Aspen Insurance Holdings Limited (NYSE:AHL) today reported
quarterly results for the quarter ended March 31, 2007. Net income
of $121.9 million versus $61.8 million for the same quarter in
2006, up 97%. Earnings per ordinary share of $1.27 versus $0.59 for
the same period in 2006, up 115%. Underwriting income in the first
quarter of 2007 increased by 134% to $90.5 million compared to
$38.7 million the first quarter 2006. Net investment income in the
first quarter of 2007 increased by 52% to $67.5 million against
$44.5 million in the first quarter of 2006. The combined ratio for
the first quarter of 2007 was 79.4% versus 90.4% for the same
quarter in 2006, a 12% improvement. Book value per ordinary share
at March 31, 2007 is $23.62 versus $19.40 at March 31, 2006, up
22%. Annualized return on average equity for the quarter was 22.9%.
Chris O'Kane, Chief Executive Officer, said, �I am delighted to
report an excellent first quarter, with all our product segments
performing well and a very strong contribution from investments. In
addition we have recently announced a number of significant new
appointments to our management team, including Glyn Jones as
Chairman, Richard Houghton as CFO with two outstanding underwriting
talents, Nathan Warde and Matt Yeldham assuming leadership roles
for our insurance operations. I look forward to working with them
as we build on a terrific start to the year.� Earnings conference
call Aspen will hold a conference call tomorrow, May 3, 2007 at
9:30 a.m. (Eastern Time) to discuss its 2007 first quarter results.
Investors may participate in the live conference call by dialing
877-860-4996 (toll-free domestic U.S.) or 973-582-2854
(international); conference ID: 8628821. Please call to register at
least 10 minutes before the conference call begins. A replay of the
call will be available for 10 days via telephone starting
approximately two hours following the live call on May 3, 2007, and
can be accessed at 877-519-4471 (toll-free domestic U.S.) or
973-341-3080 (international); digital pin: 8628821. The live call
and a replay can also be heard via Aspen's website at www.aspen.bm.
In addition, a financial supplement relating to Aspen's financial
results for the first quarter 2007 is available in the Investor
Relations section of Aspen's website at www.aspen.bm. A brief slide
presentation which will be used for reference during the earnings
call will also be available in the Investor Relations section of
Aspen�s website. About Aspen Insurance Holdings Limited Aspen
Insurance Holdings Limited was established in June 2002. Aspen is a
Bermudian holding company that provides property and casualty
reinsurance in the global market, property and liability insurance
principally in the United Kingdom and the United States and
specialty insurance and reinsurance consisting mainly of marine and
energy and aviation worldwide. Aspen's operations are conducted
through its wholly-owned subsidiaries located in London, Bermuda
and the United States: Aspen Insurance UK Limited, Aspen Insurance
Limited and Aspen Specialty Insurance Company. Aspen has four
operating segments: property reinsurance, casualty reinsurance,
specialty insurance and reinsurance and property and casualty
insurance. Aspen's principal existing founding shareholders include
The Blackstone Group, Candover Partners Limited and Credit Suisse
First Boston Private Equity. For more information about Aspen,
please visit Aspen's website at www.aspen.bm. Application of the
Safe Harbor of the Private Securities Litigation Reform Act of
1995: This press release contains, and Aspen's earnings conference
call may contain, written or oral "forward-looking statements"
within the meaning of the U.S. federal securities laws. These
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of
words such as "expect," "intend," "plan," "believe," "project,"
"anticipate," "seek," "will," "estimate," "may," "continue," and
similar expressions of a future or forward-looking nature. All
forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors
that could cause actual results to differ materially from those
indicated in these statements. Aspen believes these factors
include, but are not limited to: the impact that our future
operating results, capital position and rating agency and other
considerations have on the execution of any capital management
initiatives; the impact of any capital management activities on our
financial condition; the impact of acts of terrorism and related
legislation and acts of war; the possibility of greater frequency
or severity of claims and loss activity, including as a result of
natural or man-made catastrophic events such as Hurricanes Katrina,
Rita and Wilma, than our underwriting, reserving or investment
practices have anticipated; evolving interpretive issues with
respect to coverage as a result of Hurricanes Katrina, Rita and
Wilma; the level of inflation in repair costs due to limited
availability of labor and materials after catastrophes; the
effectiveness of Aspen's loss limitation methods; changes in the
availability, cost or quality of reinsurance or retrocessional
coverage, which may affect our decision to purchase such coverage;
the reliability of, and changes in assumptions to, catastrophe
pricing, accumulation and estimated loss models; loss of key
personnel; a decline in our operating subsidiaries' ratings with
