Endurance Specialty Holdings Ltd.'s profits dropped by more than $90 million during the second quarter of 2010 as the Bermuda-based company experienced tough underwriting and investing conditions.

The company made a net income of $58.6 million, or 97 cents per share, for the second quarter versus $149.1 million or $2.42 per share in the same period last year.

Net income for the six months ended June 30, 2010 was $114.4 million, or $1.88 per share, compared to $227.4 million, or $3.65 per share, for the first six months of 2009.

Book value per share rose 4.1 percent to $47.78 at June 30, 2010, driven by a combination of earnings and an improvement in unrealised investment gains. Year to date, book value per share increased 7.1 percent as a result of earnings and improvements in unrealised investment gains.

But net premiums written for the second quarter fell 6.1 percent to $450.8 million and the company's combined ratio climbed to 91 percent, including 6.5 percentage points of favourable prior year loss reserve development. Endurance reported a net investment income of $33.4 million, a decrease of $55.5 million over the same period in 2009, while operating income, which excludes after-tax realised investment gains and losses and foreign exchange gains and losses, stood at $57.7 million or 96 cents per share.

David Cash, chief executive officer of Endurance, said: "Endurance generated solid financial results during a quarter characterised by challenging underwriting and investing conditions.

"Our diluted book value per common share increased by $1.89 to $47.78 per share during the quarter, a return of 4.7 percent including dividends paid. Our US insurance operations, including our crop insurance business, was a strong contributor to our overall results.

"Outside our underwriting operations, we experienced a fifth consecutive quarter of strong total returns on our investment portfolio, generating $80 million of combined net investment income and realised and unrealised gains on our portfolio, a strong achievement in an investing environment that remains volatile."

Within the company's insurance segment, net premiums written rose 26.8 percent to $195 million for the quarter, while its combined ratio stood at 94.1 percent, an improvement of 0.8 percentage points from the second quarter of 2009.

The increase in net premiums written was attributed to higher retentions in Endurance's agriculture and US property and casualty lines of business, partially offset by a reduction in premiums from exiting the workers' compensation line of business in February 2009 due to a decrease in the acquisition expense ratio partially offset by an increase in the net loss and general and administrative expense ratios.

Within the agriculture line of business, the company bought less third party reinsurance and, due to improved growing conditions compared to a year ago, reduced cessions to the Federal Crop Insurance Corporation, leading to increased net premiums.

Beginning in the second quarter of 2009, Endurance also reduced reinsurance purchases on its US property and casualty insurance lines of business as the US insurance operations matured.