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Aspen News

Aspen reports results for quarter ended March 31, 2017

26th April

  • Annualized Net Income Return on Equity of 11.6% for the First Quarter 2017
  • Annualized Operating Return on Equity of 6.8% for the First Quarter 2017
  • Diluted Book Value Per Share of $47.89, up 2.5% from December 31, 2016
  • Quarterly Dividend on Ordinary Share increased by 9.1%

Aspen Insurance Holdings Limited reported today net income after tax of $96.5 million, or $1.36 per diluted ordinary share, and operating income after tax of $59.8 million, or $0.79 per diluted ordinary share, for the first quarter of 2017

Chris O’Kane, Chief Executive Officer, commented: "Aspen recorded positive underwriting contributions from both our Insurance and Reinsurance businesses in the first quarter. At Aspen Insurance, we are focused on areas of expertise where we can provide our clients with the best service and capitalize on opportunities for profitable growth. Aspen Re’s diversified business model, strong client relationships and highly innovative solutions continue to provide a winning combination, resulting once again in strong results for the quarter. For the sixth consecutive year, and reflecting our continued confidence in Aspen’s future prospects, the Aspen Board approved today an increase in the dividend on our ordinary shares."

Operating highlights for the quarter ended March 31, 2017

Gross written premiums of $998.0 million in the first quarter of 2017, an increase of 2.3% compared with $975.7 million in the first quarter of 2016.

  • Insurance: Gross written premiums of $432.7 million, a decrease of 5.5% compared with $458.1 million in the first quarter of 2016, primarily due to decreases in the Property and Casualty, and Marine, Aviation and Energy sub-segments, partially offset by growth in the Financial and Professional lines sub-segment
  • Reinsurance: Gross written premiums of $565.3 million, an increase of 9.2% from $517.6 million in the first quarter of 2016, primarily due to growth in the Other Property, Casualty and Specialty sub-segments

Loss ratio of 56.5% in the first quarter of 2017 compared with 53.9% in the first quarter of 2016. The loss ratio included pre-tax catastrophe losses, net of reinsurance recoveries, of $29.1 million, or 5.0 percentage points, in the first quarter of 2017. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $18.7 million, or 2.8 percentage points, in the first quarter of 2016.

  • Insurance: Loss ratio of 61.0% compared with 58.2% in the first quarter of 2016. Pre-tax catastrophe losses, net of reinsurance recoveries, of $4.5 million, totaled 1.5 percentage points in the first quarter of 2017 primarily related to weather-related events in the U.S. Pre-tax catastrophe losses net of reinsurance recoveries totaled $8.0 million, or 2.1 percentage points, in the first quarter of 2016
  • Reinsurance: Loss ratio of 51.6% compared with 48.0% in the first quarter of 2016. The loss ratio included pre-tax catastrophe losses, net of reinsurance recoveries, of $24.6 million, or 8.9 percentage points, in the first quarter of 2017 primarily as a result of a tornado in Mississippi, Cyclone Debbie in Australia, and other weather-related events. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $10.7 million, or 3.8 percentage points, in the first quarter of 2016

Net favorable development on prior year loss reserves benefited the loss ratio by $26.2 million, or 4.5 percentage points, in the first quarter of 2017 compared with $21.6 million, or 3.3 percentage points, in the comparable period.

  • Insurance: Prior year net favorable reserve development of $5.0 million, or 1.6 percentage points, compared with $3.4 million, or 0.9 percentage points, in the first quarter of 2016. Prior year net favorable development in the first quarter of 2017 included $17.7 million of adverse development as a result of the Ogden rate change
  • Reinsurance: Prior year net favorable reserve development of $21.2 million, or 7.6 percentage points, compared with $18.2 million, or 6.5% percentage points, in the first quarter of 2016. Prior year net favorable development in the first quarter of 2017 included $12.8 million of adverse development as a result of the Ogden rate change

Accident year loss ratio excluding catastrophes was 56.0% in the first quarter of 2017 compared with 54.4% in the first quarter of 2016.

  • Insurance: Accident year loss ratio excluding catastrophes for the quarter ended March 31, 2017 was 61.1% compared with 57.0% a year ago. In the first quarter of 2017, there were approximately $14.8 million of mid-sized losses, including a $4.8 million energy-related loss and $10.0 million of fire-related losses, which together equated to 4.9 percentage points on the accident year ex-cat loss ratio
  • Reinsurance: Accident year loss ratio excluding catastrophes for the quarter ended March 31, 2017 was 50.3% compared with 50.7% a year ago

Total expense ratio of 40.5% and total expense ratio (excluding amortization and non-recurring expenses) of 40.1% in the first quarter of 2017 compared with 37.7% and 37.7%, respectively, in the first quarter of 2016. The policy acquisition expense ratio was 19.6% in the first quarter of 2017, the same as the first quarter of 2016. General and administrative expenses (excluding amortization and non-recurring expenses) were $119.1 million in the first quarter of 2017, largely unchanged from the first quarter of 2016. Due to lower net earned premium, the general and administrative expense ratio (excluding amortization and non-recurring expenses) increased to 20.5% from 18.1% in the first quarter of 2016.

Net income after tax of $96.5 million, or $1.36 per diluted share, and operating income after tax of $59.8 million, or $0.79 per diluted share, in the first quarter of 2017. This compares with net income of $114.4 million, or $1.68 per diluted share, and operating income of $89.9 million, or $1.29 per diluted share, in the first quarter of 2016.

Annualized net income return on average equity of 11.6% and annualized operating return on average equity of 6.8% for the quarter ended March 31, 2017 compared with 14.4% and 11.2%, respectively, for the first quarter of 2016.

Investment performance

  • Investment income of $47.7 million in the first quarter of 2017 decreased by 3.6% compared with $49.5 million in the first quarter of 2016
  • The total return on Aspen’s aggregate investment portfolio was 1.09% for the three months ended March 31, 2017 and reflects net realized and unrealized gains and losses in both the fixed income and equity portfolios.
  • Aspen’s investment portfolio continues to be comprised primarily of high quality fixed income securities with an average credit quality of “AA-”. The average duration of the fixed income portfolio was 3.89 years as at March 31, 2017
  • Book yield on the fixed income portfolio as at March 31, 2017 was 2.53% compared with 2.49% as at December 31, 2016

Capital

  • Total shareholders’ equity was $3.6 billion as at March 31, 2017
  • Diluted book value per share was $47.89 as at March 31, 2017, up 2.5% from December 31, 2016
  • On January 3, 2017, Aspen used $133.2 million of the proceeds from its 5.625% Perpetual Non-Cumulative Preference Shares to redeem its outstanding 7.401% Perpetual Non-Cumulative Preference Shares. As a result, Aspen did not repurchase any ordinary shares during the first quarter of 2017
  • On April 26, 2017, the Board of Directors approved a 9.1% increase in quarterly ordinary dividend, from $0.22 per share to $0.24 per share

Read the full press release