Aspen Insurance Holdings Limited (“Aspen”) (NYSE: AHL) today
reported net income after tax of $115.1 million and diluted
earnings per share of $1.45 for the third quarter of 2012. Diluted
book value per share increased by 3.8% from June 30, 2012 to
$41.53.
Trading highlights in the quarter included low catastrophe
levels, areas of pricing improvement, and net favorable reserve
development with profitable performance in both the reinsurance and
insurance segments.
Operating highlights for the quarter ended September 30,
2012
- Diluted net earnings per share of $1.45
for the quarter ended September 30, 2012 compared with diluted net
earnings per share of $0.21 in the third quarter of 2011(1)
- Diluted operating earnings per share of
$1.34 for the quarter ended September 30, 2012 compared with
diluted operating earnings per share of $0.68 in the third quarter
of 2011(1)(2)
- Diluted book value per share of $41.53,
up 9.1% from the third quarter of 2011 and up 3.8% from June 30,
2012(1)(2)
- Annualized net income return on average
equity of 14.4% and annualized operating return on average equity
of 13.2% for the third quarter of 2012 compared with 2.4% and 7.2%,
respectively in the third quarter of 2011(1)(2)
- Gross written premiums in the third
quarter of 2012 increased 12.7% from the third quarter of 2011 to
$558.4 million with the majority of the growth resulting from a
36.2% increase in the insurance segment
- Combined ratio of 87.0% for the third
quarter of 2012 compared with a combined ratio of 96.9%(1) for the
third quarter 2011
- Net favorable development on prior year
loss reserves of $29.8 million, or 5.8 combined ratio points, for
the quarter compared with $15.6 million, or 3.2 combined ratio
points, for the third quarter of 2011
(1) See provision of ASU 2010-26 on page 13
(2) See definition of non-GAAP financial measures on pages 12
and 13
Financial highlights, quarter ended
September 30, 2012 (unaudited)
$ in millions, except per share amounts
and percentages
Q3 2012
Q3 2011(1) Gross written premiums $558.4
$495.6 Net earned premiums $516.2 $486.9 Net investment income
$48.6 $57.3 Net income after tax $115.1 $21.2 Operating income
after tax $106.5 $55.5 Diluted net income per share $1.45 $0.21
Diluted operating earnings per share $1.34 $0.68 Annualized net
income return on equity 14.4% 2.4% Annualized operating return on
equity 13.2% 7.2% Combined ratio 87.0% 96.9% Combined ratio
excluding catastrophes(2) 86.6% 85.8% Book value per ordinary share
$42.90 $39.41 Diluted book value per ordinary share $41.53
$38.07
Financial highlights, nine months ended
September 30, 2012 (unaudited)
$ in millions, except per share amounts
and percentages
YTD 2012 YTD 2011(1) Gross
written premiums $2,007.1 $1,749.1 Net earned premiums $1,525.0
$1,399.1 Net investment income $153.8 $171.4 Net income (loss)
after tax $278.4 $(122.5) Operating income (loss) after tax $282.8
$(75.4) Diluted net income (loss) per share $3.47 $(1.98) Diluted
operating earnings (loss) per share $3.53 $(1.32) Annualized net
income (loss) return on equity 11.9% (6.7)% Annualized operating
return (loss) on equity 12.0% (4.4)% Combined ratio 89.3% 116.4%
Combined ratio excluding catastrophes(2) 87.2% 87.1%
(1) See provision of ASU 2010-26 on page
13
(2) See definition of non-GAAP financial
measures on pages 12 and 13
Chris O’Kane, Chief Executive Officer commented, “Our operating
income for the third quarter was $106.5 million, equivalent to
diluted earnings per share of $1.34 and the result of positive
performances in both reinsurance and insurance. Diluted book value
per share grew 3.8% in the quarter to $41.53 and we generated an
annualized operating return on equity of 13.2%. We enter the final
quarter of the year with positive momentum and a strong capital
position as we continue to execute our diversified business
strategy and to manage capital effectively.”
