We use performance cookies to collect information about how you use our website (for instance which pages you visit most often). Cookies help us to improve your online experience with Aspen. Find out more here

close

Aspen News

Aspen reports results for quarter ended March 31, 2018

2nd May

Aspen reported today a net income after tax of $30.8 million, or $0.38 per diluted ordinary share, and an operating income after tax of $63.0 million, or $0.91 per diluted ordinary share, for the first quarter of 2018.

Chris O’Kane, Chief Executive Officer, commented: “The first quarter of 2018 was the first in Aspen's history in which we wrote more than a billion dollars of premium. Our strong results include gross written premium growth across both Aspen Re and Aspen Insurance as a result of our targeted growth strategy. Both segments generated underwriting profits, we improved our total expense ratio and we continue to implement our operational effectiveness and efficiency program.”

Operating highlights for the quarter ended March 31, 2018

Gross written premiums of $1,116.8 million in the first quarter of 2018, an increase of 11.9% compared with $998.0 million in the first quarter of 2017

  • Insurance: Gross written premiums of $493.3 million, an increase of 14.0% compared with $432.7 million in the first quarter of 2017, due primarily to growth in the Financial and Professional Lines and Property and Casualty sub-segments
  • Reinsurance: Gross written premiums of $623.5 million, an increase of 10.3% compared with $565.3 million in the first quarter of 2017. Specialty sub-segment premiums increased largely due to growth in agriculture business which included a fronting arrangement written as part of the transitional arrangements following the sale of AgriLogic in 2017 while the Property Catastrophe sub-segment premium increase was largely driven by rate improvement

Net written premiums of $635.5 million in the first quarter of 2018, a decrease of 7.4% compared with $686.2 million in the first quarter of 2017 as Aspen continues to make increased use of ceded reinsurance to seek to reduce volatility. The retention ratio in the first quarter of 2018 was 56.9% compared with 68.8% in the first quarter of 2017

  • Insurance: Net written premiums of $210.5 million, a decrease of 11.6% compared with $238.0 million in the first quarter of 2017, due primarily to increased use of quota share reinsurance to seek to reduce volatility. The retention ratio in the first quarter of 2018 was 42.7% compared with 55.0% in the first quarter of 2017
  • Reinsurance: Net written premiums of $425.0 million, a decrease of 5.2% compared with $448.2 million in the first quarter of 2017. Net written premiums in the first quarter of 2018 reflect a change in accounting treatment of cessions related to Aspen Capital Markets and, in addition, continued to be impacted by transitional changes to ceding of premiums following the sale of AgriLogic. The retention ratio in the first quarter of 2018 was 68.2% compared with 79.3% in the first quarter of 2017

Loss ratio of 58.1% in the first quarter of 2018 compared with 56.5% in the first quarter of 2017. The loss ratio included pre-tax catastrophe losses of $24.2 million, or 4.5 percentage points, net of reinsurance recoveries, in the first quarter of 2018 compared with $29.1 million, or 5.0 percentage points, in the first quarter of 2017

  • Insurance: Loss ratio of 57.1% compared with 61.0% in the first quarter of 2017. The loss ratio included pre-tax catastrophe losses of $9.4 million, or 3.7 percentage points, net of reinsurance recoveries, in the first quarter of 2018 primarily as a result of weather-related events in the U.S. and U.K. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $4.5 million, or 1.5 percentage points, in the first quarter of 2017
  • Reinsurance: Loss ratio of 59.1% compared with 51.6% in the first quarter of 2017. The loss ratio included pre-tax catastrophe losses of $14.8 million, or 5.2 percentage points, net of reinsurance recoveries, in the first quarter of 2018 primarily as a result of Winter Storm Friederike and other weather-related events. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $24.6 million, or 8.9 percentage points, in the first quarter of 2017

Net favorable development on prior year loss reserves of $37.7 million benefited the loss ratio by 7.1 percentage points in the first quarter of 2018. Prior year net favorable reserve development of $26.2 million benefited the loss ratio by 4.5 percentage points in the first quarter of 2017

