L.P.(5)........................   5,000,000        9.1%
Thomas H. Lee entities(6)......................  10,547,045       19.0%
Texas Pacific Group(7).........................  10,547,045       19.0%
Kenneth J. LeStrange(8)........................     100,000       *
Thomas Bell(9).................................      58,352       *
Steve W. Carlsen(9)............................      87,527       *
David S. Cash(9)...............................      58,352       *
James R. Kroner(9).............................      72,939       *
William H. Bolinder............................          --
David L. Cole(10)..............................          --
Jonathan J. Coslet(11).........................          --
Anthony J. DiNovi(12)..........................          --
Bryon Ehrhart(13)..............................      50,000       *
Charles Froland(14)............................          --
Richard Perry(15)..............................          --
Robert A. Spass(16)............................          --
Richard J. Sterne(17)..........................          --
All directors and executive officers as a
  group........................................     427,170       *
------------

 *   Less than 1%.

(1)  Includes the outstanding ordinary shares and assumes full conversion into
     ordinary shares of all outstanding class A shares and the exercise of all
     warrants outstanding for ordinary shares and class A shares as well as the
     exercise of all options vested at September 30, 2002.

     The proposed amended and restated bye-laws of Endurance Holdings generally
     provide that any shareholder owning, directly, indirectly or by
     attribution, more than 9.5% of our ordinary shares will have the voting
     rights attached to such ordinary shares reduced so that it may not exercise
     more than 9.5% of the total voting rights. See "Description of Share
     Capital -- Voting Adjustments"

(2)  Unless otherwise stated, the address for each beneficial owner is c/o
     Endurance Specialty Holdings Ltd., Crown House, 4 Par-La-Ville Road,
     Hamilton HM 08, Bermuda.

                                        85
(3)  Includes 2,170,000 ordinary shares and warrants exercisable for 785,035
     ordinary shares held by Combined Insurance Company of America; 75,000
     ordinary shares and warrants exercisable for 27,065 ordinary shares held by
     Combined Life Assurance Company of Europe Limited; 115,000 ordinary shares
     and warrants exercisable for 41,495 ordinary shares held by London General
     Insurance Company; 150,000 ordinary shares and warrants exercisable for
     54,125 ordinary shares held by Resource Life Insurance Company; 100,000
     ordinary shares and warrants exercisable for 36,085 ordinary shares held by
     Sterling Life Insurance Company, Inc.; and 8,750,000 ordinary shares and
     warrants exercisable for 3,157,395 ordinary shares held by Virginia Surety
     Company, Inc. The address of the beneficial owner is 1000 North Milwaukee
     Avenue, Sixth Floor, Glenview, Illinois 60025.

(4)  Includes 4,223,500 ordinary shares and warrants exercisable for 2,049,600
     ordinary shares held by Capital Z Financial Services Fund II, LP and 26,500
     ordinary shares held by Capital Z Financial Services Private Fund II, LP.
     The address of the beneficial owner is 54 Thompson Street, New York, New
     York 10012.

(5)  Includes 176,700 ordinary shares held by Perry European Fund, L.P.; 823,300
     ordinary shares held by Perry European Fund, Ltd.; 2,824,000 ordinary
     shares held by Perry Partners International, Inc.; and 1,176,000 ordinary
     shares held by Perry Partners, L.P. The address of the beneficial owner is
     599 Lexington Avenue, 36th Floor, New York, New York 10022.

(6)  Includes 7,708,020 ordinary shares and warrants exercisable for 421,665
     class A shares held by Thomas H. Lee (Alternative) Fund V, L.P.; 1,999,920
     ordinary shares and warrants exercisable for 109,405 class A shares held by
     Thomas H. Lee (Alternative) Parallel Fund V, L.P.; 106,210 ordinary shares
     and warrants exercisable for 5,810 class A shares held by Thomas H. Lee
     (Alternative) Cayman Fund V, L.P. 15,340 ordinary shares and warrants
     exercisable for 840 class A shares held by State Street Bank and Trust
     Company as Trustee under the 1997 Thomas H. Lee Nominee Trust; 12,350
     ordinary shares and warrants exercisable for 675 class A shares held by
     Thomas H. Lee Investors Limited Partnership; 51,750 ordinary shares and
     warrants exercisable for 2,825 class A shares held by Putnam Investments
     Employees' Securities Co. I LLC; 46,205 ordinary shares and warrants
     exercisable for 2,530 class A shares held by Putnam Investments Employees'
     Securities II LLC; and 60,205 ordinary shares and warrants exercisable for
     3,295 class A shares held by Putnam Investments Holdings, LLC. The address
     for the Thomas H. Lee (Alternative) Fund V, L.P., Thomas H. Lee
     (Alternative) Parallel Fund V, L.P. and Thomas H. Lee (Alternative) Cayman
     Fund V, L.P. is c/o Walkers, Walker House, Mary Street, George Town, Grand
     Cayman, Cayman Islands. The address for the 1997 Thomas H. Lee Nominee
     Trust and Thomas H. Lee Investors Limited Partnership is 75 State Street,
     Boston, Massachusetts 02109. The address for Putnam Investments Employees'
     Securities Company I, LLC, Putnam Investments Employees' Securities Company
     II, LLC and Putnam Investments Holdings LLC is One Post Office Square,
     Boston, Massachusetts 02109.

(7)  Includes 157,210 class A shares and warrants exercisable for 11,465 class A
     shares held by TPG Dutch Parallel III, C.V.; 781,605 class A shares and
     warrants exercisable for 42,420 class A shares held by TPG Endurance
     Investments (Cayman), L.P.; and 9,061,185 ordinary shares and warrants
     exercisable for 493,160 ordinary shares held by TPG Endurance Partners
     (Cayman), L.P. The address of the beneficial owner is 301 Commerce Street,
     Suite 3300, Fort Worth, Texas 76102.

(8)  The Company has granted Mr. LeStrange options to purchase 1,094,092
     ordinary shares. As of September 30, 2002, none of these options had
     vested. See "Compensation of Directors and Executive Officers -- Employment
     Agreements."

(9)  Represents vested options exercisable for ordinary shares as of September
     30, 2002. No additional options granted to these individuals vest within
     the 60 day period following September 30, 2002.

(10) Mr. Cole, one of our Directors, is the Chairman, President and Chief
     Executive Officer of Combined Specialty Insurance Co., an affiliate of Aon.
     Mr. Cole disclaims beneficial ownership of any of the common shares owned
     by Aon.

                                        86
(11) Mr. Coslet, one of our directors, is a senior partner of TPG. Mr. Coslet
     disclaims beneficial ownership of any of the common shares owned by TPG.

(12) Mr. DiNovi, one of our directors, is a managing director of Thomas H. Lee
     Advisors, LLC, the general partner of THL. Mr. DiNovi disclaims beneficial
     ownership of any of the common shares owned by THL.

(13) Mr. Ehrhart, one of our directors, is the Executive Vice President of Aon
     Re Inc. and President of Aon Re Services, Inc., each of which are
     affiliates of Aon. Mr. Ehrhart disclaims beneficial ownership of any of the
     common shares owned by Aon. Mr. Ehrhart has been granted an option by Aon
     to purchase 50,000 ordinary shares owned by Aon.

(14) Includes 851,940 common shares held by First Plaza Group Trust and
     1,148,060 common shares held by GM Capital Partners I, L.P. Mr. Froland,
     one of our directors, is a Managing Director of GM Asset Management. Mr.
     Froland disclaims beneficial ownership of any of the common shares owned by
     the GM entities.

(15) Mr. Perry, one of our directors, is the President and Chief Executive
     Officer of Perry Capital. Mr. Perry disclaims beneficial ownership of any
     of the common shares owned by Perry.

(16) Mr. Spass, one of our directors, is a partner at Capital Z Financial
     Services, an affiliate of Capital Z. Mr. Spass disclaims beneficial
     ownership of any of the common shares owned by Capital Z.

(17) Includes 2,500,000 common shares held by LY-Endurance, LLC. Mr. Sterne, one
     of our directors, is a managing director of Lightyear Capital, LLC, an
     affiliate of LY-Endurance. Mr. Sterne disclaims beneficial ownership of any
     of the common shares owned by LY-Endurance.

                                        87
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS AND RELATIONSHIPS WITH INITIAL INVESTORS

       Aon and Zurich participated in our initial private placement, investing
$200 million and $100 million, respectively. In addition, Aon was granted
warrants to purchase 4,099,200 ordinary shares and Zurich was granted warrants
to purchase 2,049,600 ordinary shares. On September 27, 2002, we repurchased
Zurich's interests in the Company. See "Description of Share
Capital -- Warrants."

       The Company is party to agreements with various affiliates of Aon and
Zurich as follows:

       Underwriting Activities.  In the normal course of business, the Company
       enters into reinsurance contracts with various subsidiaries of Aon and
       Zurich. Such contracts resulted in gross premiums written of $65.0
       million, losses and loss expenses of $7.5 million and acquisition
       expenses of $3.2 million for the nine months ended September 30, 2002.
       During the nine months ended September 30, 2002, affiliates of Aon
       produced 42.6% of the Company's gross premiums written. Gross premiums
       written excludes $88.6 million of gross premiums acquired from LaSalle.

       Analytical Services.  The Company utilized certain analytical services
       and licensed technology from an affiliate of Aon during the period ended
       September 30, 2002. Fees incurred of $109,000 pursuant to the agreement
       were included in general and administrative expenses.

       Financial Accounting and Administrative Services.  An affiliate of Aon
       performed certain financial accounting and administrative services for
       the Company during the period ended September 30, 2002. Fees incurred of
       $289,000 pursuant to the agreement were included in general and
       administrative expenses.

       Investment Management Services.  The Company utilized the services of a
       wholly-owned subsidiary of Zurich to perform portions of its short-term
       investment and cash management functions and provide investment
       accounting services. Under the terms of the investment management
       agreement, which is subject to the Company's investment guidelines and
       other restrictions, the Company pays a fee based on the value of its cash
       and investment portfolio. The Company expensed related investment
       management and accounting fees of $227,000 during the nine months ended
       September 30, 2002. The Company expensed related investment management
       and accounting fees of $22,000 during the period ended December 31, 2001.

       Office Services.  The Company rented office space and received limited
       administrative services from various Bermuda based subsidiaries of Zurich
       until April 5, 2002. Rent and office services fees for the nine months
       ended September 30, 2002 of $419,000 were paid and the expense is
       recorded in general and administrative expenses. Rent and office services
       fees of $40,000 were expensed during the period ended December 31, 2001.

TRANSACTIONS AND RELATIONSHIPS WITH UNDERWRITERS

       DLJ Growth Capital Overseas Partners, C.V. and Donaldson, Lufkin &
Jenrette Securities Corporation, affiliates of Credit Suisse First Boston
Corporation, one of the underwriters in this offering, invested $18.9 million
and $6.1 million, respectively, in our initial private placement.

       JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc., one of
the underwriters in this offering, participates and acts as the administrative
agent and/or a lender in our revolving credit facility and term loan facility.
J.P. Morgan Securities Inc. served as sole advisor, sole lead manager and sole
book manager in both facilities. Under these facilities, we have a revolving
credit line with a $108 million borrowing limit and have borrowed a three-year
term loan of $192 million.

                                        88
DESCRIPTION OF SHARE CAPITAL

       Prior to the completion of this offering, we intend to amend and restate
the bye-laws of Endurance Holdings. Our board of directors has approved the
submission of these proposed amended and restated bye-laws to a vote of our
existing shareholders. The following summary of our proposed amended and
restated bye-laws is qualified in its entirety by the provisions of such
bye-laws, copies of which will be filed as exhibits to the registration
statement of which this prospectus is a part once they have been approved by our
existing shareholders. As of September 30, 2002, there were 55 record holders of
our ordinary shares, 2 record holders of our class A shares, 8 record holders of
warrants currently exercisable for ordinary shares and 10 record holders of
warrants currently exercisable for class A shares.

       Endurance Holdings has authorized share capital of 120,000,000 shares,
par value $1.00 per share, of which 54,061,185 ordinary shares and 938,815 class
A shares had been issued as of September 30, 2002 after giving effect to the
share premium issuance in December 2002. In this prospectus, references to
common shares refer to both the ordinary shares and the class A shares.
Immediately after completion of this offering,        ordinary shares (
ordinary shares if the underwriters exercise their over-allotment option in
full) and 938,815 class A shares will be outstanding. The following summary of
our share capital is qualified in its entirety by reference to our memorandum of
association and bye-laws, the shareholders agreement, the registration rights
agreement and the warrants, copies of which will be filed as an exhibit to the
registration statement.

         ORDINARY SHARES

       In general, subject to the adjustments regarding voting set forth in
"-- Voting Adjustments" below, holders of our ordinary shares have one vote for
each ordinary share held by them and are entitled to vote, on a non-cumulative
basis, at all meetings of shareholders. Holders of our ordinary shares are
entitled to receive dividends as may be lawfully declared from time to time by
our board of directors. Holders of our ordinary shares have no preemptive,
redemption, conversion or sinking fund rights. In the event of our liquidation,
dissolution or winding-up, the holders of our ordinary shares are entitled to
share equally and ratably in our assets, if any remain after the payment of all
our debts and liabilities and the liquidation preference of any outstanding
preferred shares.

       Pursuant to our shareholders agreement, certain of our shareholders have
certain rights with respect to the nomination of directors for election by all
shareholders of Endurance Holdings. See "Shareholders Agreement."

         CLASS A SHARES

       Holders of our class A shares have the same rights as the holders of
ordinary shares, except that they have no right to vote on any matters put
before the shareholders of Endurance Holdings. The holders of class A shares may
convert their class A shares into ordinary shares at any time, provided that
certain voting percentage limits are not breached and that adverse tax
consequences to Endurance Holdings do not result from such conversion.

         VOTING ADJUSTMENTS

       In general, and except as provided below, shareholders have one vote for
each ordinary share held by them and are entitled to vote, on a non-cumulative
basis, at all meetings of shareholders. If, and so long as, the "controlled
shares" (as defined below) of any person would otherwise represent more than
9.5% of the voting power of all of the shares entitled to vote generally at a
meeting of shareholders, then the votes conferred by the shares of such person's
"control group" (as defined below) shall be reduced by whatever amount is
necessary so that after any such reduction the votes conferred by the controlled
shares of such person shall not exceed such 9.5% limitation. The reduction in
votes is generally to be applied proportionately among all shareholders who are
members of the first shareholder's "control group". "Controlled shares" in
reference to any person means all ordinary shares that a person is deemed to own
directly, indirectly (within the meaning of Section 958(a) of the Code) or, in
the case of a U.S. person
                                        89
(as defined in our bye-laws), constructively (within the meaning of Section
958(b) of the Code). "Control group" means, with respect to any person, all
shares directly owned by such person and all shares directly owned by each other
shareholder any of whose shares are included in the controlled shares of such
person.

       In addition, if, and so long as, the shares held directly by any "related
group" would otherwise exceed the 9.5% limitation, then the votes conferred by
the shares held directly by members of such "related group" shall be reduced by
whatever amount is necessary so that after any such reduction the votes
conferred by the shares held directly by such related group shall not exceed the
9.5% limitation. The reduction in votes is generally to be applied
proportionately among all directly held shares of such related group. "Related
group" means a group of shareholders that are investment vehicles and are under
common control or management.

       For purposes of applying these provisions, shareholders will be entitled
to direct that our board (i) treat them (and certain affiliates) as U.S.
persons, and/or (ii) treat them (and certain related shareholders) as one person
for purposes of determining a shareholder's control group.

       The amount of any reduction of votes that occurs by operation of the
above limitations will generally be allocated proportionately among all other
shareholders of Endurance Holdings. Consequently, under these provisions certain
shareholders may have their voting rights limited to less than one vote per
share, while other shareholders may have voting rights in excess of one vote per
share.

       In addition, our board may adjust a shareholder's voting rights to the
extent that the board reasonably determines in good faith that it is necessary
to do so to avoid adverse tax consequences or materially adverse legal or
regulatory treatment to us, any subsidiary or any shareholder or its affiliates.
This adjustment may result in a shareholder having voting rights in excess of
one vote per share. Therefore, a shareholder's voting rights might increase
above 5% of the aggregate voting power of the outstanding ordinary shares,
thereby possibly resulting in the shareholder becoming a reporting person
subject to Schedule 13D or 13G filing requirements under the Exchange Act. In
addition, the reallocation of your votes could result in you becoming subject to
filing requirements under Section 16 of the Exchange Act. The bye-laws of
Endurance Holdings also provide that shareholders will be notified of their
voting interests prior to any vote to be taken by the shareholders.

       We also have the authority under our bye-laws to request information from
any shareholder for the purpose of determining whether a shareholder's voting
rights are to be reallocated pursuant to the bye-laws. If, after a reasonable
cure period, a shareholder fails to respond to our request for information or
submits incomplete or inaccurate information in response to a request by us,
Endurance Holdings, in its reasonable discretion, may reduce or eliminate the
shareholder's voting rights.

         SHAREHOLDERS AGREEMENT

       General.  We entered into a shareholders agreement with all of our
existing shareholders at the time of the exchange offer in July of 2002. Except
for specific provisions described below which survive termination under certain
conditions, the shareholders agreement will generally terminate upon the
earliest of (i) this initial public offering, (ii) consent among us and holders
of 75% of the aggregate number of our shares outstanding held by parties to the
agreement at the time or (iii) our liquidation or dissolution.

       The shareholders agreement, together with the bye-laws, define the rights
and obligations of existing shareholders party to the shareholders agreement
with respect to our corporate governance, the transfer of our ordinary shares
and related matters. The shareholders agreement may be amended only with our
consent and the consent of the holders of at least 66 2/3% of the ordinary
shares held by shareholders and warrant holders who are parties to that
agreement. Amendments require the prior written consent of each shareholder or
warrant holder who is a party to the shareholders agreement if such amendment or
waiver would (i) rescind, alter, amend or waive any of the provisions governing
the requirements for amending or waiving the agreement, (ii) provide a benefit
to the consenting shareholders and/or warrant holders not shared on a
proportionate basis with all shareholders and/or warrant holders at

                                        90
that time or (iii) operate to the detriment of the shareholders and/or warrant
holders that do not consent relative to the shareholders and/or warrant holders
that do consent.

       Composition of Board and Board Committees.  Pursuant to the shareholders
agreement, affiliates of Aon, THL, TPG, GM, Lightyear Capital, Capital Z, Perry
Capital and Metro Center Investments Pte Ltd. have the right to designate,
through the Nominating Committee of the board of directors, nine of the twelve
members of our board of directors. In addition, the shareholders agreement
requires the establishment of a nominating committee of our board of directors
comprised of three directors, with each of Aon, THL and TPG having the right to
designate one member of this committee. The shareholders agreement also sets the
size of the underwriting committee of the board of directors at three, with THL
and TPG having the right to designate two of these members. Finally, the
shareholders agreement also requires the establishment of an audit committee and
a compensation committee, each of which must have at least one member designated
by each of Aon, Capital Z, THL and TPG, provided that Aon and Capital Z cannot
designate a majority of the members of these committees. See
"Management -- Board and Board Committee Designations."

         REGISTRATION RIGHTS AGREEMENT

       We entered into a registration rights agreement in conjunction with our
exchange offer in July of 2002 with all of our existing shareholders at the
time. Pursuant to the terms of this agreement, after the consummation of this
offering, shareholders that collectively hold at least 10% of the securities
eligible for registration rights outstanding as of the date of the agreement
will have the rights to require us, subject to specified exceptions, on five
occasions, to register under the Securities Act any common shares owned by such
shareholders. Under certain circumstances, after the consummation of this
offering, if we propose to register the sale of any of our securities under the
Securities Act, shareholders who are a party to the registration rights
agreement and so request will have the right to participate proportionately in
such sale.

       If the managing underwriters advise us that, in their opinion, the number
of securities requested to be included in an offering pursuant to the
shareholders agreement exceeds the number which can be sold without adversely
affecting the marketability of the offering and within a price range acceptable
to the holders of a majority of the securities requesting registration, we will
first include those securities requested to be included, that in the opinion of
the underwriters, can be sold without adversely affecting the marketability of
the offering, pro rata among the holders thereof on the basis of the amount of
securities owned by each holder. Under certain circumstances, we may postpone
the filing or the effectiveness of a registration statement if we reasonably
believe that, in the absence of such postponement, we would be required under
state or federal securities laws to disclose any material non-public
information.

       The registration rights agreement also provides, that as required by the
managing underwriters, neither we, nor the existing shareholders party to that
agreement, will offer, sell, or otherwise dispose of any ordinary shares or
other securities convertible or exchangeable for ordinary shares for 180 days
after the effective date of the registration statement for this offering or, in
the case of all other offerings, 90 days following the date of the corresponding
underwriting agreement.

         BYE-LAWS

       In addition to the provisions of the bye-laws described above under
"-- Voting Adjustments," the following summarizes some of the other important
provisions of the proposed amended and restated bye-laws of Endurance Holdings.

       Our Board of Directors and Corporate Action.  Endurance Holdings'
bye-laws provide that the board of directors shall consist of not less than two
nor more than 20 directors, as determined by the shareholders at an annual
general meeting of the shareholders, divided into four approximately equal
classes. Pursuant to the shareholders agreement, our board of directors consists
of 12 directors. The board of directors has three Class I directors whose
initial term expires at our next annual meeting, three Class II directors whose
initial term expires at the annual shareholders' meeting in the year following
our next annual shareholders' meeting, three Class III directors whose initial
term expires at the annual
                                        91
shareholder meeting in the second year following our next annual meeting and
three Class IV directors whose initial term expires at the annual shareholders'
meeting in the third year following our next annual shareholders' meeting. After
the initial terms of these directors, the term of each class of directors
elected shall be four years. Directors may only be removed prior to the
expiration of such director's term at a special meeting of shareholders called
for that purpose. The appointment or removal of a director requires the simple
majority of votes cast, in person or by proxy, at the general meeting at which
the proposal is put forth.

       A special meeting of shareholders may be convened by Endurance Holdings'
board of directors or the President of Endurance Holdings. Pursuant to the
Companies Act a special meeting of shareholders may also be convened at the
request of shareholders holding at the date of the deposit of the request not
less than 10% of the paid up voting share capital of Endurance Holdings.

       Generally, the affirmative vote of a majority of the directors present at
any meeting at which a quorum is present shall be required to authorize
corporate action. Corporate action may also be taken by a unanimous written
resolution of the board of directors without a meeting. Unless otherwise fixed
at a different number, a majority of the directors in office shall constitute a
quorum, but in no event may a quorum consist of less than two directors.

       Shareholder Action.  At any general meeting, four or more persons present
in person or by proxy and representing more than 50% of our shareholders'
aggregate voting power shall constitute a quorum for the transaction of
business. In general, any action that we may take by resolution in a general
meeting may, without a meeting, be taken by a resolution in writing signed by
all of the shareholders entitled to attend such meeting and vote on the
resolution. In general, any question proposed for the consideration of the
shareholders at any general meeting shall be decided by the affirmative votes of
a majority of the votes cast in accordance with the bye-laws.

       Acquisition of Ordinary Shares by Endurance Holdings.  Endurance
Holdings' bye-laws provide that we have the option, but not the obligation, to
require a shareholder to sell its ordinary shares for their fair market value to
us, to other shareholders or to third parties if we determine, based on the
written advice of legal counsel, that failure to exercise our option would
result in adverse tax consequences to us or certain U.S. Persons as to which the
shares held by such shareholder constitute controlled shares. Our right to
require a shareholder to sell its ordinary shares to us will be limited to the
purchase of a number of ordinary shares that will permit avoidance of those
adverse tax consequences.

