Aspen Reports Q4 After-Tax Net Income of $67.2 Million

February 6, 2015

Bermuda-headquartered Aspen Insurance Holdings Limited reported net income after tax of $67.2 million, or $0.90 diluted net income per share, for the fourth quarter of 2014. This compares to net income after tax of $90.0 million, or $1.21 diluted net income per share, for the fourth quarter of 2013.

Operating highlights for Q4 2014
  • Gross written premiums increased by 1.8 percent to$615.4 million in the fourth quarter of 2014 from the fourth quarter of 2013
  • Combined ratio of 94.1 percent for the fourth quarter of 2014 compared with 91.9% for the fourth quarter of 2013. Net favorable development on prior year loss reserves of$11.5 million, or 1.9 combined ratio points, for the fourth quarter of 2014 compared with $20.5 million, or 3.6 combined ratio points, in the comparable period a year ago
  • There were$15.7 million, or 2.6 combined ratio points, of pre-tax catastrophe losses in the fourth quarter of 2014 compared with $34.7 million, or 6.1 combined points, of pre-tax catastrophe losses net of reinsurance recoveries and reinstatement premiums in the fourth quarter of 2013.
Operating highlights for 2014
  • Gross written premiums increased by 9.7 percent to$2,902.7 million for the year ended December 31, 2014 compared with the year ended December 31, 2013. Gross written premiums increased by 3.4 percent in reinsurance and 14.4 percent in insurance compared to 2013
  • Combined ratio of 91.7 percent (90.5 percent excluding bid defense costs) for 2014 compared with 92.6 percent for 2013. Net favorable development on prior year loss reserves of$104.1 million, or 4.3 combined ratio points, for 2014 compared with $107.7 million, or 5.0 combined ratio points, for 2013
  • There were $65.5 million, or 2.7 combined ratio points, of pre-tax catastrophe losses in 2014 compared with $101.9 million, or 4.7 combined points, of pre-tax catastrophe losses net of reinsurance recoveries and reinstatement premiums in 2013
Financial highlights
  • Annualized net income return on average equity of 11.1 percent (12.1 pecent excluding corporate expenses related to bid defense costs) and annualized operating return on average equity of 11.5% for the year ended December 31, 2014 compared with 10.6 percent and 9.7 percent, respectively, for 2013
  • Diluted net income per share of$4.82 ($5.25 excluding bid defense costs) for the year ended December 31, 2014 compared with diluted net income per share of $4.14 for the year ended December 31, 2013
  • Diluted operating income per share of$5.01 for the year ended December 31, 2014 compared with diluted operating income per share of $3.88 for the year ended December 31, 2013
  • Diluted book value per share of$45.13 at December 31, 2014 up 10.3% from December 31, 2013; Diluted book value per share increased 11.4 percent from December 31, 2013, excluding bid defense costs.
New $500 Million Share Repurchase Plan

Total shareholders’ equity was $3.4 billion at December 31, 2014.

During the fourth quarter of 2014, 1,398,727 ordinary shares were repurchased under a Rule 10b5-1 plan at an average price of $42.87 per share for a total cost of $60.0 million. For the 12 months ended December 31, 2014, a total of 4,289,857 ordinary shares were repurchased at an average price of $42.16 per ordinary share for a total cost of $180.9 million.

Aspen announced that its board of directors has replaced its existing share repurchase authorization with a new authorization of $500 million. The total share repurchase authorization, which is effective immediately through February 6, 2017, permits Aspen to effect repurchases from time to time through a combination of transactions, including open market repurchases, privately negotiated transactions and accelerated share repurchase transactions.

CEO Commentary

Chris O’Kane, chief executive officer, commented, “In 2014 Aspen achieved book value per share growth of 10.3 percent and a strong Operating Return on Equity of 11.5 percent. Our performance – achieved despite a dynamic and competitive reinsurance market that has required constant strategic vigilance – reflects our deep client relationships and access to more attractively priced business in reinsurance, as well as the continued successful build out of our U.S. insurance teams and the innovative insurance solutions we offer our clients around the world.”

Outlook for Year Ahead

Aspen expects to achieve an operating return on equity of 11 percent in 2015.

Commenting on Aspen’s outlook, O’Kane said: “In insurance, where rate environments differ by line and geography, our international insurance business has been successful in targeting niche areas where business is well rated and our U.S. platform continues to gain scale with increased profitable growth.

“We maintained our disciplined underwriting approach during the January reinsurance renewal season as we reduced our book where rates and terms did not meet our return requirements while achieving meaningful growth in areas where overall return remain attractive. In 2015, we will remain sharply focused on driving operating return on equity and book value growth. We currently expect an operating return on equity of 11 percent in 2015. We expect to continue to utilize repurchases and dividends as appropriate to return to shareholders excess capital that cannot be deployed in the business at our required rates of return,” O’Kane continued.

Source: Aspen Insurance Holdings Limited

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