Segment highlights
Reinsurance
Operating highlights for Reinsurance for the quarter ended
September 30, 2012 include:
- Gross written premiums of $259.5
million, down 6.0% compared with $276.1 million for the third
quarter of 2011 as we continue to reduce exposure where we do not
believe price reflects our current view of the risks
- Combined ratio of 73.8% compared with
95.5% for the third quarter of 2011
- Favorable prior year loss reserve
development of $22.0 million primarily in property and specialty
reinsurance compared with $11.7 million in the third quarter of
2011
The combined ratio for the third quarter of 2012 was 73.8%,
benefitting from benign catastrophe activity. There was no change
in reserves for the 2010 and 2011 catastrophe events. In
comparison, the combined ratio for the third quarter of 2011 was
95.5% or 77.7%(1)(2) excluding natural catastrophe losses.
The segment underwriting profit for the third quarter of 2012
was $73.2 million compared with an underwriting profit of $12.3
million for the third quarter of 2011.(1)
Operating highlights for Reinsurance for the nine months ended
September 30, 2012 include:
- Gross written premiums of $1,033.5
million, up 3.2% compared with $1,001.2 million for the first nine
months of 2011
- Combined ratio of 77.5% compared with
126.1% for the first nine months of 2011(1)
- Favorable prior year loss reserve
development for the first nine months of 2012 was $64.2 million
compared with $57.8 million for the first nine months of 2011
The combined ratio of 77.5% for the first nine months of 2012
included pre-tax catastrophe losses, net of reinsurance recoveries
and reinstatement premiums, of $19.5 million or 2.6 percentage
points. In comparison, the combined ratio for the first nine months
of 2011 was 126.1% or 77.6%(1)(2) excluding natural catastrophe
losses.
The segment underwriting profit for the first nine months of
2012 was $186.8 million compared with an underwriting loss of
$214.5 million(1) for the first nine months of 2011 which was
severely impacted by natural catastrophes, primarily the Japan and
New Zealand earthquakes.
(1) See provision of ASU 2010-26 on page 13
(2) See definition of non-GAAP financial measures on pages 12
and 13
Insurance
Operating highlights for Insurance for the quarter ended
September 30, 2012 include:
- Gross written premiums of $298.9
million, up 36.2% compared with $219.5 million in the third quarter
of 2011
- Combined ratio of 96.4% compared with
93.5% for the third quarter of 2011(1)
- Favorable prior year loss reserve
development of $7.8 million compared with $3.9 million in the third
quarter of 2011 primarily in property and casualty
The increase in gross written premiums was mainly attributable
to growth in our US based insurance operations.
Operating highlights for Insurance for the nine months ended
September 30, 2012 include:
- Gross written premiums of $973.6
million, up 30.2% compared with $747.9 million in the first nine
months of 2011
- Combined ratio of 97.5% compared with
97.0% for the first nine months of 2011(1)
- Favorable prior year loss reserve
development of $31.2 million compared with $12.5 million in the
first nine months of 2011
Investment performance
Net investment income for the third quarter of 2012 was $48.6
million compared with $57.3 million in the third quarter of 2011.
Net realized and unrealized investment gains included in net income
for the quarter were $2.7 million which included $8.1 million of
losses from the Company’s interest rate swaps.
Unrealized gains in the available for sale investment portfolio,
including equity securities, at the end of September 30, 2012 were
$392.9 million, an increase of $32.2 million from the end of the
second quarter of 2012.
Book yield at September 30, 2012 on the fixed income portfolio
was 3.04% a decrease of 50 basis points from 3.54% at the end of
the third quarter of 2011. The average credit quality of the fixed
income portfolio was AA and it had an average duration of 2.8 years
at September 30, 2012, excluding the impact of interest rate
swaps.
Capital
Total shareholders’ equity increased $119.1 million in the
quarter to $3.6 billion at September 30, 2012.
During the third quarter of 2012, Aspen repurchased 864,634
ordinary shares in the open market at an average price of $28.91
per share for a total cost of $25.0 million. Aspen had $142.4
million remaining under its current share buyback authorization at
September 30, 2012.