       Transfer Restrictions.  Endurance Holdings' directors may decline to
register the transfer of any ordinary shares if the transfer is in favor of five
persons or more jointly, the shares have not been fully paid or the transferor
fails to comply with all applicable laws and regulations governing the transfer.
No shareholder may transfer any non-publicly traded ordinary shares unless the
transfer is approved by a majority of either the board of directors or the
appropriately delegated committee, and the transferring shareholder complies
with various other requirements, including providing the directors 30 days'
written notice, obtaining an agreement by the proposed transferee to be bound by
the terms of the shareholders agreement, obtaining a letter certifying that the
transfer may be effected without registration and that the transferee will
adhere to all applicable laws and rules. Unless such a transfer will result in
adverse tax consequences to either Endurance Holdings, its subsidiaries or
certain of its shareholders, the directors may not unreasonably withhold their
consent to any transfer.

       Tax Liability Resulting from Acts of Shareholders.  Our bye-laws provide
certain protections against adverse tax consequences to us resulting from laws
that apply to our shareholders. If a shareholder's death or non-payment of any
tax or duty payable by the shareholder, or any other act or thing involving the
shareholder, causes any adverse tax consequences to us, (i) the shareholder or
its executor or administrator is required to indemnify us against any tax
liability that we incur as a result, (ii) we will have a lien on any dividends
or any other distributions payable to the shareholder by us to the extent of the
tax liability, and (iii) if any amounts not covered by our lien on dividends and
distributions are owed to us by the shareholder as a result of our tax
liability, we have the right to refuse to register any transfer of the
shareholder's shares.
                                        92
Certain Subsidiaries.  Endurance Holdings' bye-laws require that the
boards of directors of Endurance Holdings' non-U.S. subsidiaries be comprised of
the persons who have been elected as director designees by the shareholders of
Endurance Holdings. A majority of the director designees for each of Endurance
Holdings' non-U.S. subsidiaries must be directors of Endurance Holdings.

       Endurance Holdings' shareholders will elect separate slates of director
designees for each of our non-U.S. subsidiaries. Under Endurance Holdings'
bye-laws, Endurance Holdings must vote shares it holds in its non-U.S.
subsidiaries to elect the slates of director designees as the directors of these
non-U.S. subsidiaries. Accordingly, the only persons eligible to be elected as
directors of Endurance Holdings' non-U.S. subsidiaries are those persons who
first have been elected by the shareholders of Endurance Holdings (including new
shareholders who buy ordinary shares being offered by this prospectus) as
director designees in accordance with our bye-laws (including after giving
effect to any limitation on voting rights). The bye-law provisions addressing
the removal of directors of Endurance Holdings' non-U.S. subsidiaries also
obligate Endurance Holdings to vote shares it holds in these non-U.S.
subsidiaries in favor of removal of any director designees in accordance with a
resolution duly adopted by the shareholders of Endurance Holdings.

         WARRANTS

       The following table shows the number of warrants outstanding to purchase
ordinary shares and class A shares at September 30, 2002:
WARRANTS TO      PERCENTAGE OF
                             ACQUIRE           COMMON
WARRANT HOLDER           COMMON SHARES(1)     SHARES(2)     EXERCISE PRICE      EXPIRATION
--------------           ----------------   -------------   --------------   -----------------
Aon(3).................     4,099,200             6.6%          $20.00       December 14, 2011
Capital Z(4)...........     2,049,600             3.3%           20.00       December 14, 2011
TPG(5).................       547,045             0.9%           20.00       December 14, 2001
Thomas H. Lee
  entities(6)..........       547,045             0.9%           20.00       December 14, 2001
                            ---------           -----
     Total.............     7,242,890            11.7%
------------

(1) Includes warrants exercisable for ordinary shares and warrants exercisable
    for class A shares as of September 30, 2002.

(2) Percentages are based upon 55,000,000 common shares outstanding as of
    September 30, 2002 plus 7,242,890 common shares issuable upon exercise of
    outstanding warrants, not including the exercise of options to purchase
    ordinary shares. If all outstanding warrants were immediately exercised for
    cash, Aon, TPG, Thomas H. Lee entities and Capital Z would own, on an
    economic basis, 24.8%, 16.9%, 16.9% and 10.1% of common shares outstanding,
    respectively (     %,      %,      % and      % of common shares,
    respectively, following the offering, assuming the over-allotment option is
    not exercised and the warrant holders make no additional purchases).

(3) Includes warrants exercisable for 783,035 ordinary shares held by Combined
    Insurance Company of America; warrants exercisable for 27,065 ordinary
    shares held by Combined Life Assurance Company of Europe Limited; warrants
    exercisable for 41,495 ordinary shares held by London General Insurance
    Company Limited; warrants exercisable for 54,125 ordinary shares held by
    Resource Life Insurance Company; warrants exercisable for 36,085 ordinary
    shares held by Sterling Life Insurance Company; and warrants exercisable for
    3,157,395 ordinary shares held by Virginia Surety Company, Inc.

(4) Includes warrants exercisable for 2,049,600 ordinary shares held by Capital
    Z Investments, LLC.

(5) Includes warrants exercisable for 493,160 ordinary shares held by TPG
    Endurance Partners (Cayman), L.P. Includes warrants exercisable for 11,465
    class A shares held by TPG Dutch Parallel III, C.V.; and warrants
    exercisable for 42,420 class A shares held by TPG Endurance Investments
    (Cayman), L.P.

                                        93
(6) Includes warrants exercisable for 421,665 class A shares held by Thomas H.
    Lee (Alternative) Fund V, L.P.; warrants exercisable for 109,405 class A
    shares held by Thomas H. Lee (Alternative) Parallel Fund V, L.P.; warrants
    exercisable for 5,810 class A shares held by Thomas H. Lee (Alternative)
    Cayman Fund V, L.P.; warrants exercisable for 2,530 class A shares held by
    State Street Bank and Trust Company as Trustee under the 1997 Thomas H. Lee
    Nominee Trust; warrants exercisable for 675 class A shares held by Thomas H.
    Lee Investors Limited Partnership; and warrants exercisable for 2,825 class
    A shares held by Putnam Investments Employees' Securities Company I LLC.

       The holders of warrants for ordinary shares may exercise their warrants
in whole or in part for ordinary shares or, under certain circumstances, for
class A shares. The holders of class A warrants may exercise their warrants in
whole or in part for class A shares only. Warrant holders also have the option
to exercise their warrants on a cashless basis, in which case the warrant holder
will receive a reduced number of ordinary shares or class A shares, as
applicable, which have an aggregate fair value equal to the total exercise price
of the warrant shares being purchased upon conversion. The exercise price and
number of shares issuable upon exercise of each warrant will be subject to
adjustment in respect of events that may have a dilutive effect on its
underlying share ownership interest. The registration rights agreement contains
registration rights for warrant holders similar to those applicable to holders
of our common shares. See "-- Registration Rights Agreement."

       ANTI-TAKEOVER PROVISIONS

       Endurance Holdings' bye-laws contain provisions that may entrench
directors and make it more difficult for shareholders to replace directors even
if the shareholders consider it beneficial to do so. In addition, these
provisions could delay or prevent a change of control that a shareholder might
consider favorable. For example, these provisions may prevent a shareholder from
receiving the benefit from any premium over the market price of our ordinary
shares offered by a bidder in a potential takeover. Even in the absence of an
attempt to effect a change in management or a takeover attempt, these provisions
may adversely affect the prevailing market price of our ordinary shares if they
are viewed as discouraging changes in management and takeover attempts in the
future.

    For example, our bye-laws contain the following provisions that could have
such an effect:

    -     election of our directors is staggered, meaning that the members of
          only one of four classes of our directors are elected each year;

    -     the total voting power of any shareholder owning more than 9.5% of our
          ordinary shares will be reduced to 9.5% of the total voting power of
          our ordinary shares;

    -     our directors may, in their discretion, decline to record the transfer
          of any ordinary shares on our share register, unless the instrument of
          transfer is in favor of less than five persons jointly or if they are
          not satisfied that all required regulation approvals for such transfer
          have been obtained; and

    -     we have the option, but not the obligation, to require a shareholder
          to sell the shareholder's ordinary shares to us, to another
          shareholder or to third parties at fair market value if we determine,
          based on the advice of legal counsel, that failure to exercise such
          option would result in adverse tax consequences to us or certain U.S.
          Persons as to which the shares held by such shareholder constitute
          controlled shares.

       INSURANCE REGULATIONS CONCERNING CHANGE OF CONTROL

       Many insurance regulatory laws intended primarily for the protection of
policyholders contain provisions that require advance approval by insurance
authorities of any proposed acquisition of an insurance company that is
domiciled or, in some cases, having such substantial business that it is deemed
to be commercially domiciled in that jurisdiction. See "Regulatory
Matters -- U.K. Regulation -- Change of Control," and "Regulatory
Matters -- U.S. Regulation -- Change of Control."
                                        94
DIFFERENCES IN CORPORATE LAW

       You should be aware that the Companies Act, which applies to us, differs
in certain material respects from laws generally applicable to United States
corporations and their shareholders. In order to highlight these differences,
set forth below is a summary of certain significant provisions of the Companies
Act (including modifications adopted pursuant to our bye-laws) applicable to us
which differ in certain respects from provisions of the State of Delaware
corporate law. Because the following statements are summaries, they do not
address all aspects of Bermuda law that may be relevant to us and our
shareholders.

       Duties of Directors.  Under Bermuda law, at common law, members of a
board of directors owe a fiduciary due to the company to act in good faith in
their dealings with or on behalf of the company and exercise their powers and
fulfill the duties of their office honestly. This duty has the following
essential elements:

       -     a duty to act in good faith in the best interests of the company;

       -     a duty not to make a personal profit from opportunities that arise
             from the office of director;

       -     a duty to avoid conflicts of interest; and

       -     a duty to exercise powers for the purpose for which such powers
             were intended. The Companies Act imposes a duty on directors and
             officers of a Bermuda company:

       -     to act honestly and in good faith with a view to the best interests
             of the company; and

       -     to exercise the care, diligence and skill that a reasonably prudent
             person would exercise in comparable circumstances.

       In addition, the Companies Act imposes various duties on officers of a
company with respect to certain matters of management and administration of the
company.

       The Companies Act provides that in any proceedings for negligence,
default, breach of duty or breach of trust against any officer, if it appears to
a court that such officer is or may be liable in respect of the negligence,
default, breach of duty or breach of trust, but that he has acted honestly and
reasonably, and that, having regard to all the circumstances of the case,
including those connected with his appointment, he ought fairly to be excused
for the negligence, default, breach of duty or breach of trust, that court may
relieve him, either wholly or partly, from any liability on such terms as the
court may think fit. This provision has been interpreted to apply only to
actions brought by or on behalf of the company against such officers. Endurance
Holdings' bye-laws, however, provide that shareholders waive all claims or
rights of action that they might have, individually or in the right of Endurance
Holdings, against any director or officer of Endurance Holdings for any act or
failure to act in the performance of such director's or officer's duties, except
this waiver does not extend to any claims or rights of action that would render
the waiver void pursuant to the Companies Act, that arise out of fraud or
dishonesty on the part of such director or officer or with respect to the
recovery of any gain, personal profit or advantage to which the officer or
director is not legally entitled.

       Under Delaware law, the business and affairs of a corporation are managed
by or under the direction of its board of directors. In exercising their powers,
directors are charged with a fiduciary duty of care to protect the interests of
the corporation and a fiduciary duty of loyalty to act in the best interests of
its stockholders.

       The duty of care requires that directors act in an informed and
deliberative manner and inform themselves, prior to making a business decision,
of all material information reasonably available to them. The duty of care also
requires that directors exercise care in overseeing and investigating the
conduct of corporate employees. The duty of loyalty may be summarized as the
duty to act in good faith, not out of self-interest, and in a manner which the
director reasonably believes to be in the best interests of the stockholders.

                                        95
A party challenging the propriety of a decision of a board of directors
bears the burden of rebutting the applicability of the presumptions afforded to
directors by the "business judgment rule." If the presumption is not rebutted,
the business judgment rule attaches to protect the directors and their
decisions, and their business judgments will not be second guessed. Where,
however, the presumption is rebutted, the directors bear the burden of
demonstrating the entire fairness of the relevant transaction. Notwithstanding
the foregoing, Delaware courts subject directors' conduct to enhanced scrutiny
in respect of defensive actions taken in response to a threat to corporate
control and approval of a transaction resulting in a sale of control of the
corporation.

       Interested Directors.  Under Bermuda law and Endurance Holdings'
bye-laws, any transaction entered into by us in which a director has an interest
is not voidable by us nor can such director be accountable to us for any benefit
realized pursuant to such transaction provided the nature of the interest is
disclosed at the first opportunity at a meeting of directors, or in writing to
the directors. In addition, Endurance Holdings' bye-laws allow a director to be
taken into account in determining whether a quorum is present and to vote on a
transaction in which he has an interest, but the resolution will fail unless it
is approved by a majority of the disinterested directors voting on the
resolution. Under Delaware law, such transaction would not be voidable if (1)
the material facts as to such interested director's relationship or interests
are disclosed or are known to the board of directors and the board in good faith
authorizes the transaction by the affirmative vote of a majority of the
disinterested directors, (2) such material facts are disclosed or are known to
the stockholders entitled to vote on such transaction and the transaction is
specifically approved in good faith by vote of the majority of shares entitled
to vote thereon or (3) the transaction is fair as to the corporation as of the
time it is authorized, approved or ratified. Under Delaware law, such interested
director could be held liable for a transaction in which such director derived
an improper personal benefit.

       Voting Rights and Quorum Requirements.  Under Bermuda law, the voting
rights of our shareholders are regulated by our bye-laws and, in certain
circumstances, the Companies Act. Under our bye-laws, at any general meeting,
four or more persons present in person or by proxy and representing more than
50% of our shareholders' aggregate voting power shall constitute a quorum for
the transaction of business. In general, any action that we may take by
resolution in a general meeting may, without a meeting, be taken by a resolution
in writing signed by all of the shareholders entitled to attend such meeting and
vote on the resolution. In general, any question proposed for the consideration
of the shareholders at any general meeting shall be decided by the affirmative
votes of a majority of the votes cast in accordance with the bye-laws.

       Any individual who is a shareholder of Endurance Holdings and who is
present at a meeting may vote in person, as may any corporate shareholder which
is present by a duly authorized representative. Our bye-laws also permit votes
by proxy, provided the instrument appointing the proxy, together with evidence
of its due execution, is satisfactory to our board of directors.

       In order to avoid adverse tax consequences to us and our shareholders,
our bye-laws provide generally that any shareholder owning, directly, indirectly
or, in the case of any U.S. Person by attribution, more than 9.5% of our
ordinary shares will have the voting rights attached to such ordinary shares
reduced so that it may not exercise more than 9.5% of the total voting rights.
The reduction in votes is generally to be applied proportionately among all
shareholders who are members of the first shareholder's "control group". A
"control group" means, with respect to any person, all shares directly owned by
such person and all shares directly owned by each other shareholder any of whose
shares are included in the controlled shares of such person. "Controlled shares"
means all ordinary shares that a person is deemed to own directly, indirectly
(within the meaning of Section 958(a) of the Code), or, in the case of a U.S.
person, constructively (within the meaning of Section 958(b) of the Code). A
similar limitation is to be applied to shares held directly by members of a
"related group." A "related group" means a group of shareholders that are
investment vehicles and are under common control and management. Any reduction
in votes is generally allocated proportionately among members of the
shareholder's "control group" or "related group", as the case may be. The amount
of any reduction of votes that occurs by operation of the above limitations will
generally be reallocated proportionately among all other shareholders of
Endurance
                                        96
Holdings who were not members of these groups so long as such reallocation does
not cause any person to become a 9.5% shareholder.

       Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could
have the effect of reducing the votes of certain shareholders who would not
otherwise be subject to the 9.5% limitation by virtue of their direct share
ownership. The bye-laws of Endurance Holdings also provide that shareholders
will be notified of their voting interests prior to any vote to be taken by the
shareholders. See "-- Voting Adjustments."

       Under Delaware law, unless otherwise provided in the company's
certificate of incorporation, each stockholder is entitled to one vote for each
share of stock held by the stockholder. Delaware law provides that a majority of
the shares entitled to vote, present in person or represented by proxy,
constitutes a quorum at a meeting of stockholders. In matters other than the
election of directors, with the exception of special voting requirements related
to extraordinary transactions, the affirmative vote of a majority of shares
present in person or represented by proxy at the meeting and entitled to vote is
required for stockholder action, and the affirmative vote of a plurality of
shares is required for the election of directors.

       Dividends.  Bermuda law does not permit payment of dividends or
distributions of contributed surplus by a company if there are reasonable
grounds for believing that the company, after the payment is made, would be
unable to pay its liabilities as they become due, or the realizable value of the
company's assets would be less, as a result of the payment, than the aggregate
of its liabilities and its issued share capital and share premium accounts. The
excess of the consideration paid on issue of shares over the aggregate par value
of such shares must (except in certain limited circumstances) be credited to a
share premium account. Share premium may be distributed in certain limited
circumstances, for example to pay up for unissued shares which may be
distributed to shareholders in proportion to their holdings, but is otherwise
subject to limitation. In addition, Endurance Bermuda's ability to pay dividends
is subject to Bermuda insurance laws and regulatory constraints. See "Regulatory
Matters -- Bermuda -- Minimum Solvency Margin and Restrictions on Dividends and
Distributions."

       Under Delaware law, subject to any restrictions contained in the
company's certificate of incorporation, a company may pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and for the preceding fiscal year. Delaware law
also provides that dividends may not be paid out of net profits if, after the
payment of the dividend, capital is less than the capital represented by the
outstanding stock of all classes having a preference upon the distribution of
assets.

       Amalgamations, Mergers and Similar Arrangements.  We may acquire the
business of another Bermuda exempted company or a company incorporated outside
Bermuda when conducting such business would benefit the Company and would be
conducive to attaining the Company's objectives contained within its memorandum
of association. We may, with the approval of a majority of votes cast at a
general meeting of our shareholders at which a quorum is present, amalgamate
with another Bermuda company or with a body incorporated outside Bermuda. In the
case of an amalgamation, a shareholder may apply to a Bermuda court for a proper
valuation of such shareholder's shares if such shareholder is not satisfied that
fair value has been paid for such shares. The court ordinarily would not
disapprove the transaction on that ground absent evidence of fraud or bad faith.

       Under Delaware law, with certain exceptions, a merger, consolidation or
sale of all or substantially all the assets of a corporation must be approved by
the board of directors and a majority of the outstanding shares entitled to vote
thereon. Under Delaware law, a stockholder of a corporation participating in
certain major corporate transactions may, under certain circumstances, be
entitled to appraisal rights pursuant to which such stockholder may receive cash
in the amount of the fair value of the shares held by such stockholder (as
determined by a court) in lieu of the consideration such stockholder would
otherwise receive in the transaction.

                                        97
Takeovers.  Bermuda law provides that where an offer is made for shares
of a company and, within four months of the offer, the holders of not less than
90% of the shares which are the subject of the offer accept, the offeror may by
notice require the non-tendering shareholders to transfer their shares on the
terms of the offer. Dissenting shareholders may apply to the court within one
month of the notice objecting to the transfer. The burden is on the dissenting
shareholders to show that the court should exercise its discretion to enjoin the
required transfer, which the court will be unlikely to do unless there is
evidence of fraud or bad faith or collusion between the offeror and the holders
of the shares who have accepted the offer as a means of unfairly forcing out
minority shareholders. Delaware law provides that a parent corporation, by
resolution of its board of directors and without any stockholder vote, may merge
with any subsidiary of which it owns at least 90% of each class of capital
stock. Upon any such merger, dissenting stockholders of the subsidiary would
have appraisal rights.

       Shareholders' Suits.  The rights of shareholders under Bermuda law are
not as extensive as the rights of shareholders under legislation or judicial
precedent in many United States jurisdictions. Class actions and derivative
actions are generally not available to shareholders under the laws of Bermuda.
However, the Bermuda courts ordinarily would be expected to follow English case
law precedent, which would permit a shareholder to commence an action in our
name to remedy a wrong done to us where the act complained of is alleged to be
beyond our corporate power or is illegal or would result in the violation of our
memorandum of association or bye-laws. Furthermore, consideration would be given
by the court to acts that are alleged to constitute a fraud against the minority
shareholders or where an act requires the approval of a greater percentage of
our shareholders than actually approved it. The winning party in such an action
generally would be able to recover a portion of attorneys' fees incurred in
connection with such action. Endurance Holdings' bye-laws provide that
shareholders waive all claims or rights of action that they might have,
individually or in the right of Endurance Holdings, against any director or
officer for any action or failure to act in the performance of such director's
or officer's duties, except such waiver shall not extend to claims or rights of
action that would render the waiver void pursuant to the Companies Act, that
arise out of any fraud or dishonesty of such director or officer or with respect
to the recovery of any gain, personal profit or advantage to which the officer
or director is not legally entitled. Class actions and derivative actions
generally are available to stockholders under Delaware law for, among other
things, breach of fiduciary duty, corporate waste and actions not taken in
accordance with applicable law. In such actions, the court generally has
discretion to permit the winning party to recover attorneys' fees incurred in
connection with such action.

       Indemnification of Directors and Officers.  Under Bermuda law and
Endurance Holdings' bye-laws, Endurance Holdings may indemnify its directors,
officers or any other person appointed to a committee of the board of directors
and any resident representative (and their respective heirs, executors or
administrators) against all actions, costs, charges, liabilities, loss, damage
or expense to the full extent permitted by law, incurred or suffered by such
person by reason of any act done, conceived in or omitted in the conduct of our
business or in the discharge of his/her duties; provided that such
indemnification shall not extend to any matter involving any fraud or dishonesty
on the part of such director, officer or other person. Under Delaware law, a
corporation may indemnify a director or officer of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in defense of an action, suit or
proceeding by reason of such position if (i) such director or officer acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and (ii) with respect to any criminal action
or proceeding, such director or officer had no reasonable cause to believe his
conduct was unlawful.

       Inspection of Corporate Records.  Members of the general public have the
right to inspect our public documents available at the office of the Registrar
of Companies in Bermuda and our registered office in Bermuda, which will include
our memorandum of association (including its objects and powers) and any
alteration to our memorandum of association and documents relating to any
increase or reduction of authorized capital. Our shareholders have the
additional right to inspect our bye-laws, minutes of general meetings and
financial statements, which must be presented to the annual general meeting of
shareholders. The register of our shareholders is also open to inspection by
shareholders without charge,

                                        98
and to members of the public for a fee. We are required to maintain our share
register in Bermuda but may establish a branch register outside of Bermuda. We
are required to keep at our registered office a register of its directors and
officers which is open for inspection by members of the public without charge.
Bermuda law does not, however, provide a general right for shareholders to
inspect or obtain copies of any other corporate records. Delaware law permits
any shareholder to inspect or obtain copies of a corporation's shareholder list
and its other books and records for any purpose reasonably related to such
person's interest as a shareholder.

       Shareholder Proposals.  Under Bermuda law, the Companies Act provides
that shareholders may, as set forth below and at their own expense (unless a
company otherwise resolves), require a company to give notice of any resolution
that the shareholders can properly propose at the next annual general meeting
and/or to circulate a statement prepared by the requesting shareholders in
respect of any matter referred to in a proposed resolution or any business to be
conducted at a general meeting. The number of shareholders necessary for such a
requisition is either that number of shareholders representing at least 5% of
the total voting rights of all shareholders having a right to vote at the
meeting to which the requisition relates or not less than 100 shareholders.
Delaware law does not include a provision restricting the manner in which
nominations for directors may be made by shareholders or the manner in which
business may be brought before a meeting.

       Calling of Special Shareholders Meetings.  Under Endurance Holdings'
bye-laws, a special general meeting may be called by the board of directors or
by the President of Endurance Holdings. Under Bermuda law a special meeting may
also be called by the shareholders when requisitioned by the holders of at least
10% of the paid up voting share capital of Endurance Holdings as provided by the
Companies Act. Delaware law permits the board of directors or any person who is
authorized under a corporation's certificate of incorporation or bye-laws to
call a special meeting of stockholders.

