Aspen Posts $2 Mn Q4 Net Income; FY $280.4 Mn; No Plans to Exit U.S. Property

February 13, 2013

Bermuda-based Aspen Insurance Holdings Limited reported net income after tax of $2.0 million for the fourth quarter of 2012, compared to $12.4 million in Q4 2011. After tax net income for the full year was $280.4 million, compared to a loss of $110.1 million in 2011. “This is equivalent to diluted net income per share of $3.38 for the year and a diluted net loss per share of $0.09 for the fourth quarter of 2012,” the report said.

“Results for the quarter were impacted by net catastrophe losses of $170 million, after tax and net of reinsurance and reinstatements, including $175 million from Superstorm Sandy and favorable development on the 2012 US storms,” it continued.

CEO Chris O’Kane commented: “In 2012 Aspen celebrated its 10 year anniversary. Our success reflects the support of our clients, with whom we have built strong relationships, the hard work and skill of all our people, and the diversified Reinsurance and Insurance platform that we have built together. In 2012, despite the impact of Superstorm Sandy, we made strong progress against our strategic objectives and generated an operating return on equity of 8.5 percent.

“In 2013, we will be intensely focused on further improving return on equity, against a backdrop of modestly improving insurance pricing, lackluster global economies, and a continued low interest rate environment.

“We will allocate capital efficiently to profitable underwriting opportunities, scale back in certain lines whose performance has not been consistent with our targeted risk profile, and return excess capital to shareholders through our expanded share repurchase authorization.”

In a telephone conference following the release of the earnings report O’Kane clarified his comment about scaling “back in certain lines,” which in some instances had been erroneously interpreted that Aspen planned to exit the U.S. property market. While the company does plan to reduce its exposure to wind and earthquake related risks in order to free up additional capital, it will continue to write all catastrophe related lines; albeit on a more selective basis.

O’Kane also said Aspen would “strive to generate increased returns from our investment portfolio while ensuring that our investments remain within our risk tolerance.”

Operating highlights for the fourth quarter of 2012 were listed as follows:
— Diluted net loss per share of $0.09 for the quarter ended December 31, 2012 compared with diluted net earnings per share of $0.09 in the fourth quarter of 2011
— Diluted operating loss per share of $0.15 for the quarter ended December 31, 2012 compared with diluted operating loss per share of $0.01 in the fourth quarter of 2011
— Diluted book value per share of $40.65, up 6.4 percent from the year ended 2011
— Annualized net return on average equity of (0.8) percent and annualized operating return on average equity of (1.6) percent for the fourth quarter of 2012 compared with 0.8 percent and Nil percent, respectively in the fourth quarter of 2011
— Gross written premiums of $576.2 million in the fourth quarter of 2012 increased 25.6 percent from the fourth quarter of 2011 with the majority of the growth resulting from a 40.2 percent increase in the insurance segment
— Combined ratio of 108.0 percent or 72.0 percent excluding catastrophes, pre-tax and net of reinsurance and reinstatements, for the fourth quarter of 2012 compared with a combined ratio of 114.3 percent or 85.9 percent excluding catastrophes for the fourth quarter 2011
— Net favorable development on prior year loss reserves of $42.0 million, or 7.5 combined ratio points, for the fourth quarter 2012 compared with $22.0 million, or 4.5 combined ratio points, for the fourth quarter of 2011

Operating highlights for the year ended December 31, 2012 were also listed as follows:
— Net return on average equity of 8.5 percent and operating return on average equity of 8.5 percent for 2012 compared with (4.8) percent and (3.4) percent, respectively in 2011(1)(2)
— Gross written premiums of $2.5833 billion, up 17.0 percent from 2011, with growth principally in the insurance segment
— Combined ratio for 2012 of 94.3 percent, including $205.0 million or 10.8 percentage points of pre-tax catastrophe losses, net of reinsurance and reinstatements compared with 115.9 percent for 2011, which included 31.5 percentage points of net losses from catastrophes
— Net favorable development on prior year loss reserves of $137.4 million, or 6.6 combined ratio points, for the year compared with $92.3 million, or 4.9 combined ratio points, for 2011

Source: Aspen Insurance Holdings

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