The upgrade on Endurance, coming five years after its founding, reflects its strong competitive position based on its global market presence, scale, and diversified insurance and reinsurance platforms, S&P said in its announcement, highlighting, in particular, Endurance's increased scale within its U.S. excess and surplus lines platform.

S&P said roughly 30 percent of Endurance's 2006 gross premiums were from reinsurance and 70 percent from insurance.

In addition, the New York-based rating agency said that Endurance maintains capital adequacy above expectations for the rating, and that its combined ratio is 87 so far this year. A bottom-line loss of $220 million from 2005 has been replenished with net income of $299 million through nine months, S&P added.

Although Endurance has also demonstrated strong financial flexibility, raising $600 million in debt and equity after the storms in 2005, S&P had some negatives to report.

For example, S&P said management underestimated the volatility and correlations inherent within its large national commercial per-risk accounts (flood exposure) and property and offshore marine exposure correlations in 2005. The company has moved to nonrenew or cancel these exposures, however, and based on Endurance's strong enterprise risk management; S&P said it expects prospective volatility to be reduced.

The stable outlook, S&P said, is based on its expectation that Endurance will maintain strong earnings in 2007--potentially net income near $400 million before significant catastrophe losses on a combined ratio of about 90.

In yesterday's announcement, S&P also said it raised counterparty credit and senior debt ratings on Endurance Specialty Holdings Ltd. to "triple-B-plus" from "triple-B," and raised its preferred stock rating to "triple-B-minus" from "double-B-plus."