       Staggered Board of Directors.  Bermuda law does not contain statutory
provisions specifically mandating staggered board of directors arrangements for
a Bermuda exempted company. Such provisions, however, may validly be provided
for in the bye-laws governing the affairs of such a company. Delaware law
permits corporations to have a staggered board of directors.

       Amendment of Memorandum of Association.  Bermuda law provides that the
memorandum of association of a company may be amended by a resolution passed at
a general meeting of shareholders of which due notice has been given. An
amendment to the memorandum of association that alters the company's business
objects may require approval of the Bermuda Minister of Finance, who may grant
or withhold approval at his or her discretion.

       Under Bermuda law, the holders of an aggregate of not less than 20% in
par value of a company's issued share capital have the right to apply to the
Bermuda courts for an annulment of any amendment of the memorandum of
association adopted by shareholders at any general meeting, other than an
amendment which alters or reduces a company's share capital as provided in the
Companies Act. Where such an application is made, the amendment becomes
effective only to the extent that it is confirmed by the Bermuda court. An
application for an annulment of an amendment of the memorandum of association
must be made within 21 days after the date on which the resolution altering the
company's memorandum of association is passed and may be made on behalf of
persons entitled to make the application by one or more of their designees as
such holders may appoint in writing for such purpose. No application may be made
by the shareholders voting in favor of the amendment.

       Under Delaware law, amendment of the certificate of incorporation, which
is the equivalent of a memorandum of association, of a company must be made by a
resolution of the board of directors setting forth the amendment, declaring its
advisability, and either calling a special meeting of the shareholders entitled
to vote or directing that the amendment proposed be considered at the next
annual meeting of the shareholders. Delaware law requires that, unless a
different percentage is provided for in the certificate of incorporation, a
majority of the voting power of the corporation is required to approve the
amendment of the certificate of incorporation at the shareholders meeting. If
the amendment would alter the number of authorized shares or par value or
otherwise adversely affect the rights or preference of any class of a company's
stock, the holders of
                                        99
the outstanding shares of such affected class, regardless of whether such
holders are entitled to vote by the certificate of incorporation, should be
entitled to vote as a class upon the proposed amendment. However, the number of
authorized shares of any class may be increased or decreased, to the extent not
falling below the number of shares then outstanding, by the affirmative vote of
the holders of a majority of the stock entitled to vote, if so provided in the
company's certificate of incorporation that was authorized by the affirmative
vote of the holders of a majority of such class or classes of stock.

       Amendment of Bye-laws.  Consistent with the Companies Act, Endurance
Holdings' bye-laws provide that the bye-laws may only be rescinded, altered or
amended, upon approval by a resolution of Endurance Holdings' board of directors
and by a simple majority of votes cast by its shareholders.

       Under Delaware law, holders of a majority of the voting power of a
corporation and, if so provided in the certificate of incorporation, the
directors of the corporation, have the power to adopt, amend and repeal the
bylaws of a corporation.

LISTING

       We intend to apply to have our ordinary shares approved for listing on
the NYSE under the trading symbol "ENH."

TRANSFER AGENT AND REGISTRAR

       The transfer agent and registrar for the ordinary shares will be
               .

                                       100
CERTAIN INDEBTEDNESS

       On August 13, 2002, Endurance Holdings entered into a $108 million
revolving credit facility with a syndicate of lenders led by The Bank of New
York, and a $192 million term loan facility with a syndicate led by JPMorgan
Chase Bank. Under the revolving credit facility, we may request up to an
additional $42 million of revolving commitments. Proceeds of the revolving
credit facility and the term loan facility may be used by us or our subsidiaries
for general corporate purposes and working capital requirements. The revolving
credit facility also provides for the issuance of standby letters of credit. The
amounts due under each facility are unsecured obligations. Endurance Holdings
guaranteed the obligations of any of our subsidiaries under the revolving credit
facility.

       The revolving credit facility requires that the outstanding principal of
revolving loans be repaid in full or converted to term loans on August 11, 2003.
The interest rate for revolving loans under the revolving credit facility is the
prime rate or LIBOR plus an applicable margin that ranges from 0.41% to 0.85%,
based upon the LEVERAGE RATIO of the Company on a consolidated basis and other
conditions provided in the credit agreement. Term loans under the revolving
credit facility must be repaid in full on February 11, 2004. The interest rate
for term loans under the revolving credit facility is an applicable margin over
the prime rate that ranges from 0.00% to 0.10% or LIBOR plus an applicable
margin that ranges from 0.66% to 1.10%, in each case based upon the Company's
leverage ratio on a consolidated basis and other conditions provided in the
credit agreement. In addition, the revolving credit facility requires payment of
a facility fee ranging from 0.09% to 0.15% of the revolving credit facility
commitments or the outstanding amount under term loans and letters of credit, as
applicable, depending upon the leverage ratio on a consolidated basis and other
conditions provided in the credit agreement. We must also pay a utilization fee
equal to 0.125% of the total amount outstanding on the revolving credit facility
or term loans, as applicable, at any time the aggregate amount of any such loans
exceeds $40 million. We are also required to pay a fee with respect to the daily
stated amount of letters of credit issued under the revolving credit facility
calculated in the same manner as the interest rate for revolving LIBOR loans. As
of September 30, 2002, we had letters of credit outstanding of $2.8 million.

       As of September 30, 2002, we had $100 million of principal outstanding
under our term loan facility. On November 21, 2002, we borrowed the remaining
$92 million available under the term loan facility. This term loan facility
requires repayment of outstanding principal in three installments. The first
installment equals 20% of all outstanding principal and is due one year after
initial borrowing under the term loan facility or September 30, 2003, whichever
occurs first. The second installment equals 40% of all outstanding principal and
is due two years after the initial borrowing or September 30, 2004, whichever
occurs first. The final installment equals all remaining outstanding principal
and is due three years after initial borrowing or September 30, 2005, whichever
occurs first. The term loan facility bears interest at either the prime rate
plus an applicable margin that ranges from 0.000% to 0.375% or LIBOR plus an
applicable margin that ranges from 0.875% to 1.375%, in each case based upon the
Company's leverage ratio on a consolidated basis and other conditions provided
in the credit agreement. Currently, the $100 million outstanding under the term
loan bears interest at the rate of 2.81% per annum; the remaining $92 million
outstanding under the term loan bears interest at 2.5% per annum. We must apply
all of the cash proceeds, net of the underwriting discount and our estimated
offering expenses, of any public debt we or any of our subsidiaries issue and
50% of the cash proceeds of any equity securities we or any of our subsidiaries
may issue to the outstanding principal of term loans outstanding under the term
loan facility. Therefore, based on an initial offering price of $          (the
midpoint of the range stated on the cover page of the prospectus), we plan to
apply approximately $          million, based on net proceeds from this offering
of approximately $          million after deducting the estimated underwriting
discount and on estimated offering expenses (assuming no exercise of the
underwriter's over-allotment option) or $          million, based on net
proceeds from this offering of $          million (assuming the full exercise of
the underwriter's over-allotment option) to the repayment of amounts outstanding
under the term loan facility.

       The revolving credit facility and the term loan facility require
compliance with certain customary restrictive covenants. These include certain
financial covenants, such as a leverage ratio (no greater than
                                       101
0.35:1.00 at any time), a consolidated tangible net worth covenant (no less than
$750 million at any time), and a consolidated fixed charge coverage ratio (no
less than 2.0:1.0 as of the end of any fiscal quarter). In addition, each of the
Company's regulated insurance subsidiaries that has a claims paying rating from
A.M. Best must maintain a rating of at least B++ at all times. The terms of
these facilities restrict the declaration or payment of dividends if the Company
is already in default or the payment or declaration would cause a default under
the terms of the loan facilities. These facilities also include other covenants
restricting such activities as:

       -     changes in business;
       -     consolidation or merger with another entity;
       -     disposal of assets;
       -     incurrence of additional indebtedness;
       -     incurrence of liens on our property;
       -     issuance of preferred or preference equity securities;
       -     dissolution or liquidation;
       -     transactions with affiliates; and
       -     changes of control.

       Endurance Holdings has entered into an interest rate swap agreement
whereby it has exchanged floating rate payments for fixed rate payments (2.62%
per annum) on a declining notional amount corresponding to the outstanding
principal amount under the term loan facility.

                                       102
SHARES ELIGIBLE FOR FUTURE SALE

       We can make no prediction as to the effect, if any, that market sales of
our ordinary shares or the availability of ordinary shares for sale will have on
the market price prevailing from time to time. The sale of substantial amounts
of ordinary shares in the public market could adversely affect the prevailing
market price of the ordinary shares and our ability to raise equity capital in
the future.

         SALE OF RESTRICTED SHARES

       As of September 30, 2002, we had an aggregate of 54,061,185 outstanding
ordinary shares and 938,815 outstanding class A shares. We expect to issue an
additional        ordinary shares to be sold in this offering, or
ordinary shares if the U.S. underwriters' over-allotment option is exercised in
full. All of the ordinary shares to be sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
except that any shares purchased by our affiliates, as that term is defined in
Rule 144 under the Securities Act, may generally only be sold in compliance with
the limitations of Rule 144 described below. As defined in Rule 144, an
affiliate of an issuer is a person that directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with
the issuer.

         LOCK-UP AGREEMENTS

       Endurance Holdings' directors, executive officers, all of its
warrantholders and certain of its current shareholders have agreed not to
directly or indirectly, dispose of or hedge any of their ordinary shares or
securities convertible into or exchangeable for ordinary shares, whether owned
currently or acquired later, for a period of 180 days from the date of this
prospectus without the prior written consent of Endurance Holdings,    and    ,
subject to certain exceptions. Immediately following this offering, shareholders
subject to lock-up agreements will own        ordinary shares and
warrants exercisable for        ordinary shares, representing approximately
     % of the then outstanding ordinary shares, or approximately      % if the
underwriters' over-allotment option is exercised in full.

       Endurance Holdings may, however, grant options to purchase ordinary
shares under its existing stock option plan and issue ordinary shares upon the
conversion of outstanding class A shares, the exercise of warrants for ordinary
shares or class A shares, or the exercise of outstanding options under the
existing stock option plan as long as the holder of such ordinary shares agrees
in writing to be bound by the obligations and restrictions of the lock-up
agreement.

         RULE 144

       In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of our ordinary shares for at least one year,
including a person who is an affiliate, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

       -     1% of the number of shares of ordinary shares then outstanding; or

       -     the average weekly trading volume of the ordinary shares on the
             NYSE during the four calendar weeks preceding the filing of a
             notice on Form 144 with respect to a sale, subject to restrictions
             specified in Rule 144.

Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about us.

         RULE 144(K)

       Under Rule 144(k), a person who has not been one of our affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell those
shares without regard to the volume, manner-of-sale or other limitations
contained in Rule 144.

                                       103
STOCK OPTIONS

       The Company had granted options to purchase a total of 438,640 ordinary
shares that were fully vested as of September 30, 2002.

       We intend to file one or more registration statements on Form S-8 under
the Securities Act to register ordinary shares issued or reserved for issuance
under our stock option plan. The first such registration statement is expected
to be filed soon after the date of this prospectus and will automatically become
effective upon filing. Accordingly, shares registered under such registration
statement will be available for sale in the open market, unless such shares are
subject to vesting restrictions with us or the lock-up restrictions described
above.

         SHAREHOLDERS AGREEMENT

       We entered into a shareholders agreement with all of our existing
shareholders at the time of the exchange offer in July of 2002. Except for
specific provisions described below which survive termination under certain
conditions, the shareholders agreement will generally terminate upon the
earliest of (i) this initial public offering, (ii) consent among us and
shareholders and warrant holders of 75% of the aggregate number of our shares
outstanding, on a fully diluted basis, held by parties to the agreement at the
time or (iii) our liquidation or dissolution.

       The shareholders agreement, together with the bye-laws, define the rights
and obligations of existing shareholders party to the shareholders agreement
with respect to the transfer of ordinary shares, our corporate governance and
related matters. The shareholders agreement may be amended only with our consent
and the consent of the holders of at least 66 2/3% of the common shares, on a
fully diluted basis, held by shareholders and warrant holders party to that
agreement. Amendments require the prior written consent of each holder or
warrant holder at the time if such amendment or waiver would (i) rescind, alter,
amend or waive any of the provisions governing the method of amending or waiving
the agreement, (ii) provide a benefit to the consenting shareholders and/or
warrant holders not shared on a proportionate basis with all shareholders and/or
warrant holders at that time or (iii) operate to the detriment of the
shareholders and/or warrant holders that do not consent relative to the
shareholders and/or warrant holders that do consent.

         REGISTRATION RIGHTS AGREEMENT

       We entered into a registration rights agreement in conjunction with our
exchange offer in July of 2002 with all of our existing shareholders at the
time. Pursuant to the terms of this agreement, after the consummation of this
offering, shareholders that collectively hold at least 10% of the securities
eligible for registration rights outstanding as of the date of the agreement
will have the rights to require us, subject to specified exceptions, on five
occasions, to register under the Securities Act any common shares owned by such
shareholders. Under certain circumstances, after the consummation of this
offering, if we propose to register the sale of any of our securities under the
Securities Act, shareholders who are a party to the registration rights
agreement and so request will have the right to participate proportionately in
such sale.

       If the managing underwriters advise us that, in their opinion, the number
of securities requested to be included in an offering pursuant to the
shareholders agreement exceeds the number which can be sold without adversely
affecting the marketability of the offering and within a price range acceptable
to the holders of a majority of the securities requesting registration, we will
first include those securities requested to be included, that in the opinion of
the underwriters, can be sold without adversely affecting the marketability of
the offering, pro rata among the holders thereof on the basis of the amount of
securities owned by each holder. Under certain circumstances, we may postpone
the filing or the effectiveness of a registration statement if we reasonably
believe that, in the absence of such postponement, we would be required under
state or federal securities laws to disclose any material non-public
information.

       The registration rights agreement also provides, that as required by the
managing underwriters, neither we, nor the existing shareholders party to that
agreement, will offer, sell, or otherwise dispose of any ordinary shares or
other securities convertible or exchangeable for ordinary shares for 180 days
after the effective date of the registration statement for this offering or, in
the case of all other offerings, 90 days following the date of the corresponding
underwriting agreement.

                                       104
MATERIAL TAX CONSIDERATIONS

       This following summary does not purport to be a comprehensive discussion
of all the tax considerations that may be relevant to a decision to purchase
ordinary shares. Prospective investors should consult their professional
advisors concerning the possible tax consequences of the subscription, purchase,
ownership, sale or redemption of ordinary shares under the laws of their
countries of citizenship, residence, ordinary residence or domicile.

         CERTAIN BERMUDA TAX CONSIDERATIONS

       The following is a summary of certain Bermuda income tax considerations
under current law and is based upon the advice of Appleby Spurling & Kempe, our
Bermuda counsel.

       Currently, there is no Bermuda income, corporation or profits tax,
withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by us or our shareholders, other than shareholders
ordinarily resident in Bermuda, if any. Currently, there is no Bermuda
withholding or other tax on principal interest or dividends paid to holders of
the ordinary shares, other than holders ordinarily resident in Bermuda, if any.
There can be no assurance that we or our shareholders will not be subject to any
such tax in the future.

       Endurance Bermuda has received written assurance dated December 7, 2001
and Endurance Holdings has received written assurance dated July 18, 2002 from
the Bermuda Minister of Finance under the Exempted Undertakings Tax Protection
Act 1966 of Bermuda, as amended, that if there is enacted in Bermuda any
legislation imposing tax computed on profits or income, or computed on any
capital asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of that tax would not be applicable to
Endurance Bermuda or Endurance Holdings or to any of their respective
operations, shares, debentures or obligations until March 28, 2016; provided,
that the assurance is subject to the condition that it will not be construed to
prevent the application of such tax to people ordinarily resident in Bermuda, or
to prevent the application of any taxes payable by Endurance Bermuda or
Endurance Holdings in respect of real property or leasehold interests in Bermuda
held by them. There can be no assurance that we will not be subject to any such
tax after March 28, 2016.

         CERTAIN UNITED KINGDOM TAX CONSIDERATIONS

       Endurance U.K. is a company incorporated in the United Kingdom and is,
therefore, resident in the United Kingdom for United Kingdom corporation tax
purposes and will be subject to United Kingdom corporation tax on its worldwide
profits (including revenue profits and capital gains). The current rate of
United Kingdom corporation tax is generally 30% on profits of whatever
description. Currently, no United Kingdom withholding tax applies to dividends
paid by Endurance U.K.

         CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

       The following discussion is a summary of certain U.S. federal income tax
considerations relating to Endurance Holdings, Endurance Bermuda, Endurance U.K.
and Endurance U.S. and the ownership of our ordinary shares by investors who
acquire such shares in the offering.

       This summary is based upon the opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, U.S. counsel to Endurance Holdings ("Skadden Arps"). The advice of
such firm does not include any factual or accounting matters, determinations or
conclusions such as RPII (as defined below), amounts and computations and
amounts of components thereof or facts relating to the business or activities of
Endurance Holdings, Endurance Bermuda, Endurance U.K. and Endurance U.S. The
opinion of Skadden Arps relies upon and is premised on the accuracy of factual
statements and representations made by Endurance Holdings, Endurance Bermuda,
Endurance U.K. and Endurance U.S. concerning their respective businesses,
properties, ownership, organization, source of income and manner of operation.

       This summary is also based upon the Code, the regulations promulgated
thereunder, rulings and other administrative pronouncements issued by the IRS,
judicial decisions, the tax treaty between the
                                       105
United States and Bermuda (the "Bermuda Treaty") and the tax treaty between the
United States and the United Kingdom (the "U.K. Treaty"), all as currently in
effect, and all of which are subject to differing interpretations or to change,
possibly with retroactive effect. No assurance can be given that the IRS would
assert, or that a court would not sustain, a position contrary to any of the tax
consequences described below. No advance ruling has been or will be sought from
the IRS regarding any matter discussed in this registration statement. This
summary is for general information only, and does not purport to discuss all
aspects of U.S. federal income taxation that may be important to a particular
investor in light of such investor's investment or tax circumstances, or to
investors subject to special tax rules, such as shareholders who own directly,
or indirectly through certain foreign entities or through the constructive
ownership rules of the Code, 10% or more of the voting power or value of
Endurance Holdings, tax-exempt organizations, dealers in securities, banks,
insurance companies, persons that hold ordinary shares that are a hedge or that
are hedged against interest rate or insurance risks or that are part of a
straddle or conversion transaction, or persons whose functional currency is not
the U.S. dollar. This summary assumes that an investor will acquire our ordinary
shares in this offering and hold our ordinary shares as capital assets, which
generally means as property held for investment. Prospective investors should
consult their tax advisors concerning the consequences, in their particular
circumstances, of the ownership of ordinary shares under U.S. federal, state,
local and other tax laws.

       For U.S. federal income tax purposes and purposes of the following
discussion, a "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
the United States or under the laws of the United States or of any of its
political subdivisions, (iii) an estate the income of which is subject to U.S.
federal income tax without regard to its source or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust.

         UNITED STATES TAXATION OF ENDURANCE HOLDINGS, ENDURANCE BERMUDA,
         ENDURANCE U.K. AND ENDURANCE U.S.

       We intend to operate Endurance Holdings, Endurance Bermuda and Endurance
U.K. in such a manner that they will not be considered to be conducting business
within the United States for purposes of U.S. federal income taxation. Whether
business is being conducted in the United States is an inherently factual
determination. Because the Code, regulations and court decisions fail to
identify definitively activities that constitute being engaged in a trade or
business in the United States, there can be no assurance that the IRS will not
contend successfully that Endurance Holdings, Endurance Bermuda and/or Endurance
U.K. are or will be engaged in a trade or business in the United States. A
foreign corporation deemed to be so engaged would be subject to U.S. federal
income tax (at a current maximum rate of 35%), as well as a 30% branch profits
tax in certain circumstances, on its income which is treated as effectively
connected with the conduct of that trade or business unless the corporation is
entitled to relief under the permanent establishment provision of an applicable
tax treaty, as discussed below. Such income tax, if imposed, would be based on
effectively connected income computed in a manner generally analogous to that
applied to the income of a U.S. corporation, except that a foreign corporation
is entitled to deductions and credits only if it timely files a U.S. federal
income tax return. Endurance Holdings, Endurance Bermuda and Endurance U.K.
intend to file protective U.S. federal income tax returns on a timely basis in
order to preserve the right to claim income tax deductions and credits if it is
ever determined that they are subject to U.S. federal income tax.

       If Endurance Bermuda is entitled to the benefits under the Bermuda
Treaty, it will not be subject to U.S. federal income tax on any income found to
be effectively connected with a U.S. trade or business unless that trade or
business is conducted through a permanent establishment in the United States.
Endurance Bermuda intends to conduct its activities so as not to have a
permanent establishment in the United States, although there can be no assurance
that it will achieve this result. An insurance enterprise resident in Bermuda
generally will be entitled to the benefits of the Bermuda Treaty if (i) more
than 50% of its shares are owned beneficially, directly or indirectly, by
individual residents of the United States or

                                       106
Bermuda or U.S. citizens and (ii) its income is not used in substantial part,
directly or indirectly, to make disproportionate distributions to, or to meet
certain liabilities of, persons who are neither residents of either the United
States or Bermuda nor U.S. citizens.

       Foreign insurance companies that conduct an insurance business within the
United States must maintain a certain minimum amount of effectively connected
net investment income, determined in accordance with a formula that depends, in
part, on the amount of U.S. risk insured or reinsured by such companies. If
Endurance Bermuda is considered to be engaged in the conduct of an insurance
business in the United States and it is not entitled to the benefits of the
Bermuda Treaty, either because it fails to satisfy one of the limitations on
Bermuda Treaty benefits described above or because Endurance Bermuda is
considered to have a U.S. permanent establishment, a significant portion of
Endurance Bermuda's premium and investment income could be subject to U.S.
federal income tax. In addition, while the Bermuda Treaty clearly applies to
premium income, it is not clear whether it applies to other income, such as
investment income. If Endurance Bermuda is considered to be engaged in the
conduct of an insurance business in the United States and is entitled to the
benefits of the Bermuda Treaty, but the Bermuda Treaty is interpreted so as not
to apply to investment income, a significant portion of Endurance Bermuda's
investment income could be subject to U.S. federal income tax even if Endurance
Bermuda does not maintain a permanent establishment in the United States.

       Under the current U.K. Treaty, Endurance U.K., if entitled to the
benefits of the current U.K. Treaty, will not be subject to U.S. federal income
tax on any income found to be effectively connected with a U.S. trade or
business unless that trade or business is conducted through a permanent
establishment in the United States. Endurance U.K. intends to conduct its
activities in a manner so that it does not have a permanent establishment in the
United States, although there can be no assurance that it will achieve this
result.

       The United States and the United Kingdom have signed a new income tax
treaty which is not yet in force. As with the current U.K. Treaty, under the
provisions of the new treaty, Endurance U.K., if entitled to the benefits of the
new U.K. Treaty, will not be subject to U.S. federal income tax on any income
found to be effectively connected with a U.S. trade or business unless that
trade or business is conducted through a permanent establishment in the United
States. Endurance U.K. will be entitled to the benefits of the new U.K. Treaty
if (i) during at least half of the days during the relevant taxable period, at
least 50% of Endurance U.K.'s stock is beneficially owned, directly or
indirectly, by citizens or residents of the United States and the United
Kingdom, and less than 50% of Endurance U.K.'s gross income for the relevant
taxable period is paid or accrued, directly or indirectly, to persons who are
not U.S. or U.K. residents in the form of payments that are deductible for
purposes of U.K. taxation or (ii) with respect to specific items of income,
profit or gain derived from the United States, if such income, profit or gain is
considered to be derived in connection with, or incidental to, Endurance U.K.'s
business conducted in the United Kingdom. The new U.K. Treaty will enter into
force upon the exchange of instruments of ratification and will apply with
respect to U.S. federal income taxes for taxable periods beginning on or after
the first day of January next following the date on which the new U.K. Treaty
enters into force.

