Aspen Reports Q4 Profits Down 83.9%, 78.8% Full Year

February 6, 2009

Bermuda-based Aspen Insurance Holdings Limited reported a sharply decreased net profit after tax for 2008 of $103.8 million or an operating profit of $1.44 per diluted ordinary share and net profit after tax for the fourth quarter of 2008 of $21.8 million or an operating profit of $0.17 per diluted ordinary share.

This compares to a net profit after tax of $489.0 million for 2007, or operating earnings of $4.99 per diluted share and net profit after tax of $135.2 million, or operating earnings of $1.47 per diluted share for the fourth quarter last year.

However Aspen did note that its “book value per share on a diluted basis of $28.10 has increased by $1.02 when compared to December 31, 2007 and by $1.89 since the end of September 2008, mainly as a result of net income after tax and increased unrealized gains in the investment portfolio.”

Aspen summarized the fourth quarter and full year earnings highlights as follows:
— Diluted book value per share of $28.10, up 3.8 percent over 2007 and 7.2 percent over the third quarter of 2008.
— Full year net income of $103.8 million and fourth quarter net income of $21.8 million, down 78.8 percent on 2007 and 83.9 percent over the same quarter last year.
— Total investment return of $117.1 million or a simple 2 percent yield, including losses from funds of hedge funds, impairment charges and changes in unrealized gains in fixed income portfolio.
— Full year net investment income of $139.2 million and fourth quarter net investment income of $10.3 million, down 53.4 percent on 2007 and 87.2 percent over the same quarter last year.
— Operating earnings per share of $1.44 for 2008, down 71.1 percent on 2007 and $0.17 for the quarter, down 88.4 percent on the fourth quarter of 2007.
— Operating return on equity of 5.4 percent for the twelve months, down from 21.1 percent for 2007, and annualized 2.4 percent for the quarter, down from 23.2 percent for the fourth quarter of 2007.
— Combined ratio for the twelve months of 95.6 percent and 93.4 percent for the quarter up from 83.0 percent and 79.4 percent for the respective periods in 2007.
— Expense ratio for the twelve months of 29.8 percent and 28.5 percent for the quarter, down from 29.9 percent on 2007 and 31.8 percent over the same quarter last year.

Operating income after tax was $151.5 million for the full year and $20.5 million for the fourth quarter of 2008 compared with $478.6 million for 2007 and $138.0 million for the fourth quarter last year.

In addition Aspen noted that “operating income, excluding losses from our funds of hedge funds, net of taxes, was $66.5 million for the quarter and $237.9 million for the year. Annualized operating return on equity for the quarter was 2.4 percent and 5.4 percent for the year. Annualized operating return on equity excluding losses from our investments in funds of hedge funds, net of taxes, was 10.6 percent for the quarter and 9.2 percent for the year.”

CEO Chris O’Kane commented: “We enter 2009 with a strong capital position and expanded product range despite difficult underwriting and investment conditions in 2008. Global economic stress will continue to provide challenges, but current signs are that rates are firming across many sectors and business flows remain strong as customers respond to Aspen’s combination of specialist expertise and balance sheet strength.”

The full report and a replay of the earnings conference call, held Thursday, February 5, may be obtained on the Investor Relations page of Aspen’s web site at: www.aspen.bm.

Source: Aspen Insurance Holdings

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