Standard & Poor's, A.M. Best Company or Moody's Investors
Service; changes in general economic conditions including
inflation, foreign currency exchange rates, interest rates and
other factors that could affect our investment portfolio; the
number and type of insurance and reinsurance contracts that we
wrote at the January 1st and other renewal periods in 2007 and the
premium rates available at the time of such renewals within our
targeted business lines; increased competition on the basis of
pricing, capacity, coverage terms or other factors; decreased
demand for Aspen�s insurance or reinsurance products and cyclical
downturn of the industry; changes in governmental regulations,
interpretations or tax laws in jurisdictions where Aspen conducts
business; proposed and future changes to insurance laws and
regulations, including with respect to U.S. state- and other
government-sponsored reinsurance funds and primary insurers; Aspen
or its Bermudian subsidiary becoming subject to income taxes in the
United States or the United Kingdom; the effect on insurance
markets, business practices and relationships of ongoing
litigation, investigations and regulatory activity by the New York
State Attorney General's office and other authorities concerning
contingent commission arrangements with brokers and bid
solicitation activities; the total industry losses resulting from
Hurricanes Katrina, Rita and Wilma and the actual number of Aspen's
insureds incurring losses from these storms; and with respect to
Hurricanes Katrina, Rita and Wilma, Aspen�s continued reliance on
loss reports received from cedants and loss adjustors, Aspen's
reliance on industry loss estimates and those generated by modeling
techniques, the impact of these storms on Aspen's reinsurers, any
changes in Aspen's reinsurers' credit quality, the amount and
timing of reinsurance recoverables and reimbursements actually
received by Aspen from its reinsurers and the overall level of
competition and the related demand and supply dynamics as contracts
come up for renewal. For a more detailed description of these
uncertainties and other factors, please see the "Risk Factors"
section in Aspen's Annual Reports on Form 10-K as filed with the
U.S. Securities and Exchange Commission on February 22, 2007. Aspen
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the dates on which they are made. Summary of Results �
Consolidated Income Statements � (in US$ millions) Three Months
EndedMarch 31, 2007 Three Months EndedMarch 31, 2006 UNDERWRITING
REVENUES Gross written premiums 636.5� 678.7� Premiums ceded (81.4)
(226.8) Net written premiums 555.1� 451.9� Change in unearned
premiums (116.1) (49.3) Net earned premiums 439.0� 402.6�
UNDERWRITING EXPENSES Losses and loss expenses (225.5) (232.4)
Acquisition expenses (77.7) (93.3) General and administrative
expenses (45.3) (38.2) Total underwriting expenses (348.5) (363.9)
Underwriting income 90.5� 38.7� OTHER OPERATING REVENUE Net
investment income 67.5� 44.5� Interest expense (4.2) (3.9) Total
other operating revenue 63.3� 40.6� Other expense (7.3) (1.9)
OPERATING INCOME BEFORE TAX 146.5� 77.4� OTHER Net realized
exchange gains 5.5� 1.3� Net realized investment losses (4.8) (1.4)
INCOME BEFORE TAX 147.2� 77.3� Income taxes expense (25.3) (15.5)
NET INCOME AFTER TAX 121.9� 61.8� Dividends paid on ordinary shares
(13.2) (14.3) Dividend paid on preference shares (6.9) (3.9)
Retained income 101.8� 43.6� Components of net income (after tax)
Operating income 120.6� 61.7� Net realized exchange gains (after
tax) 5.5� 1.3� Net realized investment losses (after tax) (4.2)
(1.2) NET INCOME AFTER TAX 121.9� 61.8� Per Share Data � (in US$
except for number of shares) Three Months EndedMarch 31, 2007 Three
Months EndedMarch 31, 2006 � Basic earnings per ordinary share Net
income adjusted for preference share dividend 1.31� 0.61� Operating
income adjusted for preference dividend 1.29� 0.61� Diluted
earnings per ordinary share Net income adjusted for preference
share dividend 1.27� 0.59� Operating income adjusted for preference
dividend 1.26� 0.59� � Weighted average ordinary shares outstanding
87,819,188� 95,243,750� Weighted average ordinary shares
outstanding and dilutive potential ordinary shares 90,487,698�
97,513,725� � Book value per ordinary share 23.62� 19.40� Diluted
book value (treasury stock method) 22.93� 18.95� � Ordinary shares
outstanding at end of the period 88,133,866� 95,250,401� Ordinary
shares outstanding and dilutive potential ordinary shares at end of
the period 90,797,595� 97,520,376� Consolidated Balance Sheets �
(in US$ millions) As atMarch 31,2007 As atDecember 31,2006 ASSETS
Investments Fixed maturities 4,024.2� 3,828.7� Other investments
316.8� 156.9� Short-term investments 621.4� 695.5� Total
investments 4,962.4� 4,681.1� � Cash and cash equivalents 346.4�
495.0� Reinsurance recoverables Unpaid losses 430.9� 468.3� Ceded
unearned premiums 76.1� 29.8� Receivables Underwriting premiums
815.0� 688.1� Other 39.5� 62.2� Deferred policy acquisition costs
161.8� 141.4� Derivative at fair value 26.5� 33.8� Office
properties and equipment 24.6� 24.6� Other assets 10.9� 7.6�
Intangible assets 8.2� 8.2� Total assets 6,902.3� 6,640.1�
LIABILITIES Insurance reserves Losses and loss adjustment expenses
2,783.3� 2,820.0� Unearned premiums 1,004.8� 841.3� Total insurance
reserves 3,788.1� 3,661.3� Payables Reinsurance premiums 105.0�
62.4� Taxation 99.7� 61.8� Accrued expenses and other payables