       Foreign corporations not engaged in a trade or business in the United
States are nonetheless subject to U.S. withholding tax at a rate of 30% of the
gross amount of certain "fixed or determinable annual or periodical gains,
profits and income" derived from sources within the United States (such as
dividends and certain interest on investments), subject to reduction by
applicable treaties.

       The United States also imposes an excise tax on insurance and reinsurance
premiums paid to foreign insurers or reinsurers with respect to risks located in
the United States. The rate of tax applicable to premiums paid to Endurance
Bermuda is 4% for casualty insurance premiums and 1% for reinsurance premiums.
The excise tax does not apply to premiums paid to Endurance U.K., provided that
Endurance U.K. is entitled to the benefits of the current U.K. Treaty (or to the
benefits of the new U.K. Treaty once that treaty comes into force), both as
described above, and certain other requirements are met.

                                       107
Endurance U.S. is a New York State corporation and will be subject to
taxation in the United States at regular corporate rates. Dividends paid by
Endurance U.S. Holdings Corp. to Endurance Bermuda will be subject to U.S.
withholding tax at the rate of 30%.

       Personal Holding Companies.  Endurance Holdings and/or any of its
subsidiaries could be subject to U.S. tax on a portion of its income earned from
U.S. sources if any of them are considered to be a PHC for U.S. federal income
tax purposes. A corporation generally will be classified as a PHC for U.S.
federal income tax purposes in a given taxable year if (i) at any time during
the last half of such taxable year, five or fewer individuals (without regard to
their citizenship or residency) own or are deemed to own (pursuant to certain
constructive ownership rules) more than 50% of the stock of the corporation by
value and (ii) at least 60% of the corporation's gross income, as determined for
U.S. federal income tax purposes, for such taxable year consists of "PHC
income." PHC income includes, among other things, dividends, interest,
royalties, annuities and, under certain circumstances, rents. For purposes of
the 50% test, each partner of an investment partnership who is an individual
will be treated as owning his/her proportionate share of any stock owned by the
partnership. Additionally, certain entities (such as tax-exempt organizations
and pension funds) will be treated as individuals. The PHC rules contain an
exception for foreign corporations that are classified as Foreign Personal
Holding Companies (as discussed below).

       If Endurance Holdings or any subsidiary were a PHC in a given taxable
year, such corporation would be subject to PHC tax (at the highest marginal rate
on ordinary income applicable to individuals) on its "undistributed PHC income."

       Although Endurance Holdings does not believe it or any of its
subsidiaries will be a PHC immediately following the offering, there can be no
assurance that they will not become PHCs immediately following the offering or
in the future because of factors including legal and factual uncertainties
regarding the application of the constructive ownership rules, the makeup of
Endurance Holdings' shareholder base and the gross income of Endurance Holdings
or any of its subsidiaries and other circumstances that could change the
application of the PHC rules to Endurance Holdings and its subsidiaries. In
addition, if Endurance Holdings or any of its subsidiaries were to become PHCs
there can be no assurance that the amount of PHC income will be immaterial.

         UNITED STATES TAXATION OF HOLDERS OF ORDINARY SHARES

        SHAREHOLDERS WHO ARE U.S. PERSONS

       Dividends.  Distributions with respect to ordinary shares will be treated
as ordinary dividend income to the extent of Endurance Holdings' current or
accumulated earnings and profits as determined for U.S. federal income tax
purposes, subject to the discussion below relating to the potential application
of the "controlled foreign corporation," "related person insurance income,"
"passive foreign investment company" and "foreign personal holding company"
rules. Such dividends will not be eligible for the dividends-received deduction
allowed to U.S. corporations under the Code. The amount of any distribution in
excess of the current and accumulated earnings and profits of Endurance Holdings
will first be applied to reduce a holder's tax basis in the ordinary shares, and
any amount in excess of tax basis will be treated as gain from the sale or
exchange of such holder's ordinary shares.

       Classification of Endurance Holdings, Endurance U.K. or Endurance Bermuda
as a Controlled Foreign Corporation.  Each "10% U.S. Shareholder" of a foreign
corporation that is a CFC for an uninterrupted period of 30 days or more during
a taxable year, and who owns shares in the CFC directly or indirectly through
foreign entities on the last day of the CFC's taxable year must include in its
gross income for U.S. federal income tax purposes its pro rata share of the
CFC's "subpart F income," even if the subpart F income is not distributed. A
foreign corporation is considered a CFC if "10% U.S. Shareholders" own more than
50% of the total combined voting power of all classes of voting stock of such
foreign corporation, or the total value of all stock of such corporation. A 10%
U.S. Shareholder is a U.S. Person who owns at least 10% of the total combined
voting power of all classes of stock entitled to vote of the foreign
corporation. For purposes of taking into account insurance income, a CFC also
includes

                                       108
a foreign corporation in which more than 25% of the total combined voting power
of all classes of stock (or more than 25% of the total value of the stock) is
owned by 10% U.S. Shareholders, on any day during the taxable year of such
corporation, if the gross amount of premiums or other consideration for the
reinsurance or the issuing of insurance contracts exceeds 75% of the gross
amount of all premiums or other consideration in respect of all risks. For
purposes of determining whether a corporation is a CFC, and therefore whether
the 50% (or 25%, in the case of insurance income) and 10% ownership tests have
been satisfied, "own" means owned directly, indirectly through foreign entities
or is considered as owned by application of certain constructive ownership
rules. Endurance Holdings believes that it is currently, and after the offering
that it could be, considered a CFC under the 25% ownership test. Endurance
Holdings believes, however, that due to the anticipated dispersion of its share
ownership among holders, its bye-law provisions that impose limitations on the
concentration of voting power of its voting shares, that authorize the board to
repurchase such shares under certain circumstances and other factors, no U.S.
Person that owns shares in Endurance Holdings directly or indirectly through
foreign entities should be subject to treatment as a 10% U.S. Shareholder of a
CFC. (These bye-law provisions are described in "Risk Factors -- Risks Related
to Ownership of Ordinary Shares" and "Description of Share Capital -- Bye-
laws."). There can be no assurance, however, that the IRS will not challenge the
effectiveness of these provisions for purposes of preventing CFC and 10% U.S.
Shareholder status and that a court will not sustain such challenge.

       RPII Companies.  The CFC rules also apply to certain insurance companies
that earn "related person insurance income." For purposes of applying the CFC
rules to foreign corporations that earn RPII, a different definition of
"controlled foreign corporation," as discussed below, applies.

       RPII is defined as any "insurance income" attributable to policies of
insurance or reinsurance with respect to which the person (directly or
indirectly) insured is a "RPII Shareholder" of the foreign corporation or a
"related person" to such RPII Shareholder. In general, and subject to certain
limitations, "insurance income" is income (including premium and investment
income) attributable to the issuing of any insurance or reinsurance contract
which would be taxed under the portions of the Code relating to insurance
companies if the income were the income of a domestic insurance company.

       For purposes of the RPII rules, "related person" means someone who
controls or is controlled by the RPII Shareholder or someone who is controlled
by the same person or persons which control the RPII Shareholder. "Control" is
measured by either more than 50% in value or more than 50% in voting power of
stock, applying constructive ownership principles. A corporation's pension plan
is ordinarily not a "related person" with respect to the corporation unless the
pension plan owns, directly or indirectly through the application of
constructive ownership rules, more than 50%, measured by vote or value, of the
stock of the corporation.

       For purposes of inclusion of Endurance U.K.'s or Endurance Bermuda's RPII
in the income of a RPII Shareholder, to the extent required under the RPII
rules, the term "RPII Shareholder" means any U.S. Person who owns, directly or
indirectly through foreign entities, any amount (rather than stock possessing
10% or more of the total combined voting power) of Endurance U.K.'s or Endurance
Bermuda's stock. Endurance U.K. or Endurance Bermuda will be treated as a CFC
for RPII purposes if such persons collectively own directly, indirectly through
foreign entities or by application of the constructive ownership rules 25% or
more of the stock of Endurance U.K. or Endurance Bermuda by vote or value.

       RPII Exceptions.  The special RPII rules do not apply if (i) direct or
indirect insureds and persons related to such insureds, whether or not U.S.
Persons, own, directly or indirectly, less than 20% of the voting power and less
than 20% of the value of the stock of Endurance U.K. or Endurance Bermuda, as
applicable (the "20% Ownership Exception"), (ii) RPII, determined on a gross
basis, is less than 20% of Endurance U.K.'s or Endurance Bermuda's gross
insurance income for the taxable year, as applicable (the "20% Gross Income
Exception"), (iii) Endurance U.K. or Endurance Bermuda elects to be taxed on its
RPII as if the RPII were effectively connected with the conduct of a U.S. trade
or business and to waive all treaty benefits with respect to RPII and meets
certain other requirements or (iv) Endurance

                                       109
U.K. or Endurance Bermuda elects to be treated as a U.S. corporation. Endurance
Bermuda and Endurance U.K. intend to operate in a manner that is intended to
ensure that each qualifies for the 20% Gross Income Exception. No assurances,
however, can be given that either of Endurance Bermuda or Endurance U.K. will be
successful in qualifying under this exception.

       If none of these exceptions applies, each U.S. Person who owns shares in
Endurance Holdings (and therefore, indirectly in Endurance U.K. and Endurance
Bermuda) on the last day of Endurance Holdings' taxable year, will be required
to include in its gross income for U.S. federal income tax purposes its share of
RPII of Endurance U.K. and/or Endurance Bermuda for the entire taxable year.
This inclusion will be determined as if such RPII were distributed
proportionately only to such U.S. Persons holding ordinary shares at that date.
The inclusion will be limited to the current-year earnings and profits of
Endurance U.K. or Endurance Bermuda, as applicable, reduced by the shareholder's
pro rata share, if any, of certain prior-year deficits in earnings and profits.

       Computation of RPII.  In order to determine how much RPII each of
Endurance U.K. and Endurance Bermuda has earned in each taxable year, Endurance
Holdings intends to obtain and rely upon information from Endurance U.K.'s and
Endurance Bermuda's insureds and reinsureds to determine whether any of the
insureds, reinsureds or other persons related to such insureds or reinsureds own
Endurance Holdings' ordinary shares and are U.S. Persons. Endurance Holdings may
not be able to determine whether any of the underlying insureds of the insurance
companies to which Endurance U.K. and Endurance Bermuda provide insurance or
reinsurance are U.S. shareholders or related persons to such shareholders.
Consequently, Endurance Holdings may not be able to determine accurately the
gross amount of RPII earned by Endurance U.K. or Endurance Bermuda in a given
taxable year. For any taxable year in which Endurance U.K.'s or Endurance
Bermuda's gross RPII is 20% or more of its gross insurance income for the year,
Endurance Holdings may also seek information from its shareholders to determine
whether direct or indirect owners of Endurance Holdings' ordinary shares at the
end of the year are U.S. Persons so that the RPII may be determined and
apportioned among such persons. To the extent Endurance Holdings is unable to
determine whether a direct or indirect owner of shares is a U.S. Person,
Endurance Holdings may assume that such owner is not a U.S. Person, thereby
increasing the per share RPII amount for all shareholders identified as U.S.
Persons.

       Apportionment of RPII to United States Shareholders.  Every RPII
Shareholder who owns shares of Endurance Holdings on the last day of any taxable
year of Endurance Holdings in which Endurance U.K.'s or Endurance Bermuda's, as
the case may be, RPII for that year equals or exceeds 20% of Endurance U.K.'s or
Endurance Bermuda's gross insurance income and to whom the 20% Ownership
Exception does not apply should expect that for such year it will be required to
include in gross income its share of Endurance U.K.'s or Endurance Bermuda's
RPII for the portion of the taxable year during which Endurance U.K. or
Endurance Bermuda, as the case may be, was a CFC under the RPII provisions, even
if such RPII Shareholder did not own the shares throughout such period. A RPII
Shareholder who owns Endurance Holdings' shares during the taxable year, but not
on the last day of such taxable year will not be required to include any RPII
into income, whether or not distributed.

       Basis Adjustments.  A RPII Shareholder's tax basis in its Endurance
Holdings ordinary shares will be increased by the amount of any RPII that the
shareholder includes in income. Any distributions made by Endurance Holdings out
of previously taxed RPII income will be exempt from further tax in the hands of
the RPII Shareholder. The RPII Shareholder's tax basis in its Endurance Holdings
ordinary shares will be reduced by the amount of any distributions that are
excluded from income under this rule.

       Information Reporting.  Under certain circumstances, U.S. Persons owning
stock in a foreign corporation are required to file IRS Form 5471 with their
U.S. federal income tax returns. Generally, information reporting on IRS Form
5471 is required with respect to (i) a person who is treated as a RPII
Shareholder, (ii) a 10% U.S. Shareholder of a foreign corporation that is a CFC
for an uninterrupted period of 30 days or more during any tax year of the
foreign corporation, and who owned the stock on the last of that year and (iii)
under certain circumstances, a U.S. Person who acquires stock in a foreign
corporation, and as a result thereof owns 10% or more of the voting power or
value of such foreign

                                       110
corporation, whether or not such foreign corporation is a CFC. For any taxable
year in which Endurance Holdings determines that gross RPII constitutes 20% or
more of Endurance U.K.'s or Endurance Bermuda's gross insurance income and the
20% Ownership Exception does not apply, Endurance Holdings intends to mail to
all U.S. Persons registered as holders of its ordinary shares IRS Form 5471,
completed with information from Endurance Holdings, for attachment to the U.S.
federal income tax returns of such shareholders. A tax-exempt organization that
is treated as a 10% U.S. Shareholder or a RPII Shareholder also must file IRS
Form 5471 in the circumstances described above. Failure to file IRS Form 5471
may result in penalties.

       Tax-Exempt Shareholders.  Tax-exempt entities will be required to treat
certain subpart F insurance income, including RPII, that is includible in income
by the tax-exempt entity as unrelated business taxable income.

       Dispositions of Ordinary Shares.  Subject to the discussion below
relating to the potential application of Code section 1248 or the "PFIC" rules,
any gain or loss realized by a U.S. Person on the sale or other disposition of
ordinary shares of Endurance Holdings will be subject to U.S. federal income
taxation as capital gain or loss in an amount equal to the difference between
the amount realized upon such sale or exchange and such person's tax basis in
the shares. If the holding period for these ordinary shares exceeds one year,
any gain will be subject to tax at a current maximum marginal tax rate of 20%
for individuals and 35% for corporations. Moreover, gain, if any, generally will
be U.S. source gain and generally will constitute "passive income" for foreign
tax credit limitation purposes.

       Code section 1248 provides that if a U.S. Person sells or exchanges stock
in a foreign corporation and such person owned directly, indirectly through
certain foreign entities or constructively 10% or more of the voting power of
the corporation at any time during the five-year period ending on the date of
disposition when the corporation was a CFC, any gain from the sale or exchange
of the shares will be treated as ordinary income to the extent of the CFC's
earnings and profits (determined under U.S. federal income tax principles)
during the period that the shareholder held the shares and while the corporation
was a CFC (with certain adjustments). A 10% U.S. Shareholder may in certain
circumstances be required to report a disposition of shares of a CFC by
attaching IRS Form 5471 to the U.S. federal income tax or information return
that it would normally file for the taxable year in which the disposition
occurs. Section 1248 also applies to the sale or exchange of shares in a foreign
corporation if the foreign corporation would be treated as a CFC for RPII
purposes and would be taxed as an insurance company if it were a domestic
corporation, regardless of whether the shareholder is a 10% U.S. Shareholder or
whether RPII constitutes 20% or more of the corporation's gross insurance income
or the 20% Ownership Exception applies. Existing U.S. Department of the Treasury
(the "U.S. Treasury") regulations do not address whether Code section 1248 would
apply if a foreign corporation is not a CFC but the foreign corporation has a
subsidiary that is a CFC or that would be taxed as an insurance company if it
were a domestic corporation. Prospective investors should consult their tax
advisors regarding the effects of these rules on a disposition of ordinary
shares.

       Uncertainty as to Application of RPII.  Regulations interpreting the RPII
provisions of the Code exist only in proposed form. It is not certain whether
these regulations will be adopted in their proposed form or what changes might
ultimately be made or whether any such changes, as well as any interpretation or
application of the RPII rules by the IRS, the courts or otherwise, might have
retroactive effect. Accordingly, the meaning of the RPII provisions and their
application to Endurance U.K. and Endurance Bermuda is uncertain. These
provisions include the grant of authority to the U.S. Treasury to prescribe
"such regulations as may be necessary to carry out the purposes of this
subsection, including . . . regulations preventing the avoidance of this
subsection through cross insurance arrangements or otherwise." In addition,
there can be no assurance that the IRS will not challenge any determinations by
Endurance U.K. or Endurance Bermuda as to the amount, if any, of RPII that
should be includible in income or that the amounts of the RPII inclusions will
not be subject to adjustment based upon subsequent IRS examination. Prospective
investors should consult their tax advisors as to the effects of these
uncertainties.

                                       111
Passive Foreign Investment Companies.  In general, a foreign corporation
will be a PFIC during a given year if (i) 75% or more of its gross income
constitutes "passive income" or (ii) 50% or more of its assets produce passive
income.

       If Endurance Holdings were characterized as a PFIC during a given year,
U.S. Persons owning ordinary shares would be subject to a penalty tax at the
time of the sale at a gain of, or receipt of an "excess distribution" with
respect to, their shares, unless such shareholders made a "qualified electing
fund election" or "mark-to-market" election. In general, a shareholder receives
an "excess distribution" if the amount of the distribution is more than 125% of
the average distribution with respect to the shares during the three preceding
taxable years (or shorter period during which the taxpayer held the shares). In
general, the penalty tax is equivalent to an interest charge on taxes that are
deemed due during the period the shareholder owned the shares, computed by
assuming that the excess distribution or gain (in the case of a sale) with
respect to the shares was taxed in equal portions at the highest applicable tax
rate on ordinary income throughout the shareholder's period of ownership. The
interest charge is equal to the applicable rate imposed on underpayments of U.S.
federal income tax for such period.

       For the above purposes, passive income generally includes interest,
dividends, annuities and other investment income. The PFIC statutory provisions,
however, contain an express exception for income derived in the active conduct
of an insurance business by a corporation which is predominantly engaged in an
insurance business.

       This exception is intended to ensure that income derived by a bona fide
insurance company is not treated as passive income, except to the extent such
income is attributable to financial reserves in excess of the reasonable needs
of the insurance business. Endurance Holdings expects for purposes of the PFIC
rules, that each of Endurance U.K. and Endurance Bermuda will be predominantly
engaged in an insurance business and is unlikely to have financial reserves in
excess of the reasonable needs of its insurance business. Accordingly, Endurance
Holdings believes that neither should be treated as a PFIC for U.S. federal
income tax purposes. The PFIC statutory provisions contain a look-through rule
stating that, for purposes of determining whether a foreign corporation is a
PFIC, such foreign corporation shall be treated as if it received "directly its
proportionate share of the income . . ." and as if it "held its proportionate
share of the assets . . ." of any other corporation in which it owns at least
25% by value of the shares. While no explicit guidance is provided by the
statutory language, under this look-through rule Endurance Holdings should be
deemed to own the assets and to have received the income of its insurance
subsidiaries directly for purposes of determining whether it qualifies for the
insurance exception. Consequently, Endurance Holdings believes that it should
not be treated as a PFIC for U.S. federal income tax purposes. This
interpretation of the look-through rule is consistent with the legislative
intention generally to exclude bona fide insurance companies from the
application of PFIC provision. There can be no assurance, however, that the IRS
will not challenge this position or that a court will not sustain such
challenge. Prospective investors should consult their tax advisor as to the
effects of the PFIC rules.

       Foreign Personal Holdings Companies.  A foreign corporation will be
classified as a FPHC for U.S. federal income tax purposes if, (i) at any time
during the taxable year, five or fewer individuals who are U.S. citizens or
residents own or are deemed to own (pursuant to certain constructive ownership
rules) more than 50% of all classes of the corporation's shares measured by
voting power or value and (ii) at least 60% of its gross income for the year is
FPHC income. For purposes of the 50% test, each partner of an investment
partnership who is an individual will be treated as owning his/her proportionate
share of any shares owned by the partnership. If Endurance Holdings or any of
its subsidiaries were to become FPHCs, shareholders of Endurance Holdings who
are U.S. Persons would be taxed on their proportionate share of the
"undistributed foreign personal holding company income" of each such FPHC as a
dividend, even if no cash dividend were actually paid. In such event, subsequent
cash distributions would first be treated as a tax-free return of any previously
taxed and undistributed amounts. Moreover, each shareholder who owns, directly
or indirectly, 10% or more of the value of a FPHC is required to file IRS Form
5471.

       Although Endurance Holdings does not believe it or any of its
subsidiaries will be a FPHC immediately following the offering, there can be no
assurance that they will not become FPHCs

                                       112
immediately following the offering or in the future because of factors including
legal and factual uncertainties regarding the application of the constructive
ownership rules, the makeup of Endurance Holdings' shareholder base, the gross
income of Endurance Holdings or any of its subsidiaries and other circumstances
that could change the application of the FPHC rules to Endurance Holdings and
its subsidiaries. In addition, if Endurance Holdings or any of its subsidiaries
were to become FPHCs there can be no assurance that the amount of FPHC income
will be immaterial.

       Other.  Except as discussed below with respect to backup withholding,
dividends paid by Endurance Holdings will not be subject to U.S. withholding
tax.

  SHAREHOLDERS WHO ARE NON-U.S. PERSONS

       Subject to certain exceptions, non-U.S. Persons will be subject to U.S.
federal income tax on dividend distributions with respect to, and gain realized
from the sale or exchange of, ordinary shares only if such dividends or gains
are effectively connected with the conduct of a trade or business within the
United States. Nonresident alien individuals will not be subject to U.S. estate
tax with respect to the ordinary shares.

  ALL SHAREHOLDERS

       Information reporting to the IRS by paying agents and custodians located
in the United States will be required with respect to payments of dividends on
the ordinary shares to U.S. Persons. Thus, you may be subject to backup
withholding with respect to dividends paid by such persons unless you (i) are a
corporation, non-U.S. Person or come within certain other exempt categories and,
when required, demonstrate this fact, or (ii) provide a taxpayer identification
number, certify as to no loss of exemption from backup withholding and otherwise
comply with applicable requirements of the backup withholding rules.

       Backup withholding is not an additional tax and may be credited against
your regular U.S. federal income tax liability or otherwise you may be entitled
to a refund for any such tax withheld.

PROPOSED U.S. TAX LEGISLATION

       Legislation has been introduced in the U.S. Congress intended to
eliminate certain perceived tax advantages of companies (including insurance
companies) that have legal domiciles outside the United States but have certain
U.S. connections. While there is no currently pending legislative proposal
which, if enacted, would have a material adverse effect on us, our subsidiaries
or our shareholders, it is possible that broader-based legislative proposals
could emerge in the future that could have an adverse impact on us, our
subsidiaries or our shareholders.

                                       113
UNDERWRITING

       Endurance Holdings and the underwriters named below have entered into a
purchase agreement with respect to the ordinary shares being offered. Subject to
certain conditions, each underwriter has severally agreed to purchase the number
of ordinary shares indicated in the following table. Goldman, Sachs & Co. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as joint
bookrunning managers of this offering and, together with J.P. Morgan Securities
Inc., Credit Suisse First Boston Corporation and Deutsche Bank Securities Inc.,
are acting as the representatives of the underwriters.
UNDERWRITERS                           NUMBER OF ORDINARY SHARES
                       ------------                           -------------------------
Goldman, Sachs & Co. ......................................
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated..................................
J.P. Morgan Securities Inc. ...............................
Credit Suisse First Boston Corporation.....................
Deutsche Bank Securities Inc. .............................

