Property and Casualty Insurer Endurance Specialty Holdings LTD Sells a Preferred Issue

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Property and casualty insurer Endurance Specialty Holdings LTD (ticker: ENH) recently sold a new preferred stock issue with a coupon of 6.35%.


As usual with insurers and banks, the new issue is non-cumulative, so dividends must be declared except when the board of directors opts not to do so during a particular quarter by the normal payment date. Such instances are rare but can occur and those leave investors without a dividend that quarter.

Granted, some investors may shy away from such non-cumulative issues, but other investors may have an interest in what appears to be a high quality issue.


While this issue is non-cumulative, the dividends paid will be “qualified” and thereby offer investors preferential tax treatment. Qualfied dividends are taxed at capital gains rates, which let investors keep more of their profits than otherwise would be the case.

The issue is rated as investment grade, BBB-, by S&P. Moody’s gave it a rating of Ba1, one step below investment grade. Further information on the credit ratings system may be found at this link.

ENH has announced via its new issue offering documents it will redeem its Series A preferred issue (ticker:ENH-A), which becomes redeemable on 12/15/2015. The Series A preferred carries a coupon of 7.75%. ENH has another issue outstanding (ticker:ENH-B) that has a coupon of 7.5% and becomes redeemable in June 2016.

The new issue has the normal five-year call protection period, but will be optionally redeemable (at the option of the company) starting in 12/2020.


The issue was scheduled to begin trading on the OTC Grey Market today, Nov. 19. For information on how to purchase on the OTC Grey Market at wholesale you can read our primer on this method of purchase.

Details of this issue can be found here.

If you would like to compare this new issue against other banking and insurance issues you can peruse our Financial Preferreds page.

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Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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