Bermuda insurer Endurance Specialty Holdings Ltd. announced yesterday that it expects to report a third-quarter operating loss of between 96 cents and $1.15 per share.

The main reasons were estimated losses of $145 million related to hurricanes Gustav and Ike and a $33 million decline in the value of Endurance's alternative investment portfolio, which are accounted for in the company's income statement.

Both items had been previously announced, but Endurance said it made yesterday's preliminary estimate of its third-quarter results because of "the volatile conditions in the world's financial markets and questions of investor confidence in financial institutions generally".

Endurance estimated that its book value at September 30, 2008 — excluding dividends paid out to shareholders this year — would be between $33.30 and $33.80, a fall of between 1.4 percent and 2.9 percent from the end of last year. Large fluctuations on the currency markets, as well as the credit squeeze, also had an impact on Endurance's results.

The company said its net income for the July through September period will be impacted by approximately $15 million of foreign exchange losses and net realised investment losses — emanating largely from widening spreads in the fixed-income market — ranging from $30 million to $35 million.

Endurance estimates that its fixed maturity portfolio experienced an increase in net unrealised investment losses of approximately $70 million to $75 million during the third quarter, or less than 1.4 percent of Endurance's anticipated cash and invested assets as of September 30, 2008.

The company said its fixed-maturity portfolio continues to have an average credit quality of AAA, and to date has not been materially impacted by downgrades or defaults.

Endurance chairman and chief executive officer Kenneth LeStrange said: "The primary focus of our capital and investment management activities has always been to maintain strong levels of risk based capital, liquidity and financial flexibility.

"This focus, along with excellent execution by our investment and finance teams, has enabled Endurance to withstand the current market volatility while maintaining a secure balance sheet.

"Endurance has excellent liquidity and flexibility, supported by strong operating and investment portfolio cash flows and additional access to committed capital and liquidity through our multi year credit facility and forward equity sale. We have the capacity, the financial strength and enterprise risk management capabilities to take advantage of the opportunities presented by the current market dislocations and to assist our clients in managing the challenges in this more volatile environment."

Endurance also revealed it spent $70.1 million repurchasing approximately 2.2 million of its shares in the third quarter.