                                                                      --------
     Total.................................................
                                                                      ========
The underwriters are committed to take and pay for all of the ordinary
shares being offered, if any are taken, other than the ordinary shares covered
by the option described below unless and until this option is exercised.

       The underwriters are offering the ordinary shares, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of legal
matters by their counsel, including the validity of the ordinary shares, and
other conditions contained in the purchase agreement, such as the receipt by the
underwriters of officer's certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.

       If the underwriters sell more ordinary shares than the total number set
forth in the table above, the underwriters have an option to buy up to an
additional           ordinary shares from Endurance Holdings to cover such
sales. They may exercise that option for 30 days. If any ordinary shares are
purchased pursuant to this option, the underwriters will severally purchase
ordinary shares in approximately the same proportion as set forth in the table
above.

       The following table shows the per ordinary share and the total
underwriting discount to be paid to the underwriters by Endurance Holdings. Such
amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase an additional           ordinary shares.
PER       NO        FULL
                                                              SHARE   EXERCISE   EXERCISE
                                                              -----   --------   --------
Public offering price.......................................  $        $          $
Underwriting discount.......................................  $        $          $
Proceeds, before expenses, to Endurance Holdings............  $        $          $
Ordinary shares sold by the underwriters to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus. Any ordinary shares sold by the underwriters to securities dealers
may be sold at a discount of up to $     per ordinary share from the initial
public offering price. Any such securities dealers may resell any ordinary
shares purchased from the underwriters to certain other brokers or dealers at a
discount of up to $     per ordinary share from the initial public offering
price. If all the ordinary shares are not sold at the initial public offering
price, the representatives may change the offering price and the other selling
terms.

                                       114
Endurance Holdings, its directors and officers, all its warrantholders
and certain of its shareholders prior to the offering have agreed with the
underwriters not to, directly or indirectly, dispose of or hedge any of their
ordinary shares or securities convertible into or exchangeable for ordinary
shares, whether owned currently or acquired later, during the period from the
date of this prospectus continuing through the date 180 days after the date of
this prospectus, without the prior written consent of Endurance Holdings,
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
subject to certain exceptions. The Company may grant options to purchase
ordinary shares under its existing stock option plan and issue ordinary shares
upon the conversion of outstanding class A shares, the exercise of warrants for
ordinary shares or class A shares, or the exercise of outstanding options under
the existing stock option plan as long as the holder of such ordinary shares
agrees in writing to be bound by the obligations and restrictions of the lock-up
agreement. See "Shares Eligible for Future Sale" for a discussion of certain
transfer restrictions.

       Prior to this offering, there has been no public market for the ordinary
shares. The initial public offering price was determined by negotiations between
Endurance Holdings and the representatives of the underwriters. The factors
considered in determining the initial public offering price include the future
prospects of the Company and its industry in general, premiums, earnings and
other financial and operating information in recent periods, and the
price-earnings ratios, ratios of price to book value, market prices of
securities and financial and operating information of companies engaged in
activities similar to those of Endurance Holdings.

       Endurance Holdings intends to apply to have its ordinary shares approved
for listing on the NYSE under the symbol "ENH." In connection with the listing
of the ordinary shares on the NYSE, the underwriters will undertake to sell
round lots of 100 shares or more to a minimum of 2,000 beneficial owners.

       The underwriters do not expect to sell more than 5% of the ordinary
shares in the aggregate to accounts over which they exercise discretionary
authority.

       In connection with the offering, the underwriters may purchase and sell
ordinary shares in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
ordinary shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the underwriters'
option to purchase additional ordinary shares from the Company in the offering.
The underwriters may close out any covered short position by either exercising
their option to purchase additional ordinary shares or purchasing ordinary
shares in the open market. In determining the source of ordinary shares to close
out the covered short position, the underwriters will consider, among other
things, the price of ordinary shares available for purchase in the open market
as compared to the price at which they may purchase ordinary shares through the
overallotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
ordinary shares in the open market. A naked short position is more likely to be
created if the underwriters are concerned that there may be downward pressure on
the price of the ordinary shares in the open market after pricing that could
adversely affect investors who purchase in the offering. Stabilizing
transactions consist of various bids for or purchases of ordinary shares made by
the underwriters in the open market prior to the completion of the offering.

       The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased ordinary
shares sold by or for the account of such underwriter in stabilizing or short
covering transactions.

       These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the ordinary shares. As a result, the price of the
ordinary shares may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the NYSE, in the
over-the-counter market, or otherwise. Neither Endurance Holdings nor any of the
underwriters makes any representation or
                                       115
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the ordinary shares.

       Endurance Holdings estimates that its share of the total expenses of the
offering, excluding the estimated underwriting discount, will be approximately
$          .

       Endurance Holdings has agreed to indemnify the several underwriters
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments the underwriters may be required to make with respect
to these liabilities.

       The underwriters and their affiliates have from time to time, and expect
to provide in the future, investment banking and commercial banking and
financial advisory services to Endurance Holdings in the ordinary course of
business, for which they have received and may continue to receive customary
fees and commissions. An affiliate of J.P. Morgan Securities Inc. is a lender
and/or administrative agent under our revolving credit facility and term loan
facility and will receive a portion of the amounts repaid under the term loan
facility with a portion of the net proceeds of this offering. Because more than
10% of the net proceeds of the offering may be paid to affiliates of the
underwriters, this offering is being made in accordance with Rule 2710(c)(8) of
the Conduct Rules of the National Association of Securities Dealers, Inc.

       Credit Suisse First Boston Corporation, which is a member of the National
Association of Securities Dealers, owns, either directly or indirectly, or has
affiliates that own securities of Endurance Holdings and are subject to the
venture capital restrictions of the Conduct Rules. Accordingly, this offering
will be made in compliance with the applicable provisions of Rule 2710(c)(7)(C)
of the Conduct Rules. In accordance with this rule, the initial public offering
price can be no higher than that recommended by a "qualified independent
underwriter" meeting certain standards. In accordance with this requirement,
          has assumed the responsibilities of acting as a qualified independent
underwriter and recommended a price in compliance with the requirements of Rule
2720 of the Conduct Rules.           , in its role as qualified independent
underwriter, has performed due diligence investigations and reviewed and
participated in the preparation of this prospectus and the registration
statement of which this prospectus is a part.           will receive no
compensation for acting in this capacity; however, Endurance Holdings has agreed
to indemnify           for acting as a qualified independent underwriter against
specified liabilities under the Securities Act.

                                       116
LEGAL MATTERS

       Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York is
representing us in connection with this offering. The validity of the issuance
of the ordinary shares under Bermuda law will be passed upon by Appleby Spurling
& Kempe, Hamilton, Bermuda. LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited
liability partnership including professional corporations, New York, New York,
will act as counsel for the underwriters. LeBoeuf, Lamb, Greene & MacRae, L.L.P.
has in the past performed, and continues to perform, legal services for us. The
underwriters are being advised as to certain legal matters with respect to
Bermuda law by Conyers Dill & Pearman, Hamilton, Bermuda.

                                    EXPERTS

       Ernst & Young, independent auditors, have audited our consolidated
financial statements at December 31, 2001, and for the period from November 30,
2001 to December 31, 2001, as set forth in their report. We have included our
financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young's report, given on their authority as
experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

       We have filed a Registration Statement on Form S-1 with the Securities
and Exchange Commission (the "Commission") regarding this offering. This
prospectus, which is part of the registration statement, does not contain all of
the information included in the registration statement, and you should refer to
the registration statement and its exhibits to read that information. References
in this prospectus to any of our contracts or other documents are not
necessarily complete, and you should refer to the exhibits attached to the
registration statement for copies of the actual contract or document. You may
read and copy the registration statement, the related exhibits and the reports,
and other information we file with the Commission at the Commission's public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., in Washington, D.C. 20549. You can also request copies of those
documents, upon payment of a duplicating fee, by writing to the Commission.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Commission also maintains an
Internet site that contains reports, proxy and information statements and other
information regarding issuers that file with the Commission. The site's internet
address is www.sec.gov. You may also request a copy of these filings, at no
cost, by writing or telephoning us as follows:

                       Endurance Specialty Holdings Ltd.
                            Office of the Secretary
                                  Crown House
                              4 Par-la-Ville Road
                            Hamilton, HM 08 Bermuda
                                  441-278-0400

       Upon completion of this offering, we will become subject to the
informational requirements of the Exchange Act and will be required to file
reports, proxy statements and other information with the Commission. You will be
able to inspect and copy these reports, proxy statements and other information
at the public reference facilities maintained by the Commission at the address
noted above. You also will be able to obtain copies of this material from the
public reference room of the Commission as described above, or inspect them
without charge at the Commission's website.

                                       117
ENFORCEABILITY OF CIVIL LIABILITIES
         UNDER UNITED STATES FEDERAL SECURITIES LAWS AND OTHER MATTERS

       Endurance Holdings was incorporated under the laws of Bermuda. In
addition, some of its directors and officers reside outside the United States,
and all or a substantial portion of their assets and its assets are or may be
located in jurisdictions outside the United States. Therefore, it may be
difficult for investors to effect service of process within the United States
upon our non-U.S. based directors and officers or to recover against Endurance
Holdings, or such directors and officers or obtain judgments of U.S. courts,
including judgments predicated upon the civil liability provisions of the U.S.
federal securities laws against them. However, Endurance Holdings may be served
with process in the United States with respect to actions against it arising out
of or in connection with violations of U.S. federal securities laws relating to
offers and sales of ordinary shares made hereby by serving CT Corporation
System, 111 Eighth Avenue, New York, New York 10011, our U.S. agent irrevocably
appointed for that purpose.

       We have been advised by Appleby Spurling & Kempe, our Bermuda counsel,
that there is no treaty in force between the United States and Bermuda providing
for the reciprocal recognition and enforcement of judgments in civil and
commercial matters. As a result, whether a United States judgment would be
enforceable in Bermuda against us or our directors and officers depends on
whether the U.S. court that entered the judgment is recognized by the Bermuda
court as having jurisdiction over us or our directors and officers, as
determined by reference to Bermuda conflict of law rules. A judgment debt from a
U.S. court that is final and for a sum certain based on U.S. Federal securities
laws will not be enforceable in Bermuda unless the judgment debtor had submitted
to the jurisdiction of the U.S. court, and the issue of submission and
jurisdiction is a matter of Bermuda (not U.S.) law.

       In addition, and irrespective of jurisdictional issues, the Bermuda
courts will not enforce a United States Federal securities law that is either
penal or contrary to public policy. Certain remedies available under the laws of
U.S. jurisdictions, including certain remedies under U.S. federal securities
laws, would not be available under Bermuda law or enforceable in a Bermuda
court, as they would be contrary to Bermuda public policy. Further, no claim may
be brought in Bermuda against us or our directors and officers in the first
instance for violation of U.S. Federal securities laws because these laws have
no extraterritorial jurisdiction under Bermuda law and do not have force of law
in Bermuda. A Bermuda court may, however, impose civil liability on us or our
directors and officers if the facts alleged in a complaint constitute or give
rise to a cause of action under Bermuda law.

                             ---------------------

       Before this offering, we expect the BMA will have issued their permission
for the issue and free transferability of the ordinary shares being offered
pursuant to this prospectus, as long as the shares are listed on the NYSE, to
and among persons who are non-residents of Bermuda for exchange control
purposes. In addition, we will deliver to and file a copy of this prospectus
with the Registrar of Companies in Bermuda in accordance with Bermuda law. The
BMA and the Registrar of Companies accept no responsibility for the financial
soundness of any proposal or for the correctness of any of the statements made
or opinions expressed in this prospectus.

                                       118
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors..............................    F-2
Consolidated Balance Sheet at December 31, 2001.............    F-3
Consolidated Statement of Income for the period from
  November 30, 2001 to December 31, 2001....................    F-4
Consolidated Statement of Changes in Shareholders' Equity
  for the period from November 30, 2001 to December 31,
  2001......................................................    F-5
Consolidated Statement of Cash Flows for the period from
  November 30, 2001 to December 31, 2001....................    F-6
Notes to the Consolidated Financial Statements for the
  period from November 30, 2001 to December 31, 2001........    F-7
Consolidated Balance Sheets at September 30, 2002
  (unaudited) and December 31, 2001.........................   F-14
Consolidated Statement of Income and Comprehensive Income
  for the nine months ended September 30, 2002
  (unaudited)...............................................   F-15
Consolidated Statement of Changes in Shareholders' Equity
  for the nine months ended September 30, 2002
  (unaudited)...............................................   F-16
Consolidated Statement of Cash Flows for the nine months
  ended September 30, 2002 (unaudited)......................   F-17
Notes to the Consolidated Financial Statements for the nine
  months ended September 30, 2002 (unaudited)...............   F-18
F-1
REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
Endurance Specialty Holdings Ltd.

     We have audited the accompanying consolidated balance sheet of Endurance
Specialty Holdings Ltd. and subsidiary as of December 31, 2001 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the period from November 30, 2001 to December 31, 2001. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Endurance Specialty Holdings Ltd. and subsidiary at December 31, 2001 and the
consolidated results of their operations and their cash flows for the period
from November 30, 2001 to December 31, 2001, in conformity with accounting
principles generally accepted in the United States.

/s/ Ernst & Young

Hamilton, Bermuda
November 27, 2002,
except Note 12(d), as to which the date is December 17, 2002.

                                       F-2
ENDURANCE SPECIALTY HOLDINGS LTD.

                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 2001
         (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AMOUNTS)
ASSETS
Cash and cash equivalents...................................  $1,162,498
Premiums receivable, net....................................         320
Deferred acquisition costs..................................          56
Other assets................................................       2,225
                                                              ----------
Total assets................................................  $1,165,099
                                                              ==========
                              LIABILITIES
Reserve for unearned premiums...............................  $      375
Accounts payable and accrued liabilities....................       2,412
                                                              ----------
Total liabilities...........................................  $    2,787
                                                              ----------
                          SHAREHOLDERS' EQUITY
Common shares
  Ordinary -- 59,061,185 issued and outstanding.............  $   59,061
  Class A -- 938,815 issued and outstanding.................         939
Additional paid-in capital..................................   1,102,000
Retained earnings...........................................         312
                                                              ----------
Total shareholders' equity..................................   1,162,312
                                                              ----------
Total liabilities and shareholders' equity..................  $1,165,099
                                                              ==========
See accompanying notes to the consolidated financial statements
                                       F-3
ENDURANCE SPECIALTY HOLDINGS LTD.

                        CONSOLIDATED STATEMENT OF INCOME
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
  (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Revenues
  Gross premiums written....................................  $       376
  Change in unearned premiums...............................         (375)
                                                              -----------
  Net premiums earned.......................................            1
  Net investment income.....................................          838
                                                              -----------
Total revenues..............................................          839
                                                              -----------
Expenses
  General and administrative expenses.......................          527
                                                              -----------
Total expenses..............................................          527
                                                              -----------
Net income..................................................  $       312
                                                              ===========
Per share data
  Weighted average number of common and common equivalent
     shares outstanding:
     Basic..................................................   39,629,630
                                                              ===========
     Diluted................................................   39,629,630
                                                              ===========
  Basic earnings per share..................................  $      0.01
                                                              ===========
  Diluted earnings per share................................  $      0.01
                                                              ===========
See accompanying notes to the consolidated financial statements
                                       F-4
ENDURANCE SPECIALTY HOLDINGS LTD.
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                    (IN THOUSANDS OF UNITED STATES DOLLARS)
Common shares
  Issuance of common shares.................................  $   60,000
                                                              ----------
Balance, end of period......................................      60,000
                                                              ----------
Additional paid-in capital
  Issuance of common shares.................................   1,140,000
  Fair value of warrants issued.............................      51,945
  Private offering costs....................................     (89,945)
                                                              ----------
Balance, end of period......................................   1,102,000
                                                              ----------
Retained earnings
  Net income................................................         312
                                                              ----------
Balance, end of period......................................         312
                                                              ----------
Total shareholders' equity..................................  $1,162,312
                                                              ==========
See accompanying notes to the consolidated financial statements
                                       F-5
ENDURANCE SPECIALTY HOLDINGS LTD.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                    (IN THOUSANDS OF UNITED STATES DOLLARS)
Cash flows used in operating activities:
  Net income................................................   $      312
  Adjustments to reconcile net income to net cash used in
     operating activities:
     Premiums receivable, net...............................         (320)
     Deferred acquisition costs.............................          (56)
     Other assets...........................................       (2,225)
     Reserve for unearned premiums..........................          375
     Accounts payable and accrued liabilities...............          548
                                                               ----------
Net cash used in operating activities.......................       (1,366)
                                                               ----------
Cash flows provided by financing activities:
  Issuance of common shares.................................    1,200,000
  Offering costs paid.......................................      (36,136)
                                                               ----------
Net cash provided by financing activities...................    1,163,864
                                                               ----------
Net increase in cash and cash equivalents...................    1,162,498
Cash and cash equivalents, beginning of period..............           --
                                                               ----------
Cash and cash equivalents, end of period....................   $1,162,498
                                                               ==========
See accompanying notes to the consolidated financial statements
                                       F-6
ENDURANCE SPECIALTY HOLDINGS LTD.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

1.     ORGANIZATION

       Endurance Specialty Holdings Ltd. ("Endurance Holdings") was incorporated
on June 27, 2002 under the laws of Bermuda to act as a holding company of
providers of property and casualty insurance and reinsurance on a worldwide
basis.

       Endurance Holdings' wholly-owned subsidiary, Endurance Specialty
Insurance Ltd. ("Endurance Bermuda"), was incorporated in Bermuda on November
30, 2001. On December 14, 2001, Endurance Bermuda completed a private offering
of 60 million common shares for gross cash proceeds of $1.2 billion. Under the
terms of an Exchange Offer dated July 22, 2002, the shareholders of Endurance
Bermuda transferred their interest in Endurance Bermuda to Endurance Holdings in
exchange for an identical shareholding in Endurance Holdings. This Exchange
Offer represents a business combination of companies under common control and
has been accounted for at historical cost.

       Endurance Holdings, through Endurance Bermuda, intends to write specialty
lines of insurance and reinsurance on a global basis.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The consolidated financial statements have been prepared on the basis of
accounting principles generally accepted in the United States ("U.S. GAAP") and
include the accounts of Endurance Holdings and Endurance Bermuda, which are
collectively referred to herein as the "Company". All intercompany transactions
and balances have been eliminated on consolidation. The following are the
significant accounting policies adopted by the Company:

                (a)     Premiums and related expenses.  Premiums written and
       ceded are earned on a pro-rata basis over the terms of the underlying
       contracts and policies. Premiums written and ceded include estimates
       based on information received from brokers, ceding companies and
       insureds, and any subsequent differences arising on such estimates are
       recorded in the periods in which they are determined. The portion of the
       premiums written and ceded applicable to the unexpired terms of the
       underlying contracts and policies are recorded as unearned premiums and
       prepaid reinsurance premiums, respectively.

                Acquisition expenses are costs that vary with and are directly
       related to the production of new and renewal business, and consist
       principally of commissions and brokerage expenses. These costs are
       deferred and amortized over the periods in which the related premiums are
       earned. Deferred acquisition costs are limited to their estimated
       realizable value based on the related unearned premiums. Anticipated net
       investment income is considered in determining the recoverability of
       deferred acquisition costs.

                (b)     Reserve for losses and loss expenses.  The reserve for
       losses and loss expenses includes reserves for unpaid reported losses and
       for losses incurred but not reported. The reserve for unpaid reported
       losses and loss expenses is established by management based on reports
       from brokers, ceding companies and insureds and consultations with
       independent legal counsel, and represents the estimated ultimate cost of
       events or conditions that have been reported to or specifically
       identified by the Company. The reserve for incurred but not reported
       losses and loss expenses is established by management based on estimates
       of ultimate losses and loss expenses. Inherent in the estimates of
       ultimate losses and loss expenses are expected trends in claim severity
       and frequency and other factors which may vary significantly as claims
       are settled. Accordingly,

                                       F-7
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       ultimate losses and loss expenses may differ materially from the amounts
       recorded in the consolidated financial statements. These estimates are
       reviewed regularly and, as experience develops and new information
       becomes known, the reserves are adjusted as necessary. Such adjustments,
       if any, are reflected in earnings in the period in which they become
       known.

                (c)     Investments.  Investments in fixed maturity securities
       are designated as available for sale and are carried at 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. Fair value is generally based on listed market
       prices. If listed market prices are not available, fair value is
       determined based on other relevant factors, including broker or dealer
       price quotations and valuation pricing models that take into account time
       value and volatility factors underlying the financial instruments.
       Realized gains and losses on the sale of investments are recognized in
       earnings using the specific identification method. Investments are
       reviewed for declines in value that are considered to be
       other-than-temporary, and if applicable, such adjustments are included in
       earnings as a component of realized losses. Interest on fixed maturity
       securities is recorded in net investment income when earned and adjusted
       for any amortization of premium or discount.

                (d)     Cash equivalents.  Cash equivalents include highly
       liquid short-term deposits and securities with maturities of ninety days
       or less at the time of purchase.

                (e)     Intangible assets.  Identifiable intangible assets and
       goodwill that arise from business combinations are accounted for in
       accordance with Statement of Financial Accounting Standard ("SFAS") No.
       141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
       Intangible Assets". Identifiable intangible assets are amortized in
       accordance with their useful lives. Goodwill and intangible assets with
       indefinite useful lives are not amortized but are tested for impairment
       annually or more often if impairment indicators arise.

                (f)     Offering and incorporation costs.  Offering costs
       incurred in connection with common share offerings, including investment
       banking fees, legal fees and the fair value of warrants issued to certain
       sponsors, are deducted from the proceeds of the offerings. Incorporation
       costs not related to the raising of capital are expensed as incurred and
       are included in general and administrative expenses.

                (g)     Foreign exchange.  Assets and liabilities of foreign
       operations whose functional currency is not the United States 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 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.

                (h)     Stock-based employee compensation plans.  Stock-based
       compensation is accounted for using the intrinsic value-based method in
       accordance with Accounting Principles Board Opinion No. 25, "Accounting
       for Stock issued to Employees".

                                       F-8
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

                (i)     Earnings per share.  Basic earnings per common share are
       based on the weighted average number of common shares outstanding and
       exclude any dilutive effects of options and warrants. Diluted earnings
       per common share are based on the weighted average number of common
       shares and common share equivalents outstanding, using the treasury stock
       method. Common share equivalents include options and warrants which are
       dilutive when the book value of the Company exceeds the exercise price of
       the options and warrants.

                (j)     Use of estimates.  The preparation of financial
       statements in conformity with U.S. GAAP requires management to make
       estimates and assumptions that affect the reported and disclosed amounts
       of assets and liabilities and disclosure of contingent assets and
       liabilities at the date of the financial statements and the reported
       amounts of revenues and expenses during the reporting period. Actual
       results could differ from those estimates.

3.     RESERVE FOR LOSSES AND LOSS EXPENSES

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
occurrence of a loss, the reporting of the loss to the Company, and the
settlement of the Company's liability may be several years. During this period,
additional facts and trends will be revealed. As these factors become apparent,
case reserves will be adjusted, sometimes requiring an increase in the overall
reserves of the Company, and at other times requiring a reallocation of incurred
but not reported reserves to specific case reserves. These estimates are
reviewed regularly, and such adjustments, if any, are reflected in earnings in
the period in which they become known. While management believes that it has
made a reasonable estimate of ultimate losses, the ultimate claims experience
may not be as reliably predicted as may be the case with other insurance and
reinsurance operations, and there can be no assurance that losses and loss
expenses will not exceed the total reserves.

       The Company was incorporated on November 30, 2001 and wrote only three
insurance policies during the period ended December 31, 2001. Given the absence
of reported loss events during the period, the Company did not establish a
reserve for losses and loss expenses at December 31, 2001.