124.7� 186.2� Liabilities under derivative contracts 26.1� 29.7�
Total payables 355.5� 340.1� Long-term debt 249.4� 249.4� Total
liabilities 4,393.0� 4,250.8� SHAREHOLDERS� EQUITY Ordinary shares
0.1� 0.1� Preference shares -� -� Additional paid-in capital
1,923.5� 1,921.7� Retained earnings 552.3� 450.5� Accumulated other
comprehensive income, net of taxes 33.4� 17.0� Total shareholders�
equity 2,509.3� 2,389.3� Total liabilities and shareholders� equity
6,902.3� 6,640.1� Summarized Cash Flows � (in US$ millions) Three
Months EndedMarch 31, 2007 Three Months EndedMarch 31, 2006 Net
cash from operating activities 128.8� 64.4� Net cash used in
investing activities (250.8) (395.2) Net cash from / (used in)
financing activities (20.1) 10.9� Effect of exchange rate movements
on cash and cash equivalents (6.5) 0.6� Decrease in cash and cash
equivalents (148.6) (319.3) Cash at beginning of the period 495.0�
748.3� Cash at end of the period 346.4� 429.0� Non-GAAP Financial
Measures In presenting Aspen's results, management has included and
discussed certain "non-GAAP financial measures", as such term is
defined in Regulation G. Management believes that these non-GAAP
measures, which may be defined differently by other companies,
better explain Aspen's results of operations in a manner that
allows for a more complete understanding of the underlying trends
in Aspen's business. However, these measures should not be viewed
as a substitute for those determined in accordance with GAAP. The
reconciliation of such non-GAAP financial measures to their
respective most directly comparable GAAP financial measures in
accordance with Regulation G is included in the financial
supplement, which can be obtained from the Investor Relations
section of Aspen's website at www.aspen.bm. (1) Annualized
Operating Return on Average Equity (�Operating ROAE�) is a non-GAAP
financial measure. Annualized Operating Return on Average Equity 1)
is calculated using operating income, as defined below and 2)
excludes from average equity, the average after-tax unrealized
appreciation or depreciation on investments and the average
after-tax unrealized foreign exchange gains or losses and the
aggregate value of the liquidation preferences of our preference
shares. Unrealized appreciation (depreciation) on investments is
primarily the result of interest rate movements and the resultant
impact on fixed income securities, and unrealized appreciation
(depreciation) on foreign exchange is the result of exchange rate
movements between the U.S. dollar and the British pound. Such
appreciation (depreciation) is not related to management actions or
operational performance (nor is it likely to be realized).
Therefore Aspen believes that excluding these unrealized
appreciations (depreciations) provides a more consistent and useful
measurement of operating performance, which supplements GAAP
information. Average equity is calculated as the arithmetic average
on a monthly basis for the stated periods. Aspen presents Operating
ROAE as a measure that is commonly recognized as a standard of
performance by investors, analysts, rating agencies and other users
of its financial information. See page 19 of Aspen's financial
supplement for a reconciliation of operating income to net income
and page 12 for a reconciliation of average equity. (2) Operating
income is a non-GAAP financial measure. Operating income is an
internal performance measure used by Aspen in the management of its
operations and represents after-tax operational results excluding,
as applicable, after-tax net realized capital gains or losses and
after-tax net foreign exchange gains or losses. Aspen excludes
after-tax net realized capital gains or losses and after-tax net
foreign exchange gains or losses from its calculation of operating
income because the amount of these gains or losses is heavily
influenced by, and fluctuates in part, according to the
availability of market opportunities. Aspen believes these amounts
are largely independent of its business and underwriting process
and including them distorts the analysis of trends in its
operations. In addition to presenting net income determined in
accordance with GAAP, Aspen believes that showing operating income
enables investors, analysts, rating agencies and other users of its
financial information to more easily analyze Aspen's results of
operations in a manner similar to how management analyzes Aspen's
underlying business performance. Operating income should not be
viewed as a substitute for GAAP net income. Please see above and
page 19 of Aspen's financial supplement for a reconciliation of
operating income to net income. Aspen�s financial supplement can be
obtained from the Investor Relations section of Aspen's website at
www.aspen.bm. (3) Diluted book value per ordinary share is a
non-GAAP financial measure. Aspen has included diluted book value
per ordinary share because it takes into account the effect of
dilutive securities; therefore, Aspen believes it is a better
measure of calculating shareholder returns than book value per
share. Please see page 19 of Aspen's financial supplement for a
reconciliation of diluted book value per share to basic book value
per share. Aspen's financial supplement can be obtained from the
Investor Relations section of Aspen's website at www.aspen.bm.
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