Aspen today announced that its Board of Directors has approved a
new share repurchase authorization for up to $400 million of
outstanding ordinary shares. The share repurchase authorization,
which is effective immediately and replaces the previous
authorization, permits Aspen to effect the repurchases from time to
time through a combination of transactions, including open market
repurchases, privately negotiated transactions and accelerated
share repurchase transactions.
(1) See provision of ASU 2010-26 on page 13
Outlook for 2012
Aspen continues to anticipate gross written premiums for 2012 to
be $2.4 billion +/- 5% and premiums ceded to be between 10% and 12%
of gross earned premiums. The full year guidance range for combined
ratio is reduced to 89% to 93% from 93% to 98% reflecting the
absence of significant third quarter catastrophe losses and
assuming normal loss experience in the fourth quarter. The revised
combined ratio range includes a catastrophe load for the remainder
of the year of $45 million. Aspen has also lowered its expectations
for the effective tax rate in 2012 to be in the range of 5% to
8%.
See “Forward-looking Statements Safe Harbor” below.
Earnings conference call and web cast
Aspen will host a conference call to discuss the results at 9:00
am (EST) on Thursday, October 25, 2012.
To participate in the October 25 conference call by
phonePlease call to register at least 10 minutes before the
conference call begins by dialing:
+1 (888) 459 5609 (US toll free) or+1 (404) 665 9920
(international)Conference ID 30243864
To listen live onlineAspen will provide a live webcast at
www.aspen.co(Investors and Media > Investor Relations > Event
calendar)
To download the materialsThe earnings press release and a
detailed financial supplement will also be published on Aspen’s
website at www.aspen.co.
To listen laterA replay of the call will be available for
14 days via phone and internet, available two hours after the end
of the live call. To listen to the replay by phone please dial:
+1 (855) 859 2056 (US toll free) or+1 (404) 537 3406
(international)Replay ID 30243864
The recording will be also available at www.aspen.co.
Aspen Insurance Holdings
Limited
Summary consolidated balance sheet
(unaudited)
$ in millions, except per share data
As at As at September 30, December
31, 2012 2011 ASSETS
Total investments
$6,720.3 $6,335.1 Cash and cash
equivalents
1,374.2 1,239.1 Reinsurance recoverables
612.9 514.4 Premiums receivable
993.4 894.4 Other
assets(1)
537.0 477.5 Total
assets
$10,237.8 $9,460.5
LIABILITIES Losses and loss adjustment expenses
$4,639.6
$4,525.2 Unearned premiums
1,184.0 916.1 Other payables
360.9 364.2 Long-term debt
499.1
499.0 Total liabilities
6,683.6 6,304.5 SHAREHOLDERS’
EQUITY Total shareholders’ equity(1)
3,554.2
3,156.0 Total liabilities and shareholders’ equity(1)
$10,237.8 $9,460.5 Book value
per share(1)
$42.90 $39.66 Diluted book value per share
(treasury stock method) (1)
$41.53
$38.21
(1) See provision of ASU 2010-26 on page
13
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Three Months Ended September 30,
September 30, 2012
2011(1)
UNDERWRITING REVENUES Gross written premiums
$558.4 $495.6
Premiums ceded
(51.3) (33.0) Net
written premiums
507.1 462.6 Change in unearned premiums
9.1 24.3 Net earned premiums
516.2 486.9 UNDERWRITING EXPENSES
Losses and loss adjustment expenses
255.0 306.2 Policy
acquisition expenses
103.1 93.4 General, administrative and
corporate expenses
90.7 72.0 Total
underwriting expenses
448.8 471.6
Underwriting income including corporate expenses
67.4
15.3 OTHER OPERATING REVENUE Net investment income
48.6 57.3 Interest expense
(7.8) (7.7) Other
income/(expense)
4.5 (9.1) Total other
operating revenue
45.3 40.5
OPERATING INCOME BEFORE TAX
112.7 55.8 Net realized
and unrealized exchange gains
7.7 0.3 Net realized and
unrealized investment gains/(losses)
2.7
(32.9) INCOME BEFORE TAX
123.1 23.2 Income taxes
(expense)
(8.0) (2.0) NET INCOME AFTER
TAX
115.1 21.2 Dividends paid on ordinary shares
(12.2) (10.6) Dividends paid on preference shares