       In the period to December 31, 2001, the Company did not purchase
reinsurance.

4.     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
six reportable business segments: property per risk treaty reinsurance, property
catastrophe reinsurance, casualty treaty reinsurance, property individual risk,
casualty individual risk and other specialty lines.

       -     Property Per Risk Treaty Reinsurance -- reinsures individual
             property risks of ceding companies on a treaty basis.

       -     Property Catastrophe Reinsurance -- reinsures catastrophic perils
             for ceding companies on a treaty basis.

       -     Casualty Treaty Reinsurance -- reinsures third party liability
             exposures from ceding companies on a treaty basis.

       -     Property Individual Risk -- insurance and facultative reinsurance
             of commercial properties.

                                       F-9
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       -     Casualty Individual Risk -- insurance and facultative reinsurance
             of third party liability exposures.

       -     Other Specialty Lines -- insurance and reinsurance of unique
             opportunities, including Aerospace, Self Insured Risks and a
             limited number of other reinsurance programs such as surety,
             marine, energy, personal accident, terrorism and others.

       Because the Company does not manage its assets by segment, investment
income and total assets are not allocated to the individual segments. Management
measures segment 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. During the period
ended December 31, 2001, the Company wrote three insurance policies, all of
which are included in the property individual risk business segment.

5.     COMMITMENTS AND CONTINGENCIES

       (a)     Concentrations of credit risk.  As at December 31, 2001,
substantially all of the Company's cash and cash equivalents were held by one
custodian.

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

6.     SHAREHOLDERS' EQUITY

       The Company's share capital at December 31, 2001 is comprised as follows:

       Authorized:
         120,000,000 common shares of $1.00 par value each
Issued, outstanding and fully paid:
          59,061,185 Ordinary common shares of $1.00 par
            value each......................................  $59,061,185
          938,815 Class A common shares of $1.00 par value
            each............................................      938,815
                                                              -----------
                                                              $60,000,000
                                                              ===========
Class A common shares have no voting rights and are convertible on a
one-for-one basis into Ordinary common shares.

       In conjunction with the capitalization of the Company, certain
shareholders have been issued warrants. The fair value of the warrants issued on
December 14, 2001 was $51.9 million. The fair value of each warrant issued was
estimated on the date of grant using the Black-Scholes option-pricing model. The
volatility assumption used, of approximately 19%, was derived from an average of
the historical ten-year volatility of two insurance industry indices. An
allowance of 30% was provided to recognize the start-up nature of the Company's
operations and for the potential illiquidity associated with the private trading
of the Company's shares. The other assumptions used in the option pricing model
were as follows: risk-free interest rate of 4.5%, expected life of ten years and
a dividend yield of nil.

                                       F-10
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       The warrants are exercisable for Ordinary and Class A common shares as
follows:
Ordinary common shares......................................  8,691,560
Class A common shares.......................................    600,930
                                                              ---------
Total common shares.........................................  9,292,490
                                                              =========
These warrants, which have an exercise price of $20 per share, became
exercisable upon capitalization of the Company on December 14, 2001, and expire
on December 14, 2011.

7.     EARNINGS PER SHARE

       The Company follows SFAS No. 128, "Earnings per Share", to account for
its weighted average shares. The numerator and denominator in both the Company's
basic and diluted earnings per share calculation is identical. There were no
dilutive securities at December 31, 2001. The Company's basic and diluted
weighted average number of shares outstanding throughout the period from
November 30, 2001 to December 31, 2001 was 39.6 million.

8.     RELATED PARTY TRANSACTIONS

       The Company is party to agreements with an affiliate of a founding
shareholder, Zurich Financial Services Group ("Zurich") as follows:

                Investment management services.  The Company utilized the
       services of a wholly-owned subsidiary of Zurich to perform portions of
       its short-term investment and cash management and provide investment
       accounting services. Under the terms of the investment management
       agreement, which is subject to the Company's investment guidelines and
       other restrictions, the Company pays a fee based on the value of its cash
       and investment portfolio. The Company expensed investment management and
       accounting fees of $22,000 during the period ended December 31, 2001.

                Office services.  The Company rented office space and received
       limited administrative services from various Bermuda based subsidiaries
       of Zurich during the period ended December 31, 2001. Rent and office
       services fees of $40,000 were expensed during the period.

       In addition to warrants (see note 6), certain founding shareholders
received $29 million for assistance with the Company's private offering
completed on December 14, 2001.

9.     STOCK OPTIONS

       The Company reserved a total of 3,646,975 common shares for issuance
under management incentive plans and at December 31, 2001, the Company had
granted 2,662,290 options. The exercise price for the options granted during the
period ended December 31, 2001 is $20 per share and all such options expire in
2011. There were 313,640 options exercisable at December 31, 2001. There were no
options exercised, forfeited or that expired during the period ended December
31, 2001.

       The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
as a result, no stock compensation expense has been recognized. If compensation
expense for options granted had been recognized based on the provisions

                                       F-11
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

of SFAS No. 123, "Accounting for Stock-Based Compensation", the Company's
results for the period ended December 31, 2001 would have been as follows:
Net loss (in thousands of U.S. dollars).....................  $(7,200)
Basic net loss per share....................................  $ (0.18)
Diluted net loss per share..................................  $ (0.18)
The weighted average fair value used to calculate pro-forma compensation
expense for the period was $5.59 per share. The fair value of each option issued
was estimated on the date of grant using the Black-Scholes option-pricing model.
The volatility assumption used, of approximately 19%, was derived from an
average of the historical ten year volatility of two insurance industry indices.
An allowance of 30% was made to recognize the start-up nature of the Company's
operations and for the potential illiquidity associated with the private trading
of the Company's shares. The other assumptions used in the option pricing model
were as follows: risk free interest rate of 4.5%, expected life of 10 years and
a dividend yield of nil.

10.     STATUTORY REQUIREMENTS AND DIVIDEND RESTRICTIONS

       Endurance Bermuda's ability to pay dividends and make capital
distributions is subject to certain regulatory restrictions. Endurance Bermuda
is licensed as a Class 4 insurer under the Bermuda Insurance Act 1978,
amendments thereto and related regulations. The minimum amount of statutory
capital and surplus required by license as a Class 4 insurer is $100 million. At
December 31, 2001, Endurance Bermuda's statutory capital and surplus was $1.16
billion. In addition, a minimum statutory liquidity ratio must be maintained.

11.     TAXES

       Currently, the Company is not required to pay any income or capital gains
taxes in Bermuda. The Company has received an assurance from the Minister of
Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 of
Bermuda, as amended, that in the event any legislation is enacted in Bermuda
imposing any tax computed on profits or income, or computed on any capital
asset, gain or appreciation or any tax in the nature of estate duty or
inheritance tax, such tax shall not be applicable to the Company until March 28,
2016 provided that the assurance is subject to the condition that it will not
prevent the application of any taxes payable by the Company in respect of real
property or leasehold interests in Bermuda held by it. Endurance Bermuda intends
to operate in a manner such that it will owe no United States tax other than
premium excise tax and withholding taxes on certain investments.

12.     SUBSEQUENT EVENTS

       (a)     Business combination.  On May 16, 2002, the Company completed a
transaction with LaSalle Re Limited ("LaSalle"), its parent, LaSalle Re Holdings
Limited, and the ultimate parent of LaSalle, Trenwick Group Ltd. LaSalle is a
Bermuda domiciled reinsurance company. The transaction was structured as a
bordereaux quota share retrocession agreement effective April 1, 2002, a
purchase of renewal rights, a transfer and purchase agreement and an
administrative services agreement. The Company did not assume any of LaSalle's
historical reinsurance liabilities. The primary reasons for the transaction were
to increase the Company's presence in the property catastrophe marketplace and
to increase the Bermuda-based staff of the Company. The transaction was
accounted for as a purchase method business combination in accordance with SFAS
141, "Business Combinations".

                                       F-12
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                     FOR THE PERIOD FROM NOVEMBER 30, 2001
                              TO DECEMBER 31, 2001
                            (UNITED STATES DOLLARS)

       (b)     Debt and financing arrangement.  On August 13, 2002, the Company
entered into a $192 million three-year term loan agreement and a $108 million
letter of credit and revolving credit facility with a syndicate of commercial
banks. Interest rates on the term loan are LIBOR plus a spread which is based on
the Company's debt to capital ratio. On September 27, 2002, the Company drew
down $100 million of the term loan. On November 21, 2002, the Company drew down
the remaining $92 million.

       (c)     Repurchase of common shares.  On September 27, 2002, the Company
repurchased 5,000,000 of its Ordinary common shares at $20 per share and
cancelled 2,049,600 warrants to purchase Ordinary common shares.

       (d)     Share premium issuance.  On December 17, 2002, the Company
effected a share premium issuance to its shareholders. Immediately after the
share premium issuance was effected, the Company's shareholders held five
Ordinary common shares for each Ordinary common share previously held, and held
five Class A common shares for each Class A common share previously held. The
share premium issuance has been reflected in the December 31, 2001 financial
statements and all applicable references as to the number of common shares and
per share information have been restated. Appropriate adjustments have been made
in the exercise price and number of shares subject to warrants and stock
options.

                                       F-13
ENDURANCE SPECIALTY HOLDINGS LTD.

                          CONSOLIDATED BALANCE SHEETS
         (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AMOUNTS)
SEPTEMBER 30,   DECEMBER 31,
                                                                  2002            2001
                                                              -------------   ------------
                                                               (UNAUDITED)
ASSETS
Cash and cash equivalents...................................   $  132,575      $1,162,498
Fixed maturity investments available for sale, at fair value
  (amortized cost: $1,272,051)..............................    1,320,659              --
Premiums receivable, net....................................      265,508             320
Deferred acquisition costs..................................       76,053              56
Prepaid reinsurance premiums................................       16,197              --
Accrued investment income...................................       12,296              --
Other assets................................................       29,795           2,225
                                                               ----------      ----------
Total assets................................................   $1,853,083      $1,165,099
                                                               ==========      ==========
                                       LIABILITIES
Reserve for losses and loss expenses........................   $  114,779      $       --
Reserve for unearned premiums...............................      402,803             375
Reinsurance balances payable................................       14,243              --
Bank debt...................................................      100,000              --
Investments pending settlement..............................       36,086              --
Other liabilities...........................................       10,764           2,412
                                                               ----------      ----------
Total liabilities...........................................      678,675           2,787
                                                               ----------      ----------
                                   SHAREHOLDERS' EQUITY
Common shares:
  Ordinary -- 54,061,185 issued and outstanding
     (2001 -- 59,061,185)...................................       54,061          59,061
  Class A -- 938,815 issued and outstanding
     (2001 -- 938,815)......................................          939             939
Additional paid-in capital..................................    1,007,000       1,102,000
Accumulated other comprehensive income......................       48,608              --
Retained earnings...........................................       63,800             312
                                                               ----------      ----------
Total shareholders' equity..................................    1,174,408       1,162,312
                                                               ----------      ----------
Total liabilities and shareholders' equity..................   $1,853,083      $1,165,099
                                                               ==========      ==========
See accompanying notes to the consolidated financial statements
                                       F-14
ENDURANCE SPECIALTY HOLDINGS LTD.

                      CONSOLIDATED STATEMENT OF INCOME AND
                              COMPREHENSIVE INCOME
                                  (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
  (IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Revenues
  Gross premiums written and acquired.......................   $   623,472
                                                               ===========
  Net premiums written and acquired.........................   $   590,513
  Change in unearned premiums...............................      (386,231)
                                                               -----------
  Net premiums earned.......................................       204,282
                                                               -----------
  Net investment income.....................................        29,355
  Net foreign exchange gains................................         1,107
  Net realized gains on sales of investments................         3,688
                                                               -----------
Total revenues..............................................       238,432
                                                               -----------
Expenses
  Losses and loss expenses..................................       115,146
  Acquisition expenses......................................        33,304
  General and administrative expenses.......................        26,494
                                                               -----------
Total expenses..............................................       174,944
                                                               -----------
Net income..................................................        63,488
                                                               -----------
Other comprehensive income
  Net change in unrealized gains on investments.............        48,608
                                                               -----------
Comprehensive income........................................   $   112,096
                                                               ===========
Per share data
  Weighted average number of common and common equivalent
     shares outstanding:
     Basic..................................................    59,945,055
                                                               ===========
     Diluted................................................    60,088,229
                                                               ===========
  Basic earnings per share..................................   $      1.06
                                                               ===========
  Diluted earnings per share................................   $      1.06
                                                               ===========
See accompanying notes to the consolidated financial statements
                                       F-15
ENDURANCE SPECIALTY HOLDINGS LTD.

                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                                  (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
                    (IN THOUSANDS OF UNITED STATES DOLLARS)
Common shares
  Balance, beginning of period..............................   $   60,000
  Repurchase of common shares...............................       (5,000)
                                                               ----------
  Balance, end of period....................................       55,000
                                                               ----------
Additional paid-in capital
  Balance, beginning of period..............................    1,102,000
  Repurchase of common shares...............................      (95,000)
                                                               ----------
  Balance, end of period....................................    1,007,000
                                                               ----------
Accumulated other comprehensive income
  Balance, beginning of period..............................           --
  Net change in unrealized gains on investments.............       48,608
                                                               ----------
  Balance, end of period....................................       48,608
                                                               ----------
Retained earnings
  Balance, beginning of period..............................          312
  Net income................................................       63,488
                                                               ----------
  Balance, end of period....................................       63,800
                                                               ----------
Total shareholders' equity..................................   $1,174,408
                                                               ==========
See accompanying notes to the consolidated financial statements
                                       F-16
ENDURANCE SPECIALTY HOLDINGS LTD.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
                    (IN THOUSANDS OF UNITED STATES DOLLARS)
Cash flows provided by operating activities:
  Net income................................................  $    63,488
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation and amortization..........................        5,960
     Net realized gains on sales of investments.............       (3,688)
     Premiums receivable, net...............................     (176,631)
     Deferred acquisition costs.............................      (64,485)
     Prepaid reinsurance premiums...........................        5,292
     Accrued investment income..............................      (12,296)
     Other assets...........................................       (9,243)
     Reserve for losses and loss expenses...................      114,779
     Reserve for unearned premiums..........................      313,870
     Reinsurance balances payable...........................      (21,557)
     Other liabilities......................................        8,567
                                                              -----------
Net cash provided by operating activities...................      224,056
                                                              -----------
Cash flows used in investing activities:
  Proceeds from sales of fixed maturity investments.........      218,981
  Purchases of fixed maturity investments...................   (1,455,780)
  Purchases of fixed assets.................................       (4,256)
  Purchase of net assets -- LaSalle.........................      (11,060)
                                                              -----------
Net cash used in investing activities.......................   (1,252,115)
                                                              -----------
Cash flows used in financing activities:
  Offering costs paid.......................................       (1,864)
  Proceeds from bank debt...................................      100,000
  Repurchase of common shares...............................     (100,000)
                                                              -----------
Net cash used in financing activities.......................       (1,864)
                                                              -----------
Net decrease in cash and cash equivalents...................   (1,029,923)
Cash and cash equivalents, beginning of period..............    1,162,498
                                                              -----------
Cash and cash equivalents, end of period....................  $   132,575
                                                              -----------
See accompanying notes to the consolidated financial statements
                                       F-17
ENDURANCE SPECIALTY HOLDINGS LTD.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

1.     ORGANIZATION

       Endurance Specialty Holdings Ltd. ("Endurance Holdings") was incorporated
on June 27, 2002 under the laws of Bermuda to act as a holding company of
providers of property and casualty insurance and reinsurance on a worldwide
basis.

       Endurance Holdings' wholly-owned subsidiary, Endurance Specialty
Insurance Ltd. ("Endurance Bermuda"), was incorporated in Bermuda on November
30, 2001. On December 14, 2001, Endurance Bermuda completed a private offering
of 60 million common shares for gross cash proceeds of $1.2 billion. Under the
terms of an Exchange Offer dated July 22, 2002, the shareholders of Endurance
Bermuda transferred their interest in Endurance Bermuda to Endurance Holdings in
exchange for an identical shareholding in Endurance Holdings. This Exchange
Offer represents a business combination of companies under common control and
has been accounted for at historical cost.

       Endurance Holdings writes specialty lines of insurance and reinsurance on
a global basis through its three wholly-owned operating subsidiaries: Endurance
Bermuda, based in Bermuda; Endurance Worldwide Insurance Limited, based in
London, England; and Endurance Reinsurance Corporation of America, based in New
York.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The consolidated financial statements have been prepared on the basis of
accounting principles generally accepted in the United States ("U.S. GAAP") and
include the accounts of Endurance Holdings and its wholly-owned subsidiaries,
which are collectively referred to herein as the "Company". All intercompany
transactions and balances have been eliminated on consolidation. In the opinion
of management, these financial statements reflect all the normal recurring
adjustments necessary for a fair presentation of the Company's financial
position as of September 30, 2002 and its results of operations and cash flows
for the nine-month period then ended. These consolidated financial statements
should be read in conjunction with the 2001 audited consolidated financial
statements and related notes thereto. The following are the significant
accounting policies adopted by the Company:

                (a)     Premiums and related expenses.  Premiums written and
       ceded are earned on a pro-rata basis over the terms of the underlying
       contracts and policies. Premiums written and ceded include estimates
       based on information received from brokers, ceding companies and
       insureds, and any subsequent differences arising on such estimates are
       recorded in the periods in which they are determined. The portion of the
       premiums written and ceded applicable to the unexpired terms of the
       underlying contracts and policies are recorded as unearned premiums and
       prepaid reinsurance premiums, respectively.

                Acquisition expenses are costs that vary with and are directly
       related to the production of new and renewal business, and consist
       principally of commissions and brokerage expenses. These costs are
       deferred and amortized over the periods in which the related premiums are
       earned. Deferred acquisition costs are limited to their estimated
       realizable value based on the related unearned premiums. Anticipated net
       investment income is considered in determining the recoverability of
       deferred acquisition costs.

                (b)     Reserve for losses and loss expenses.  The reserve for
       losses and loss expenses includes reserves for unpaid reported losses and
       for losses incurred but not reported. The reserve for unpaid reported
       losses and loss expenses is established by management based on reports
       from brokers, ceding companies and insureds and consultations with
       independent legal counsel, and

                                       F-18
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

       represents the estimated ultimate cost of events or conditions that have
       been reported to or specifically identified by the Company. The reserve
       for incurred but not reported losses and loss expenses is established by
       management based on estimates of ultimate losses and loss expenses.
       Inherent in the estimates of ultimate losses and loss expenses are
       expected trends in claim severity and frequency and other factors which
       may vary significantly as claims are settled. Accordingly, ultimate
       losses and loss expenses may differ materially from the amounts recorded
       in the consolidated financial statements. These estimates are reviewed
       regularly and, as experience develops and new information becomes known,
       the reserves are adjusted as necessary. Such adjustments, if any, are
       reflected in earnings in the period in which they become known.

                (c)     Investments.  Investments in fixed maturity securities
       are designated as available for sale and are carried at 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. Fair value is generally based on listed market
       prices. If listed market prices are not available, fair value is
       determined based on other relevant factors, including broker or dealer
       price quotations and valuation pricing models that take into account time
       value and volatility factors underlying the financial instruments.
       Realized gains and losses on the sale of investments are recognized in
       earnings using the specific identification method. Investments are
       reviewed for declines in value that are considered to be
       other-than-temporary, and if applicable, such adjustments are included in
       earnings as a component of realized losses. Interest on fixed maturity
       securities is recorded in net investment income when earned and adjusted
       for any amortization of premium or discount.

                (d)     Cash equivalents.  Cash equivalents include highly
       liquid short-term deposits and securities with maturities of ninety days
       or less at the time of purchase.

                (e)     Intangible assets.  Identifiable intangible assets and
       goodwill that arise from business combinations are accounted for in
       accordance with Statement of Financial Accounting Standard ("SFAS") No.
       141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
       Intangible Assets". Identifiable intangible assets are amortized in
       accordance with their useful lives. Goodwill and intangible assets with
       indefinite useful lives are not amortized but are tested for impairment
       annually or more often if impairment indicators arise.

                (f)     Offering and incorporation costs.  Offering costs
       incurred in connection with common share offerings, including investment
       banking fees, legal fees and the fair value of warrants issued to certain
       sponsors, are deducted from the proceeds of the offerings. Incorporation
       costs not related to the raising of capital are expensed as incurred and
       are included in general and administrative expenses.

                (g)     Foreign exchange.  Assets and liabilities of foreign
       operations whose functional currency is not the United States 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 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.

                                       F-19
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

                (h)     Stock-based employee compensation plans.  Stock-based
       compensation is accounted for using the intrinsic value-based method in
       accordance with Accounting Principles Board Opinion No. 25, "Accounting
       for Stock Issued to Employees".

                (i)     Earnings per share.  Basic earnings per common share are
       based on the weighted average number of common shares outstanding and
       exclude any dilutive effects of options and warrants. Diluted earnings
       per common share are based on the weighted average number of common
       shares and common share equivalents outstanding, using the treasury stock
       method. Common share equivalents include options and warrants which are
       dilutive when the book value of the Company exceeds the exercise price of
       the options and warrants.

                (j)     Use of estimates.  The preparation of financial
       statements in conformity with U.S. GAAP requires management to make
       estimates and assumptions that affect the reported and disclosed amounts
       of assets and liabilities and disclosure of contingent assets and
       liabilities at the date of the financial statements and the reported
       amounts of revenues and expenses during the reporting period. Actual
       results could differ from those estimates.

3.     INVESTMENTS

       The amortized cost, fair value and related gross unrealized gains and
losses on fixed maturity investments at September 30, 2002 are as follows:
GROSS        GROSS
                                   AMORTIZED    UNREALIZED   UNREALIZED      FAIR
                                      COST        GAINS        LOSSES       VALUE
                                   ----------   ----------   ----------   ----------
U.S. government and agency
  securities.....................  $  395,023    $15,732        $ (6)     $  410,749
Corporate securities.............     191,437     15,589          --         207,026
Mortgage-backed securities.......     522,674     11,933         (36)        534,571
Asset-backed securities..........     162,917      5,397          (1)        168,313
                                   ----------    -------        ----      ----------
                                   $1,272,051    $48,651        $(43)     $1,320,659
                                   ==========    =======        ====      ==========
The following table summarizes the composition of the fixed maturity
portfolio by investment ratings assigned by rating agencies:
FAIR VALUE   PERCENTAGE
                                                          ----------   ----------
U.S. government and agency securities...................  $  410,749      31.1%
AAA/Aaa.................................................     715,957      54.2%
AA/Aa...................................................      53,281       4.0%
A/A.....................................................     140,672      10.7%
                                                          ----------     -----
Total...................................................  $1,320,659     100.0%
                                                          ==========     =====
Contractual maturities of fixed maturity securities are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.

                                       F-20
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)
SEPTEMBER 30, 2002
                                                        -----------------------
                                                        AMORTIZED       FAIR
                                                           COST        VALUE
                                                        ----------   ----------
Due within one year...................................  $       --   $       --
Due after one year through five years.................     422,368      440,716
Due after five years through ten years................     118,950      129,989
Due after ten years...................................      45,142       47,070
Mortgage-backed securities............................     522,674      534,571
Asset-backed securities...............................     162,917      168,313
                                                        ----------   ----------
                                                        $1,272,051   $1,320,659
                                                        ==========   ==========
The components of net investment income for the nine months ended
September 30, 2002 are as follows:
Fixed maturity investments..................................  $30,148
Cash and cash equivalents...................................       93
                                                              -------
                                                               30,241
Investment expenses.........................................     (886)
                                                              -------
Net investment income.......................................  $29,355
                                                              =======
The analysis of realized gains (losses) on sales of investments for the
nine months ended September 30, 2002 is as follows:
Gross realized gains........................................  $3,822
Gross realized losses.......................................    (134)
                                                              ------
Net realized gains on sales of investments..................  $3,688
                                                              ======
4.     RESERVE FOR LOSSES AND LOSS EXPENSES

       Reserves for losses and loss expenses are based in part upon the
estimation of losses resulting from catastrophic events. Estimation of the
losses and loss expenses resulting from catastrophic events based upon the
Company's historical claim experience is inherently difficult because of the
Company's short operating history and the possible severity of catastrophe
claims. Therefore, the Company utilizes both proprietary and commercially
available models, as well as historical reinsurance industry catastrophe claims
experience, for purposes of evaluating future trends and providing an estimate
of ultimate claims costs.

