Well, this was working out. Like many other reinsurance companies, Endurance Specialty (NYSE:ENH) had enjoyed a pretty decent summer. That optimism hit the rocks today, though, as the market frowned on the company's second-quarter report.

Simply put, operating earnings were weak. The company reported $0.82 per share in operating earnings, while the Street wanted something closer to $1.35. Though earnings were hurt by above-normal catastrophe (or "cat") losses tied to last year, insurance companies like Endurance are nonetheless responsible for managing and minimizing the risks of such occurrences.

There were some positives, though. Gross premiums rose about 12%, and total written premiums jumped about 23% from last year. Not only is the company taking advantage of very favorable pricing in the property cat market (where gross premiums were up about 49%), but it continues to build out the onshore specialty business as well; its "aerospace and other" line grew about 55%.

Furthermore, the adjusted combined ratio wasn't that bad when you account for negative developments this quarter and positive developments last quarter. Strip those out, and you're looking at 91.5 versus 88.2 -- worse, yes, but not terribly so.

Endurance Specialty still isn't my favorite name in the space, and I'll always suggest that prospective investors at least check out names like Arch Capital (NASDAQ:ACGL), RenaissanceRe (NYSE:RNR), and XL Capital (NYSE:XL) as part of their due diligence. But as I look at that list, Endurance might just be the cheapest of these firms. I'm not as fond of relative valuation calls as other investors seem to be, but I can't deny that's something to consider.

I truly have no idea what this upcoming hurricane season will look like, or whether Endurance (or any other company) has sufficiently rejiggered its risk modeling to avoid the bite of more years like 2005. Investors who are more worried about that question might want to consider a more diversified option like AIG (NYSE:AIG), but Fools who think that Endurance is back on the right path might just be getting a potential bargain opportunity today.

For more Foolish reassurance:

Endurance Specialty is a Motley Fool Inside Value pick. For more of the market's best bargains, join Philip Durell and his fellow Foolish value-hunters with a free 30-day trial subscription.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).