(8.6) (5.7) Dividends paid to non-controlling interest
(0.1) (0.1) Proportion due to non-controlling interest
─ (0.1) Retained income
$94.2
$4.7 Components of net income (after tax)
Operating Income
$106.5 $55.5 Net realized and unrealized
exchange gains/(losses) after tax
6.1 (0.8) Net realized
investment gains/(losses) after tax
2.5
(33.5) NET INCOME AFTER TAX
$115.1
$21.2 Loss ratio
49.4% 62.9% Policy acquisition
expense ratio
20.0% 19.2% General, administrative and
corporate expense ratio
17.6% 14.8% Expense ratio
37.6% 34.0% Combined ratio
87.0%
96.9%
(1) See provision of ASU 2010-26 on page
13
Aspen Insurance
Holdings Limited Summary consolidated financial data
(unaudited) Three Months Ended Nine Months
Ended September
September
September
September
(in US$ except for number of shares) 30, 2012
30, 2011(1)
30, 2012
30, 2011(1)
Basic earnings per ordinary share Net income/(loss) adjusted
for preference share dividend
$1.50 $0.22
$3.60
$(1.98) Operating income/(loss) adjusted for preference dividend
$1.37 $0.70
$3.67 $(1.32) Diluted earnings per
ordinary share Net income/(loss) adjusted for preference share
dividend
$1.45 $0.21
$3.47 $(1.98) Operating
income/(loss) adjusted for preference dividend
$1.34 $0.68
$3.53 $(1.32) Weighted average number of ordinary
shares outstanding (in millions)(2)
71.129 70.699
71.126 70.682 Weighted average number of ordinary shares
outstanding and dilutive potential ordinary shares (in millions)(2)
73.398 73.300
73.703 70.682 Book value per
ordinary share
$42.90 $39.41 Diluted book value (treasury
stock method)
$41.53 $38.07 Ordinary shares
outstanding at end of the period (in millions)
71.012 70.595
Ordinary shares outstanding and dilutive potential ordinary shares
at end of the period (treasury stock method) (in millions)
73.341 73.079
(1) See provision of ASU 2010-26 on page
13
(2) The basic and diluted number of
ordinary shares for the nine months ended September 30, 2011 is the
same, as the inclusion of dilutive shares in a loss-making period
would be anti-dilutive
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Three Months Ended September 30, 2012 Three Months
Ended September 30, 2011 Reinsurance
Insurance Total Reinsurance
Insurance Total
Gross written
premiums
$259.5 $298.9 $558.4 $276.1 $219.5
$495.6 Net written premiums
256.9 250.2 507.1
270.5 192.1 462.6 Gross earned premiums
299.8 302.0
601.8 303.2 246.7 549.9 Net earned premiums
279.6
236.6 516.2 279.6 207.3 486.9 Losses and loss
adjustment expenses
117.1 137.9 255.0 188.8
117.4 306.2 Policy acquisition expenses
55.7 47.4
103.1 51.8 41.6 93.4 General and administrative expenses(1)
33.6 42.8 76.4
26.7 34.9 61.6 Underwriting
income/(loss)
$73.2 $8.5 $81.7
$12.3 $13.4 $25.7 Net investment income
48.6 57.3 Net realized and unrealized investment
gains/(losses) (2)
2.7 (32.9) Corporate expenses
(14.3) (10.4) Other income/(expense)
4.5 (9.1)
Interest expenses
(7.8) (7.7) Net realized and unrealized
foreign exchange gains (3)
7.7 0.3 Income before tax
123.1 23.2 Income tax (expense)
(8.0) (2.0)
Net
income $115.1 $21.2
Ratios Loss ratio
41.9% 58.3% 49.4% 67.5% 56.6% 62.9% Policy
acquisition expense ratio
19.9% 20.0% 20.0%
18.5% 20.1% 19.2% General and administrative expense ratio (4)
12.0% 18.1% 17.6% 9.5% 16.8% 14.8% Expense
ratio
31.9% 38.1% 37.6% 28.0% 36.9% 34.0%
Combined ratio
73.8% 96.4%
87.0% 95.5% 93.5%
96.9%
(1)
See provision of ASU 2010-26 on page
13
(2)
Includes realized and unrealized capital
gains and losses and realized and unrealized gains and losses on
interest rate swaps
(3)
Includes realized and unrealized foreign
exchange gains and losses and realized and unrealized gains and
losses on foreign exchange contracts
(4)
The total group general and administrative
expense ratio includes the impact from corporate expenses
About Aspen Insurance Holdings Limited
Aspen provides reinsurance and insurance coverage to clients in
various domestic and global markets through wholly-owned
subsidiaries and offices in Bermuda, France, Germany, Ireland,
Singapore, Switzerland, the United Kingdom and the United States.