       Several aspects of the Company's casualty insurance and reinsurance
operations complicate the actuarial reserving techniques for loss reserves as
compared to other insurance and reinsurance operations. Among these aspects are
the differences in the Company's policy forms from more traditional forms, the
lack of complete historical data for losses of the same type intended to be
covered by the policies and contracts, and the expectation that losses in excess
of the Company's attachment levels will be low frequency and high severity in
nature, limiting the utility of claims experience of other insureds for similar
claims.

       The Company uses statistical and actuarial methods to reasonably estimate
ultimate expected losses and loss expenses. The period of time from the
occurrence of a loss, the reporting of the loss to the

                                       F-21
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

Company, and the settlement of the Company's liability may be several years.
During this period, additional facts and trends will be revealed. As these
factors become apparent, case reserves will be adjusted, sometimes requiring an
increase in the overall reserves of the Company, and at other times requiring a
reallocation of incurred but not reported reserves to specific case reserves.
These estimates are reviewed regularly, and such adjustments, if any, are
reflected in earnings in the period in which they become known. While management
believes that it has made a reasonable estimate of ultimate losses, the ultimate
claims experience may not be as reliably predicted as may be the case with other
insurance and reinsurance operations, and there can be no assurance that losses
and loss expenses will not exceed the total reserves.

5.     REINSURANCE

       Reinsurance ceded contracts do not relieve the Company from its
obligations to policyholders. The Company remains primarily liable to its
policyholders for the portion reinsured to the extent that any reinsurer does
not meet the obligations assumed under the reinsurance agreements.

6.     DEBT AND FINANCING ARRANGEMENTS

       On August 13, 2002, the Company entered into a $192 million three-year
term loan agreement and a $108 million letter of credit and revolving credit
facility with a syndicate of commercial banks. As at September 30, 2002, the
Company had $100 million on the term loan and letters of credit totaling $2.8
million outstanding. Under the terms of the loan agreement, the Company is
committed to making repayments of $20 million on September 27, 2003 and $40
million on September 27, 2004 and 2005 each, respectively.

       Interest rates on the term loan are LIBOR plus a spread which is based on
the Company's debt to capital ratio. On September 27, 2002, the Company drew
down $100 million of the term loan and the interest rate applied to the
outstanding balance averaged 2.81% during the period ended September 30, 2002.
The letter of credit and revolving credit facility expires on August 11, 2003,
at which point any revolving credit balance will be converted into a six-month
term loan. The agreements contain certain covenants including requirements that
debt, as defined in the agreements, to shareholders' equity does not exceed a
ratio of 0.35:1; consolidated tangible net worth must exceed $750 million; and
the consolidated fixed charge ratio, as defined in the agreements, must exceed
2:1. The Company was in compliance with all covenants of these agreements at
September 30, 2002.

       The Company accrued interest expense of $30,000 for the period ended
September 30, 2002 and at September 30, 2002 the fair value of the borrowings
approximated the carrying value.

7.     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
six reportable business segments: property per risk treaty reinsurance, property
catastrophe reinsurance, casualty treaty reinsurance, property individual risk,
casualty individual risk and other specialty lines.

       -     Property Per Risk Treaty Reinsurance -- reinsures individual
             property risks of ceding companies on a treaty basis.

       -     Property Catastrophe Reinsurance -- reinsures catastrophic perils
             for ceding companies on a treaty basis.

                                       F-22
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

       -     Casualty Treaty Reinsurance -- reinsures third party liability
             exposures from ceding companies on a treaty basis.

       -     Property Individual Risk -- insurance and facultative reinsurance
             of commercial properties.

       -     Casualty Individual Risk -- insurance and facultative reinsurance
             of third party liability exposures.

       -     Other Specialty Lines -- insurance and reinsurance of unique
             opportunities, including Aerospace, Self Insured Risks and a
             limited number of other reinsurance programs such as surety,
             marine, energy, personal accident, terrorism and others.

       Because the Company does not manage its assets by segment, investment
income and total assets are not allocated to the individual segments. Management
measures segment 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. General and
administrative expenses are allocated to segments based on the segment's
proportional share of gross premiums written and acquired.

       The following table provides a summary of the segment revenues and
results for the nine month period ended September 30, 2002:
PROPERTY PER    PROPERTY      CASUALTY
                                              RISK TREATY    CATASTROPHE     TREATY
                                              REINSURANCE    REINSURANCE   REINSURANCE
                                              ------------   -----------   -----------
REVENUES
  Gross premiums written and acquired.......    $123,585      $170,185      $143,481
                                                --------      --------      --------
  Net premiums written and acquired.........     123,585       138,099       143,481
                                                --------      --------      --------
  Net premiums earned.......................      28,448        77,257        35,405
                                                --------      --------      --------
EXPENSES
  Losses and loss expenses..................      14,657        45,937        20,820
  Acquisition expenses......................       6,019        11,419         8,452
  General and administrative expenses.......       5,252         7,232         6,097
                                                --------      --------      --------
  TOTAL EXPENSES............................      25,928        64,588        35,369
                                                --------      --------      --------
  UNDERWRITING INCOME.......................    $  2,520      $ 12,669      $     36
                                                ========      ========      ========
  Loss ratio................................        51.5%         59.5%         58.8%
  Acquisition expense ratio.................        21.2%         14.8%         23.9%
  General and administrative expense
     ratio..................................        18.5%          9.4%         17.2%
                                                --------      --------      --------
  Combined ratio............................        91.2%         83.7%         99.9%
                                                ========      ========      ========
F-23
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)
PROPERTY     CASUALTY      OTHER
                                                   INDIVIDUAL   INDIVIDUAL   SPECIALTY
                                                      RISK         RISK        LINES
                                                   ----------   ----------   ---------
REVENUES
  Gross premiums written and acquired............   $50,989      $66,289      $68,943
                                                    -------      -------      -------
  Net premiums written and acquired..............    50,116       66,289       68,943
                                                    -------      -------      -------
  Net premiums earned............................    19,263       21,525       22,384
                                                    -------      -------      -------
EXPENSES
  Losses and loss expenses.......................     4,661       16,425       12,646
  Acquisition expenses...........................     1,909        1,894        3,611
  General and administrative expenses............     2,167        2,817        2,929
                                                    -------      -------      -------
  TOTAL EXPENSES.................................     8,737       21,136       19,186
                                                    -------      -------      -------
  UNDERWRITING INCOME............................   $10,526      $   389      $ 3,198
                                                    =======      =======      =======
  Loss ratio.....................................      24.2%        76.3%        56.5%
  Acquisition expense ratio......................       9.9%         8.8%        16.1%
  General and administrative expense ratio.......      11.2%        13.1%        13.1%
                                                    -------      -------      -------
  Combined ratio.................................      45.3%        98.2%        85.7%
                                                    =======      =======      =======
The following table reconciles total segment results to consolidated net
income for the nine months ended September 30, 2002:
TOTAL UNDERWRITING INCOME...................................  $29,338
Net investment income.......................................   29,355
Net foreign exchange gains..................................    1,107
Net realized gains on sales of investments..................    3,688
                                                              -------
NET INCOME..................................................  $63,488
                                                              =======
8.     BUSINESS COMBINATION

       On May 16, 2002, the Company completed a transaction with LaSalle Re
Limited ("LaSalle"), its parent, LaSalle Re Holdings Limited, and the ultimate
parent of LaSalle, Trenwick Group Ltd. LaSalle is a Bermuda domiciled
reinsurance company. The transaction was structured as a bordereaux quota share
retrocession agreement effective April 1, 2002, a purchase of renewal rights, a
transfer and purchase agreement and an administrative services agreement. The
Company did not assume any of LaSalle's historical reinsurance liabilities. The
primary reasons for the transaction were to increase the Company's presence in
the property catastrophe marketplace and to increase the Bermuda-based staff of
the Company. The transaction was accounted for as a purchase method business
combination in accordance with SFAS 141, "Business Combinations".

       The initial purchase price payable by the Company was $25.6 million and
the fair value of the net assets acquired was $24.7 million, resulting in $0.9
million of goodwill.

                                       F-24
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

The fair value of net assets acquired is summarized as follows:
ASSETS
Premiums receivable, net....................................  $ 72,643
Prepaid reinsurance premiums................................    21,490
Acquisition cost of in-force contracts......................    11,513
Other identifiable intangible assets........................    14,205
Other assets................................................       440
                                                              --------
     Assets acquired........................................   120,291
                                                              --------
                             LIABILITIES
Unearned premiums...........................................    88,558
Reinsurance balances payable................................     5,575
Accrued liabilities.........................................     1,410
                                                              --------
     Liabilities acquired...................................    95,543
                                                              --------
     Net assets acquired....................................  $ 24,748
                                                              ========
Other identifiable intangible assets include the fair value of the
underwriters' relationships, customer lists and the non-solicit and non-compete
rights purchased. These other identifiable assets are estimated to have finite
lives of up to ten years and they are being amortized over such periods. The
amortization expense in the nine months to September 30, 2002 of $0.3 million
was recorded in general and administrative expenses in the consolidated
statement of income. The acquisition expenses of the in-force contracts are
included in deferred acquisition costs in the consolidated balance sheet and are
amortized pro-rata over the remaining terms of the related in-force contracts,
and the related amortization expense in the period of $7.2 million is included
in acquisition expenses in the consolidated statement of income.

       In addition to the initial purchase price, the Company may be required to
pay further amounts to LaSalle. Such contingent amounts are based on the renewal
and profitability of the April 1, 2002 in-force contracts acquired, and will be
recorded in the period in which they are determined to be payable.

       Operating results of the LaSalle business acquired have been included in
the consolidated financial statements from April 1, 2002, which is the effective
date of the retrocession agreement. As required by SFAS 141, the following
selected pro forma information is being provided to present a summary of the
combined results of the Company and the LaSalle business acquired assuming the
transaction had been effected on January 1, 2002. The pro forma data is for
informational purposes only and does not necessarily represent results that
would have occurred if the transaction had taken place on the basis assumed
above.
NINE MONTHS ENDED SEPTEMBER 30, 2002
Total revenues..............................................  $263,525
Net income..................................................    77,197
Earnings per share -- basic.................................      1.29
Earnings per share -- diluted...............................      1.29
F-25
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

9.     COMMITMENTS AND CONTINGENCIES

       Concentrations of credit risk.  As at September 30, 2002, substantially
all of the Company's cash and investments were held by one custodian. The
Company's investment guidelines limit the amount of credit exposure to any one
issuer other than the U.S. treasury.

       Major production sources.  During the nine months to September 30, 2002,
the Company obtained 70.7% of its gross premiums written through two brokers,
Aon Corporation ("Aon") -- 42.6%, Marsh & McLennan Companies, Inc. -- 28.1%.
Gross premiums written excludes $88.6 million of gross premiums acquired from
LaSalle (see note 8).

       Letters of credit.  As of September 30, 2002, the Company's bankers have
issued letters of credit of approximately $2.8 million in favor of certain
ceding companies.

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

10.     SHAREHOLDERS' EQUITY

       The Company's share capital at September 30, 2002 is comprised as
follows:
Authorized:
  120,000,000 common shares of $1.00 par value each
Issued, outstanding and fully paid:
  54,061,185 Ordinary common shares of $1.00 par value
     each...................................................  $54,061
  938,815 Class A common shares of $1.00 par value each.....      939
                                                              -------
                                                              $55,000
                                                              =======
Class A common shares have no voting rights and are convertible on a
one-for-one basis into Ordinary common shares.

       In conjunction with the capitalization of the Company, certain
shareholders have been issued warrants. The fair value of the warrants issued on
December 14, 2001 was $51.9 million. The fair value of each warrant issued was
estimated on the date of grant using the Black-Scholes option-pricing model. The
volatility assumption used, of approximately 19%, was derived from an average of
the historical ten-year volatility of two insurance industry indices. An
allowance of 30% was provided to recognize the start-up nature of the Company's
operations and for the potential illiquidity associated with the private trading
of the Company's shares. The other assumptions used in the option pricing model
are as follows: risk-free interest rate of 4.5%, expected life of ten years and
a dividend yield of nil.

       The warrants are exercisable for Ordinary and Class A common shares as
follows:
Ordinary common shares......................................  6,641,960
Class A common shares.......................................    600,930
                                                              ---------
Total common shares.........................................  7,242,890
                                                              =========
These warrants, which have an exercise price of $20 per share, became
exercisable upon capitalization of the Company on December 14, 2001, and expire
on December 14, 2011.

                                       F-26
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

       On September 27, 2002, the Company repurchased 5,000,000 of its Ordinary
common shares at $20 per share and cancelled 2,049,600 warrants to purchase
Ordinary common shares.

11.     EARNINGS PER SHARE

       The Company follows SFAS No. 128, "Earnings per Share", to account for
its weighted average shares. The numerator in both the Company's basic and
diluted earnings per share calculation is identical. The reconciliation of the
denominator from basic to diluted weighted average shares outstanding for the
nine-month period ended September 30, 2002 is as follows:
Weighted average shares -- basic............................  59,945,055
Share equivalents
  Warrants..................................................     105,881
  Options...................................................      37,293
                                                              ----------
Weighted average shares -- diluted..........................  60,088,229
                                                              ==========
12.     RELATED PARTY TRANSACTIONS

       The Company is party to agreements with various affiliates of two
founding shareholders, Aon and Zurich Financial Services Group ("Zurich") as
follows:

                Underwriting activities.  In the normal course of business, the
       Company enters into reinsurance contracts with various subsidiaries of
       Aon and Zurich. Such contracts resulted in gross premiums written of
       $65.0 million, losses and loss expenses of $7.5 million and acquisition
       expenses of $3.2 million for the nine months ended September 30, 2002. As
       at September 30, 2002, there were related reinsurance premiums receivable
       of $38.3 million. During the nine months ended September 30, 2002,
       affiliates of Aon produced 42.6% of the Company's gross premiums written.
       Gross premiums written excludes $88.6 million of gross premiums acquired
       from LaSalle (see note 8).

                Analytical services.  The Company utilized certain analytical
       services and licensed technology from an affiliate of Aon during the nine
       months ended September 30, 2002. Fees incurred of $109,000 pursuant to
       the agreement were included in general and administrative expenses.

                Financial accounting and administrative services.  An affiliate
       of Aon performed certain financial accounting and administrative services
       for the Company during the nine months ended September 30, 2002. Fees
       incurred of $289,000 pursuant to the agreement were included in general
       and administrative expenses.

                Investment management services.  The Company utilized the
       services of a wholly-owned subsidiary of Zurich to perform portions of
       its short-term investment and cash management and provide investment
       accounting services. Under the terms of the investment management
       agreement, which is subject to the Company's investment guidelines and
       other restrictions, the Company pays a fee based on the value of its cash
       and investment portfolio. The Company expensed related investment
       management and accounting fees of $227,000 during the nine months ended
       September 30, 2002.

                                       F-27
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

                Office services.  The Company rented office space and received
       limited administrative services from various Bermuda based subsidiaries
       of Zurich until April 5, 2002. Rent and office services fees for the nine
       months ended September 30, 2002 of $419,000 were paid and the expense is
       recorded in general and administrative expenses.

13.     STOCK OPTIONS

       Endurance Holdings established a Stock Option Plan (the "Option Plan"),
which provides for the grant of options to purchase shares of the Company's
common stock to key employees. Under the terms of the Option Plan, a total of
3,646,975 common shares has been reserved for issuance. As of September 30,
2002, 3,287,290 options had been granted with dates of entitlement between
December 14, 2001 and December 14, 2006. The exercise price for all options
granted through September 30, 2002 under the Option Plan is $20 per share and
the maximum term of an option is 10 years.

       Activity with respect to the Option Plan for the nine months ended
September 30, 2002 was as follows:
Options outstanding, beginning of period....................  2,662,290
Options granted.............................................    625,000
                                                              ---------
Options outstanding, end of period..........................  3,287,290
                                                              =========
Exercisable options, end of period..........................    438,640
                                                              =========
There were no options exercised, forfeited or that expired during the
period ended September 30, 2002.

       The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
as a result, no stock compensation expense has been recognized. If compensation
expense for options granted had been recognized based on the provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation", the Company's results for
the nine months ended September 30, 2002 would have been as follows:
Net income..................................................  $60,287
Basic earnings per share....................................  $  1.01
Diluted earnings per share..................................  $  1.00
The weighted average fair value used to calculate pro-forma compensation
expense for the period was $5.68 per share. The fair value of each option issued
was estimated on the date of grant using the Black-Scholes option-pricing model.
The volatility assumption used, of approximately 19%, was derived from an
average of the historical ten-year volatility of two insurance industry indices.
An allowance of 20% to 30% was made to recognize the start-up nature of the
Company's operations and for the potential illiquidity associated with the
private trading of the Company's shares. The other assumptions used in the
option pricing model were as follows: risk free interest rate of 4.2% to 5.2%,
expected life of ten years and a dividend yield of nil.

14.     STATUTORY REQUIREMENTS AND DIVIDEND RESTRICTIONS

       Endurance Bermuda's ability to pay dividends and make capital
distributions is subject to certain regulatory restrictions. Endurance Bermuda
is licensed as a Class 4 insurer under the Bermuda Insurance Act 1978,
amendments thereto and related regulations. The minimum amount of statutory
capital and

                                       F-28
ENDURANCE SPECIALTY HOLDINGS LTD.

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN TABLES EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE
                                    AMOUNTS)

surplus required by license as a Class 4 insurer is $100 million. At September
30, 2002, Endurance Bermuda's statutory capital and surplus was $1.18 billion.
In addition, a minimum statutory liquidity ratio must be maintained.

15.     TAXES

       Currently, the Company is not required to pay any income or capital gains
taxes in Bermuda. The Company has received an assurance from the Minister of
Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 of
Bermuda, as amended, that in the event any legislation is enacted in Bermuda
imposing any tax computed on profits or income, or computed on any capital
asset, gain or appreciation or any tax in the nature of estate duty or
inheritance tax, such tax shall not be applicable to the Company until March 28,
2016 provided that the assurance is subject to the condition that it will not
prevent the application of any taxes payable by the Company in respect of real
property or leasehold interests in Bermuda held by it. Endurance Bermuda intends
to operate in a manner such that it will owe no United States tax other than
premium excise tax and withholding taxes on certain investments.

       The Company's subsidiaries based in the United Kingdom and United States
will be subject to income tax in their respective jurisdictions once their
operations commence.

16.     SUBSEQUENT EVENTS

       (a)     Debt and financing arrangement.  On November 21, 2002, the
Company drew down the remaining $92 million of the term loan.

       (b)     Share premium issuance.  On December 17, 2002, the Company
effected a share premium issuance to its shareholders. Immediately after the
share premium issuance was effected, the Company's shareholders held five
Ordinary common shares for each Ordinary common share previously held, and held
five Class A common shares for each Class A common share previously held. The
share premium issuance has been reflected in the September 30, 2002 financial
statements and all applicable references as to the number of common shares and
per share information have been restated. Appropriate adjustments have been made
in the exercise price and number of shares subject to warrants and stock
options.

                                       F-29
GLOSSARY OF SELECTED INSURANCE AND OTHER TERMS

Acquisition expense ratio.....   Financial ratio calculated by dividing
                                 acquisition expenses by net premiums earned.

Attachment point..............   The amount of loss retained by the cedent (per
                                 occurrence or in the aggregate, as the case may
                                 be) above which excess of loss insurance or
                                 reinsurance becomes operative.

Broker........................   An intermediary who negotiates contracts of
                                 insurance or reinsurance on behalf of an
                                 insured party, receiving a commission from the
                                 insurer or reinsurer for placement and other
                                 services rendered.

Broker-market participant.....   An insurer or reinsurer that markets and sells
                                 insurance or reinsurance principally through
                                 brokers or other intermediaries rather than
                                 through its own employees.

Capacity......................   The percentage of surplus, or the dollar amount
                                 of exposure, that an insurer or reinsurer is
                                 willing or able to place at risk. Capacity may
                                 apply to a single risk, a program, a line of
                                 business or an entire book of business.
                                 Capacity may be constrained by legal
                                 restrictions, corporate restrictions or
                                 indirect restrictions.

Captive insurance companies or
captives......................   An insurance company formed to insure the risks
                                 of its parent entity or entities.

Case reserves.................   Loss reserves, established with respect to
                                 specific, individual reported claims.

Casualty insurance or
reinsurance...................   Insurance or reinsurance which is primarily
                                 concerned with the losses caused by injuries to
                                 third persons, i.e., not the insured, or to
                                 property owned by third persons and the legal
                                 liability imposed on the insured resulting
                                 therefrom. It includes, but is not limited to,
                                 employers' liability, workers' compensation,
                                 public liability, automobile liability,
                                 personal liability and aviation liability
                                 insurance. It excludes certain types of losses
                                 that by law or custom are considered as being
                                 exclusively within the scope of other types of
                                 insurance or reinsurance, such as fire or
                                 marine.

Catastrophe...................   A severe loss, typically involving multiple
                                 claimants. Common perils include earthquakes,
                                 hurricanes, hailstorms, severe winter weather,
                                 floods, fires, tornadoes, explosions and other
                                 natural or man-made disasters. Catastrophe
                                 losses may also arise from acts of war, acts of
                                 terrorism and political instability.

Catastrophe loss..............   Loss and directly identified loss adjustment
                                 expenses from catastrophes.

Catastrophe reinsurance.......   A form of excess of loss reinsurance which,
                                 subject to a specified limit, indemnifies the
                                 ceding company for the amount of loss in excess
                                 of a specified retention with respect to an
                                 accumulation of losses resulting from a
                                 catastrophic event. The actual reinsurance
                                 document is called a "catastrophe cover." These
                                 reinsurance contracts are typically designed to
                                 cover property insurance losses but can be
                                 written to cover other types of insurance
                                 losses such as from workers' compensation
                                 policies.

                                       G-1
Cede; cedent; ceding
company.......................   When an insurer reinsures some or all of its
                                 liability with another insurer, it "cedes"
                                 business and is referred to as the "ceding
                                 company."

Ceded premiums payable........   Reinsurance premium that a ceding company is
                                 obligated to pay to a reinsurer but which has
                                 not yet been paid.

Claim.........................   Request by an insured or reinsured for
                                 indemnification by an insurance company or a
                                 reinsurance company for loss incurred from an
                                 insured peril or event.

Claims-made basis.............   Insurance or reinsurance coverage with respect
                                 to claims reported during the policy period.

Combined ratio................   The sum of the loss ratio, the acquisition
                                 expense ratio and the general and
                                 administrative expense ratio. A combined ratio
                                 under 100% generally indicates an underwriting
                                 profit. A combined ratio over 100% generally
                                 indicates an underwriting loss.

Correlation...................   The degree to which events or financial results
                                 tend to correspond to each other.

CRESTA zone...................   Areas worldwide where natural hazards, such as
                                 floods, hurricanes and tornadoes, occur.
                                 Insurers use them to classify areas susceptible
                                 to particular risks.

Deductible....................   The amount of loss that an insured retains.

Deferred acquisition
expenses......................   Primarily commissions and premium taxes, which
                                 vary with and are primarily related to the
                                 production of business, are deferred and
                                 amortized to achieve a matching of revenues and
                                 expenses when reported in financial statements
                                 prepared in accordance with U.S. GAAP.