  • Insurance: Prior year net favorable reserve development of $30.2 million benefited the loss ratio by 12.0 percentage points in the first quarter of 2018 and reflected releases, primarily from short-tail lines, including favorable development from 2017 natural catastrophes. Prior year net favorable development of $5.0 million benefited the loss ratio by 1.6 percentage points in the first quarter of 2017
  • Reinsurance: Prior year net favorable reserve development of $7.5 million benefited the loss ratio by 2.7 percentage points in the first quarter of 2018. Prior year net favorable development of $21.2 million benefited the loss ratio by 7.6 percentage points in the first quarter of 2017

Accident year loss ratio excluding catastrophes was 60.7% in the first quarter of 2018 compared with 56.0% in the first quarter of 2017

  • Insurance: Accident year loss ratio excluding catastrophes for the quarter ended March 31, 2018 was 65.4%, including 2.6 percentage points resulting from a trade credit loss and 1.9 percentage points from a fire-related loss. The accident year loss ratio excluding catastrophes in the first quarter of 2017 was 61.1%
  • Reinsurance: Accident year loss ratio excluding catastrophes for the quarter ended March 31, 2018 was 56.6%, including a 2.9 percentage points from a fire-related loss. The accident year loss ratio excluding catastrophes in the first quarter of 2017 was 50.3%

Total expense ratio of 39.7% and total expense ratio (excluding amortization and non-recurring expenses) of 37.4% in the first quarter of 2018 compared with 40.5% and 40.1%, respectively, in the first quarter of 2017

  • The policy acquisition expense ratio was 17.0% in the first quarter of 2018 compared with 19.6% in the first quarter of 2017
  • General and administrative expenses (excluding amortization and non-recurring expenses) were $108.9 million in the first quarter of 2018, compared with $119.1 million in the first quarter of 2017. The general and administrative expense ratio (excluding amortization and non-recurring expenses) decreased to 20.4% from 20.5% in the first quarter of 2017

Net income after tax of $30.8 million, or $0.38 per diluted ordinary share, in the first quarter of 2018 compared with net income of $96.5 million, or $1.36 per diluted ordinary share, in the first quarter of 2017. Net income included $(37.7) million of net realized and unrealized investment losses in the first quarter of 2018 compared with $46.2 million net realized and unrealized investment gains in the first quarter of 2017.

Operating income after tax of $63.0 million, or $0.91 per diluted ordinary share, in the first quarter of 2018 compared with operating income of $59.8 million, or $0.79 per diluted ordinary share, in the first quarter of 2017

Annualized net income return on average equity of 4.0% and annualized operating return on average equity of 9.2% for the quarter ended March 31, 2018 compared with 11.6% and 6.8%, respectively, for the first quarter of 2017

Investment performance

  • Investment income of $47.3 million in the first quarter of 2018 compared with $47.7 million in the first quarter of 2017
  • The total return on Aspen’s aggregate investment portfolio was (0.9)% for the three months ended March 31, 2018 and reflects net realized and unrealized gains and losses mainly in the fixed income portfolio
  • Aspen’s investment portfolio was comprised primarily of high quality fixed income securities with an average credit quality of “AA-”. The average duration of the fixed income portfolio was 3.98 years as at March 31, 2018
  • Aspen took advantage of rising equity markets in the first quarter of 2018 and sold its equity portfolio
  • Book yield on the fixed income portfolio as at March 31, 2018 was 2.63% compared with 2.56% as at December 31, 2017

Capital

  • Total shareholders’ equity was $2.9 billion as at March 31, 2018
  • Diluted book value per share was $38.70 as at March 31, 2018, down 3.5% from December 31, 2017 primarily due to realized and unrealized investment losses in the quarter

Operational Effectiveness and Efficiency Program

  • Aspen recorded $11.8 million of expenses related to its operational effectiveness and efficiency program in the first quarter of 2018

Read the full press release