Aspen Insurance Holdings confirmed on Friday, Feb. 16 that it has ceased underwriting property insurance on its Bermuda platform, effective immediately, as a result of the company’s 2017 catastrophe losses.
The move was made in response to CEO Chris O’Kane’s stated commitment to reduce volatility and improve profitability. During Aspen’s recent Q4 earnings call, O’Kane said the company is “moving away from major property accounts that contain considerable catastrophe exposure.”
Indeed, a company representative said the action stems from the high level of catastrophe loss activity seen during 2017.
Aspen recently announced a net loss after tax of $185 million in the fourth quarter of 2017, compared to a net loss of $71.5 million in Q4 2016. For the full year ended Dec. 31, 2017, Aspen reported a net loss after tax of $266.4 million, compared with net income of $203.4 million in 2016. Its full-year combined ratio was 125.7 percent, compared with 98.5 percent in 2016, while its fourth quarter combined ratio was 152.6 percent, compared with 107.2 for the same period in 2016. (When company reports a combined ratio over 100 percent, it indicates an underwriting loss.)
While California wildfire catastrophe costs contributed greatly to Aspen’s Q4 results, in an earnings conference call, O’Kane also blamed the Insurance division as “the source of considerable poor performance.”
Putting the decision to cease underwriting property business into context, the representative said, Aspen’s Bermuda book of business forms only a small part of the company’s U.S. property insurance book, which is unaffected by this announcement. The Bermuda property platform “relates to a very small unit within our Insurance segment; nothing else is affected for either our Insurance or Reinsurance businesses,” she said in emailed comments.
The representative said the Aspen Bermuda office still maintains a wide range of insurance business, including global casualty and financial and professional lines of business, as well as being one of the company’s principal reinsurance hubs.
Further, she said that Aspen will continue “to write a property book on the ground in the U.S., where it operates in the excess and surplus lines (E&S) market through the wholesale distribution channel.” Aspen’s E&S property operation is run in Atlanta by Cliff Hope, executive vice president and head of U.S. P&C.
Three members of staff are affected by Aspen’s announcement, the representative confirmed. “Stephanie Law has left the company and Natasha Pethick and Allison Bassett will be staying on for a while to ensure a smooth transition.” The representative emphasized that the decision to stop underwriting property insurance from Bermuda “was in no way influenced by the underwriting expertise or talent within the team – these individuals are outstanding.”