Direct insurance..............   Insurance sold by an insurer that contracts
                                 with the insured, as distinguished from
                                 reinsurance.

Directors' and officers'
liability.....................   Insurance which covers liability for corporate
                                 directors and officers for wrongful acts,
                                 subject to applicable exclusions, terms and
                                 conditions of the policy.

Earned premiums or premiums
earned........................   That portion of property and casualty premiums
                                 written that applies to the expired portion of
                                 the policy term. Earned premiums are recognized
                                 as revenues under both SAP and U.S. GAAP.

Excess of loss................   Reinsurance or insurance that indemnifies the
                                 reinsured or insured against all or a specified
                                 portion of losses over a specified currency
                                 amount or "retention."

Exclusions....................   Provisions in an insurance or reinsurance
                                 policy excluding certain risks or otherwise
                                 limiting the scope of coverage.

Exposure......................   The possibility of loss. A unit of measure of
                                 the amount of risk a company assumes.

Facultative reinsurance.......   The reinsurance of all or a portion of the
                                 insurance provided by a single policy. Each
                                 policy reinsured is separately negotiated.

Frequency.....................   The number of claims occurring during a given
                                 coverage period.

                                       G-2
General and administrative
expense ratio.................   Financial ratio calculated by dividing general
                                 and administrative expenses by net premiums
                                 earned.

Gross premiums written and
acquired......................   Total premiums for insurance written and
                                 assumed reinsurance during a given period.

Incurred but not reported
("IBNR") reserves.............   Reserves for estimated losses and loss expenses
                                 that have been incurred but not yet reported to
                                 the insurer or reinsurer.

Liability insurance...........   Same as casualty insurance.

Limits........................   The maximum amounts that an insurer or
                                 reinsurer will insure or reinsure in a given
                                 area of coverage. The term also refers to the
                                 maximum amount of benefit payable for a given
                                 situation or occurrence.

Loss; losses..................   An occurrence that is the basis for submission
                                 and/or payment of a claim. Losses may be
                                 covered, limited or excluded from coverage,
                                 depending on the terms of the policy.

Loss expenses.................   The expenses of settling claims, including
                                 legal and other fees and the portion of general
                                 expenses allocated to claim settlement costs.

Loss ratio....................   Financial ratio calculated by dividing net
                                 losses and loss expenses by net premiums
                                 earned.

Loss ratio cap................   Provision in a reinsurance contract limiting
                                 the amount of loss to be assumed by the
                                 reinsurer under any one contract.

Loss reserves.................   Liabilities established by insurers and
                                 reinsurers to reflect the estimated cost of
                                 claims incurred that the insurer or reinsurer
                                 will ultimately be required to pay in respect
                                 of insurance or reinsurance it has written.
                                 Reserves are established for losses and for
                                 loss expenses, and consist of case reserves and
                                 IBNR reserves. As the term is used in this
                                 prospectus, "loss reserves" is meant to include
                                 reserves for both losses and for loss expenses.

Losses incurred...............   The total losses sustained by an insurer or
                                 reinsurer under a policy or policies, whether
                                 paid or unpaid. Incurred losses include a
                                 provision for IBNR.

Losses occurring basis........   Insurance or reinsurance coverage with respect
                                 to losses that occur during the policy period.

Maximum aggregate
limitations...................   The maximum amount recoverable under an
                                 insurance or reinsurance policy, regardless of
                                 the number or size of claims.

Monoline......................   Insurance that applies to one kind of coverage.

National Association of
Insurance Commissioners
("NAIC")......................   An organization of the insurance commissioners
                                 or directors of all 50 states and the District
                                 of Columbia organized to promote consistency of
                                 regulatory practice and statutory accounting
                                 standards throughout the United States.

Net premiums earned...........   The portion of net premiums written during or
                                 prior to a given period that was actually
                                 recognized as income during such period.

                                       G-3
Net premiums written and
acquired......................   Direct written premiums plus assumed
                                 reinsurance premiums less premiums ceded to
                                 reinsurers.

Per occurrence limitations....   The maximum amount recoverable under an
                                 insurance or reinsurance policy as a result of
                                 any one event, regardless of the number of
                                 claims.

Per risk limitations..........   The maximum amount which may be claimed in
                                 association with damage to or loss of any one
                                 "risk". A "risk" in this context may mean a
                                 building, a group of buildings or an object,
                                 based on the definition used in the particular
                                 policy.

Policies attaching basis......   Reinsurance coverage with respect to the
                                 policies written by the ceding company during
                                 the reinsurance contract period.

Policy attaching contracts....   Reinsurance contracts written on a policies
                                 attaching basis.

Potential economic loss.......   As used in this prospectus, expected ultimate
                                 net earned premiums, including reinstatement
                                 premiums, less acquisition costs and less
                                 expected ultimate net losses.

Premiums......................   The amount charged during the term on policies
                                 and contracts issued, renewed or reinsured by
                                 an insurance company or reinsurance company.

Probable maximum loss.........   The largest probable loss on any given
                                 insurance policy or coverage, as determined by
                                 past experience and information.

Professional liability........   Insurance that provides coverage for attorneys,
                                 doctors, accountants and other professionals.

Property insurance or
reinsurance...................   Insurance or reinsurance that provides coverage
                                 to a person with an insurable interest in
                                 tangible property for that person's property
                                 loss, damage or loss of use.

Property per risk treaty
reinsurance...................   Reinsurance on a treaty basis of individual
                                 property risks insured by a ceding company.

Proportional basis
reinsurance...................   A generic term describing all forms of
                                 reinsurance in which the reinsurer shares a
                                 proportional part of both the original premiums
                                 and the losses of the reinsured.

Proportional treaties.........   Reinsurance treaties which assume a
                                 proportional share of the risks and premiums
                                 taken on by the ceding company.

Quota share agreements........   Reinsurance agreements wherein the insurer
                                 cedes an agreed-upon fixed percentage of
                                 liabilities, premiums and losses for each
                                 policy covered on a pro rata basis.

Qualifying quota shares.......   A reinsurance arrangement under which premiums
                                 paid by a Lloyd's syndicate to a reinsurer
                                 qualify under the Lloyd's Bye-laws to be
                                 set-off against the syndicate's aggregate
                                 premiums received, thereby increasing the
                                 syndicate's underwriting capacity.

Rates.........................   Amounts charged per unit of insurance and
                                 reinsurance.

Reinstatement.................   A ceding company's right and, typically,
                                 obligation to reinstate the portion of coverage
                                 exhausted by prior claims. Reinstatement
                                 provisions typically limit the amount of
                                 aggregate coverage for all claims during the
                                 contract period and often require additional
                                 premium payments.

                                       G-4
Reinsurance...................   The practice whereby one insurer, called the
                                 reinsurer, in consideration of a premium paid
                                 to that reinsurer, agrees to indemnify another
                                 insurer, called the ceding company, for part or
                                 all of the liability of the ceding company
                                 under one or more policies or contracts of
                                 insurance which it has issued.

Reinsurance agreement.........   A contract specifying the terms of a
                                 reinsurance transaction.

Reported losses...............   Claims or potential claims that have been
                                 identified to a reinsurer by a ceding company
                                 or to an insurer by an insured.

Retention.....................   The amount of exposure a policyholder company
                                 retains on any one risk or group of risks. The
                                 term may apply to an insurance policy, where
                                 the policyholder is an individual, family or
                                 business, or a reinsurance policy, where the
                                 policyholder is an insurance company.

Retrocessional coverage.......   A transaction whereby a reinsurer cedes to
                                 another reinsurer, the retrocessionaire, all or
                                 part of the reinsurance that the first
                                 reinsurer has assumed. Retrocessional
                                 reinsurance does not legally discharge the
                                 ceding reinsurer from its liability with
                                 respect to its obligations to the reinsured.
                                 Reinsurance companies cede risks to
                                 retrocessionaires for reasons similar to those
                                 that cause primary insurers to purchase
                                 reinsurance: to reduce net liability on
                                 individual risks, to protect against
                                 catastrophic losses, to stabilize financial
                                 ratios and to obtain additional underwriting
                                 capacity.

Risk-based Capital ("RBC")....   A measure adopted by the NAIC and enacted by
                                 states for determining the minimum statutory
                                 capital and surplus requirements of insurers
                                 with required regulatory and company actions
                                 that apply when an insurer's capital and
                                 surplus is below these minimums.

Self-insure...................   That portion of the risk retained by a person
                                 for its own account.

Statutory accounting practices
("SAP").......................   The practices and procedures prescribed or
                                 permitted by domiciliary state insurance
                                 regulatory authorities in the United States for
                                 recording transactions and preparing financial
                                 statements. Statutory accounting practices
                                 generally reflect a modified going concern
                                 basis of accounting.

Statutory policyholders'
surplus or surplus............   As determined under SAP, the amount remaining
                                 after all liabilities, including loss reserves,
                                 are subtracted from all admitted assets.
                                 Admitted assets are assets of an insurer
                                 prescribed or permitted by a state to be
                                 recognized on the statutory balance sheet.
                                 Statutory surplus is also referred to as
                                 "surplus" or "surplus as regards policyholders"
                                 for statutory accounting purposes.

Treaty reinsurance............   The reinsurance of a specified type or category
                                 of risks defined in a reinsurance agreement (a
                                 "treaty") between a primary insurer or other
                                 reinsured and a reinsurer. Typically, in treaty
                                 reinsurance, the primary insurer or reinsured
                                 is obligated to offer and the reinsurer is
                                 obligated to accept a specified portion of all
                                 of that type or category of risks originally
                                 written by the primary insurer or reinsured.

                                       G-5
U.S. GAAP.....................   United States generally accepted accounting
                                 principles as defined by the American Institute
                                 of Certified Public Accountants or statements
                                 of the Financial Accounting Standards Board.
                                 U.S. GAAP is the method of accounting to be
                                 used by the Company for reporting to
                                 shareholders.

U.S. Person...................   For U.S. federal income tax purposes, (i) a
                                 citizen or resident of the United States, (ii)
                                 a corporation, partnership or other entity
                                 created or organized in the United States or
                                 under the laws of the United States or of any
                                 of its political subdivisions, (iii) an estate
                                 the income of which is subject to U.S. federal
                                 income tax without regard to its source or (iv)
                                 a trust if a court within the United States is
                                 able to exercise primary supervision over the
                                 administration of the trust and one or more
                                 U.S. persons have the authority to control all
                                 substantial decisions of the trust.

Umbrella liability............   A form of insurance protection against losses
                                 in excess of amounts covered by other liability
                                 insurance policies or amounts not covered by
                                 the usual liability policies.

Underwriter...................   An employee of an insurance or reinsurance
                                 company who examines, accepts or rejects risks
                                 and classifies accepted risks in order to
                                 charge an appropriate premium for each accepted
                                 risk. The underwriter is expected to select
                                 business that will produce an average risk of
                                 loss no greater than that anticipated for the
                                 class of business.

Underwriting..................   The insurer's or reinsurer's process of
                                 reviewing applications for insurance coverage,
                                 and the decision whether to accept all or part
                                 of the coverage and determination of the
                                 applicable premiums; also refers to the
                                 acceptance of that coverage.

Underwriting gain or
underwriting loss.............   The pre-tax profit or loss experienced by a
                                 property and casualty insurance company or
                                 reinsurance company after deducting losses and
                                 loss expenses and operating expenses from net
                                 earned premiums. This profit or loss
                                 calculation includes reinsurance assumed and
                                 ceded but excludes investment income.

Unearned premium..............   The portion of premiums written that is
                                 allocable to the unexpired portion of the
                                 policy term.

Workers' compensation.........   A system (established under state and federal
                                 laws) under which employers provide insurance
                                 for benefit payments to their employees for
                                 work-related injuries, deaths and diseases,
                                 regardless of fault.

Working layer.................   Reinsurance which absorbs the losses
                                 immediately above the reinsured's retention
                                 layer. A working layer reinsurer will pay up to
                                 a certain dollar amount of losses over the
                                 insured's retention, at which point a higher
                                 layer reinsurer (or the ceding company) will be
                                 liable for additional losses. The coverage
                                 terms of a working layer typically assume an
                                 element of loss frequency.

                                       G-6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

     THROUGH AND INCLUDING          , 2003 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO A DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING
AS AN UNDERWRITER AND WITH RESPECT TO AN UNSOLD ALLOTMENT OR SUBSCRIPTION.

                                             SHARES

                                (ENDURANCE LOGO)

                       ENDURANCE SPECIALTY HOLDINGS LTD.

                                ORDINARY SHARES

                             ----------------------

                                   PROSPECTUS
                             ----------------------

                           JOINT BOOKRUNNING MANAGERS
         GOLDMAN, SACHS & CO.                       MERRILL LYNCH & CO.
                            ------------------------
                                    JPMORGAN
                            ------------------------
CREDIT SUISSE FIRST BOSTON                                         DEUTSCHE BANK
                                          , 2003

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

       The following table sets forth the various expenses payable by us in
connection with the offering of the ordinary shares being registered hereby. All
of the fees set forth below are estimates except for the SEC registration fee,
the NASD fee and the NYSE listing fee.
SEC registration fee........................................   $ 18,400
NYSE listing fee............................................    250,000
NASD fee....................................................     20,500
Printing and engraving expenses.............................          *
Legal fees and expenses.....................................          *
Accounting fees and expenses................................          *
Transfer agent and registrar fees...........................          *
Miscellaneous fees and expenses.............................          *
                                                               ========
     Total..................................................   $      *
------------

* To be completed by amendment

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

       The Bye-laws of the Registrant provide for the indemnification of the
Registrant's officers and directors, members of a (duly constituted) committee
and any resident representative (and their respective heirs, executors or
administrators), each referred to as an Indemnified Person, against all actions,
costs, charges, liabilities, loss, damage or expense to the full extent
permitted by Bermuda law, incurred or suffered by such party by reason of any
act done, conceived in or omitted in the conduct of the Registrant's business or
in the discharge of his/her duties; provided that such indemnification shall not
extend to any matter which would render it void pursuant to the Companies Act
1981 (the "Companies Act") as in effect from time to time in Bermuda.

       The Registrant's bye-laws state that an Indemnified Person shall be
indemnified out of the funds of the Registrant against all liabilities incurred
by him or her by reason of any act done, conceived in or omitted in the conduct
of the Registrant's business or in the discharge of his or her duties, in
defending any proceedings, whether civil or criminal, in which judgment is given
in his or her favor, or in which he or she is acquitted, or in connection with
the application under the Companies Act in which relief is granted to him or her
by the court.

       In addition, each shareholder and the Registrant agree to waive any claim
or right of action he or it may have at any time, whether individually or by or
in the right of the Registrant against any Indemnified Person on account of any
action taken by such person in the performance of his duties with or for the
Registrant; provided that such waiver shall not extend to any claims or rights
of action which would render it void pursuant to the Companies Act 1981 as in
effect from time to time in Bermuda, that arises out of fraud or dishonesty on
the part of such Indemnified Person or with respect to the recovery of any gain,
personal profit or advantage to which such Indemnified Person is not legally
entitled.

       The Companies Act provides that a Bermuda company may indemnify its
directors in respect of any loss arising or liability attaching to them as a
result of any negligence, default, breach of duty or breach of trust of which
they may be guilty. However, the Companies Act also provides that any provision,
whether contained in the company's bye-laws or in a contract or arrangement
between the company and the director, indemnifying a director against any
liability which would attach to him in respect of his fraud or dishonesty will
be void.

                                       II-1
Reference is made to the form of Purchase Agreement to be filed as
Exhibit 1.1 hereto for provisions providing that the Underwriters are obligated,
under certain circumstances, to indemnify the directors, certain officers and
the controlling persons of the Registrant against certain liabilities under the
Securities Act of 1933, as amended (the "Securities Act").

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

       Since its formation, the Registrant has issued unregistered securities as
described below. None of the transactions involved any underwriters,
underwriting discounts or commissions, or any public offering and the Registrant
believes that each transaction, if deemed to be a sale of a security, was exempt
from the registration requirements of the Securities Act by virtue of Section
4(2) thereof, Regulation D promulgated thereunder, or Regulation S for offerings
of securities outside of the United States. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, such securities were restricted as to transfers and
appropriate legends were affixed to the share certificates and instruments
issued in such transactions.

       On December 14, 2001, Endurance Specialty Insurance Ltd. ("Endurance
Bermuda") sold 59,061,185 ordinary shares and 938,815 class A shares to certain
accredited investors for an aggregate price of $1.2 billion and issued warrants
exercisable for 8,691,560 ordinary shares and 600,930 class A shares. The sales
of shares and warrants were made in reliance on Section 4(2) of the Exchange
Act.

       On July 22, 2002, the Registrant exchanged 59,061,185 ordinary shares and
938,815 class A shares of the Registrant for an equal number of common shares of
Endurance Bermuda. In addition, outstanding warrants exercisable for 8,691,560
ordinary shares and 600,930 class A shares of Endurance Bermuda were exchanged
for the same number of ordinary warrants and class A warrants of the Registrant.
This exchange was made in reliance on Section 4(2) of the Securities Act.

       On December 17, 2002, the Registrant issued fully paid additional shares.
These shares were issued to the existing holders of ordinary shares and class A
shares in the ratio of four additional shares for each existing share held by
them. This issuance had the effect of increasing the number of common shares. No
consideration was paid for this issuance.

                                       II-2
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

       (a) Exhibits
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
1.1      Form of Purchase Agreement*
 3.1      Amended and Restated Memorandum of Association*
 3.2      Amended and Restated Bye-laws*
 4.1      Specimen Ordinary Share Certificate*
 4.2      Specimen Class A Share Certificate*
 4.3      Form of Warrant for Ordinary Shares*
 4.4      Form of Warrant for Class A Shares*
 5.1      Opinion of Appleby, Spurling & Kempe*
 8.1      Opinion of Appleby, Spurling & Kempe as to certain tax
          matters*
 8.2      Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
          certain tax matters*
10.1      Shareholders Agreement, dated as of July 22, 2002 among the
          Registrant and each of the persons listed on Schedule A
          thereto*
10.2      Registration Rights Agreement, dated as of July 22, 2002,
          among the Registrant and each of the persons listed on
          Schedule A thereto*
10.3      Employment Agreement between the Registrant and Kenneth J.
          LeStrange*
10.4      Credit Agreement, dated as of August 13, 2002, among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent*
10.5      Term Loan Agreement, dated as of August 13, 2002 among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent, as amended on September 26,
          2002*
10.6      2002 Stock Option Plan*
21.1      Subsidiaries of the Registrant*
23.1      Consent of Appleby, Spurling & Kempe (included in Exhibits
          5.1 and 8.1)*
23.2      Consent of Skadden, Arps, Slate, Meagher & Flom LLP
          (included in Exhibit 8.2)*
23.3      Consent of Ernst & Young
24.1      Power of Attorney (included as part of the signature pages)
99.1      Form F-N*
------------

* To be filed by amendment.

ITEM 17.  UNDERTAKINGS

       (a)  Insofar as indemnification for liabilities existing under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                       II-3
(b)     The undersigned Registrant hereby undertakes that:

                (1)     For purposes of determining any liability under the Act,
       the information omitted from the form of prospectus filed as part of this
       registration statement in reliance upon Rule 430A and contained in a form
       of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
       or 497(h) under the Act shall be deemed to be part of this registration
       statement as of the time it was declared effective.

                (2)     For the purpose of determining any liability under the
       Act, each post-effective amendment that contains a form of prospectus
       shall be deemed to be a new registration statement relating to the
       securities offered therein, and the offering of such securities at that
       time shall be deemed to be the initial bona fide offering thereof.

       (c)     The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

                                       II-4
SIGNATURES

       Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Hamilton, Bermuda on the 19th day of December, 2002.

                                          ENDURANCE SPECIALTY HOLDINGS LTD.

                                          By: /s/ KENNETH J. LESTRANGE
                                            ------------------------------------
                                              Name: Kenneth J. LeStrange
                                              Title: Chairman of the Board

                               POWER OF ATTORNEY

     We, the undersigned officers, directors and authorized representatives of
Endurance Specialty Holdings Ltd., hereby severally constitute and appoint
Kenneth J. LeStrange, our true and lawful attorney with full power to him, with
full power of substitution and resubstitution, to sign for us and in our names
in the capacities indicated below, the Registration Statement on Form S-1 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and any subsequent Registration Statement for the same
offering which may be filed under Rule 462(b), and generally to do all such
things in our names and on our behalf in our capacities as officers and
directors to enable Endurance Specialty Holdings Ltd. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney, or his substitute or
substitutes, to said Registration Statement and any and all amendments thereto
or to any subsequent Registration Statement for the same offering which may be
filed under Rule 462(b).

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
/s/ KENNETH J. LESTRANGE
------------------------------------------------      Chairman of the Board, Chief     December 19, 2002
Name: Kenneth J. LeStrange                            Executive Officer, President
                                                              and Director

/s/ JAMES R. KRONER                                      Chief Financial Officer       December 19, 2002
------------------------------------------------      (Principal Financial Officer
Name: James R. Kroner                                   and Principal Accounting
                                                          Officer) and Director

/s/ WILLIAM H. BOLINDER                                         Director               December 19, 2002
------------------------------------------------
Name: William H. Bolinder

/s/ DAVID L. COLE                                               Director               December 19, 2002
------------------------------------------------
Name: David L. Cole

/s/ JONATHAN J. COSLET                                          Director               December 19, 2002
------------------------------------------------
Name: Jonathan J. Coslet
II-5
SIGNATURE                                     TITLE                      DATE
                    ---------                                     -----                      ----
/s/ ANTHONY J. DINOVI                                           Director               December 19, 2002
------------------------------------------------
Name: Anthony J. DiNovi

/s/ BRYON EHRHART                                               Director               December 19, 2002
------------------------------------------------
Name: Bryon Ehrhart

/s/ CHARLES FROLAND                                             Director               December 19, 2002
------------------------------------------------
Name: Charles Froland

/s/ RICHARD PERRY                                               Director               December 19, 2002
------------------------------------------------
Name: Richard Perry

/s/ ROBERT A. SPASS                                             Director               December 19, 2002
------------------------------------------------
Name: Robert A. Spass

/s/ RICHARD J. STERNE                                           Director               December 19, 2002
------------------------------------------------
Name: Richard J. Sterne
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
1.1      Form of Purchase Agreement*
 3.1      Amended and Restated Memorandum of Association*
 3.2      Amended and Restated Bye-laws*
 4.1      Specimen Ordinary Share Certificate*
 4.2      Specimen Class A Share Certificate*
 4.3      Form of Warrant for Ordinary Shares*
 4.4      Form of Warrant for Class A Shares*
 5.1      Opinion of Appleby, Spurling & Kempe*
 8.1      Opinion of Appleby, Spurling & Kempe as to certain tax
          matters*
 8.2      Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
          certain tax matters*
10.1      Shareholders Agreement, dated as of July 22, 2002 among the
          Registrant and each of the persons listed on Schedule A
          thereto*
10.2      Registration Rights Agreement, dated as of July 22, 2002,
          among the Registrant and each of the persons listed on
          Schedule A thereto*
10.3      Employment Agreement between the Registrant and Kenneth J.
          LeStrange*
10.4      Credit Agreement, dated as of August 13, 2002, among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent*
10.5      Term Loan Agreement, dated as of August 13, 2002 among the
          Registrant, various lending institutions and JPMorgan Chase
          Bank as Administrative Agent, as amended on September 26,
          2002*
10.6      2002 Stock Option Plan*
21.1      Subsidiaries of the Registrant*
23.1      Consent of Appleby, Spurling & Kempe (included in Exhibits
          5.1 and 8.1)*
23.2      Consent of Skadden, Arps, Slate, Meagher & Flom LLP
          (included in Exhibit 8.2)*
23.3      Consent of Ernst & Young
24.1      Power of Attorney (included as part of the signature pages)
99.1      Form F-N*
------------

* To be filed by amendment.