Endurance Specialty Holdings became the latest Bermuda reinsurer to report that catastrophes in 2010 had lowered its earnings when it said its fourth quarter profit dropped 28 percent and its annual net income fell by 31 percent.Endurance said fourth quarter net income was $111.2 million or $2.09 per share compared to $154.8 million and $2.56 per share for the fourth quarter of 2009.Analysts were expecting net income per share of $1.55.For the year ended December 31, Endurance reported a profit of $364.7 million and $6.38 per share compared to net income of $536.1 million and $8.69 per share in 2009.Endurance chief executive officer David Cash said: “2010 was a strong year for Endurance both financially and strategically. The Company earned a 12.6 percent operating return on equity despite a number of large industry catastrophe losses and historically low fixed income yields, launched several strategic initiatives that will help extend our portfolio of specialty businesses and grew book value per share significantly.”Losses and loss expenses were $246.4 million in the fourth quarter compared to $164 million in the prior year period while they were $1.04 billion for the year, compared to $866.6 million in 2009.For the year, Endurance reported a combined ratio of 88.7 percent, which included 7.3 percent of prior year loss reserve development, compared to 84 percent in 2009. For the fourth quarter, the combined ratio was 84.6 percent compared to 74.8 percent in 2009. In the company’s reinsurance segment, the combined ratio rose from 75.9 percent to 86.9 percent compared to the same period in 2009 due to higher net loss ratios, as the industry experienced a greater frequency of large loss events during 2010, including the earthquake in Chile and European Windstorm Xynthia in the first quarter and the earthquake in New Zealand in the third quarter. Partially offsetting the increase in the net loss ratio in the current year was the recognition of greater favourable prior year loss reserve development.Also affecting net income was the decline in investment income. Endurance’s net investment income decreased four percent or $2.4 million for the quarter and 29.5 percent or $83.8 million for the year.“During the fourth quarter and year ended December 31, 2010, Endurance’s net investment income included gains of $16.4 million and $40.3 million on its alternative investment funds and high yield loan funds which are included in other investments, as compared to gains of $16.8 million and $98.1 million in (the same periods in 2009).“Investment income generated from Endurance’s fixed maturity investments declined by $1.4 million and $20.8 million for the three months and year ended December 31, 2010 compared to the same periods in 2009. This decrease resulted from lower reinvestment rates during 2010, driven by lower market yields, partially offset by higher average investment portfolio balances.”Gross premiums written for the quarter were $189 million compared to $209 million a year earlier, while they were $2.05 billion for 2010, compared to $2.02 billion for 2009.Net premiums written for the quarter rose to $158.1 million from $146.44 million, while they rose from $1.6 billion to $1.76 billion for the year.