For the year ended December 31, 2011, Aspen reported $9.5 billion
in total assets, $4.5 billion in gross reserves, $3.2 billion in
shareholders’ equity and $2.2 billion in gross written premiums.
Its operating subsidiaries have been assigned a rating of “A”
(“Strong”) by Standard & Poor’s, an “A” (“Excellent”) by A.M.
Best and an “A2” (“Good”) by Moody’s Investors Service.
For more information about Aspen, please visit www.aspen.co.
Forward-looking Statements Safe Harbor
This press release contains, and Aspen's earnings conference
call will contain, written or oral "forward-looking statements"
within the meaning of the US 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," "do not
believe," "aim," "project," "anticipate," "seek," "will,"
"estimate," "may," "continue," “guidance,” 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 possibility of
greater frequency or severity of claims and loss activity,
including as a result of natural or man-made (including economic
and political risks) catastrophic or material loss events, than our
underwriting, reserving, reinsurance purchasing or investment
practices have anticipated; the reliability of, and changes in
assumptions to, natural and man-made catastrophe pricing,
accumulation and estimated loss models; evolving issues with
respect to interpretation of coverage after major loss events and
any intervening legislative or governmental action; the
effectiveness of our loss limitation methods; changes in the total
industry losses, or our share of total industry losses, resulting
from past events and, with respect to such events, our reliance on
loss reports received from cedants and loss adjustors, our reliance
on industry loss estimates and those generated by modeling
techniques, changes in rulings on flood damage or other exclusions
as a result of prevailing lawsuits and case law; the impact of acts
of terrorism and related legislation and acts of war; decreased
demand for our insurance or reinsurance products and cyclical
changes in the insurance and reinsurance sectors; any changes in
our reinsurers’ credit quality and the amount and timing of
reinsurance recoverables; changes in the availability, cost or
quality of reinsurance or retrocessional coverage; the continuing
and uncertain impact of the current depressed economic environment
in many of the countries in which we operate; the level of
inflation in repair costs due to limited availability of labor and
materials after catastrophes; changes in insurance and reinsurance
market conditions; increased competition on the basis of pricing,
capacity, coverage terms or other factors and the related demand
and supply dynamics as contracts come up for renewal; a decline in
our operating subsidiaries’ ratings with S&P, A.M. Best or
Moody’s; our ability to execute our business plan to enter new
markets, introduce new products and develop new distribution
channels, including their integration into our existing operations;
the persistence of the global financial crisis and the Eurozone
debt crisis, changes in general economic conditions, including
inflation, foreign currency exchange rates, interest rates and
other factors that could affect our investment portfolio; the risk
of a material decline in the value or liquidity of all or parts of
our investment portfolio; changes in our ability to exercise
capital management initiatives or to arrange banking facilities as
a result of prevailing market changes or changes in our financial
position; changes in government regulations or tax laws in
jurisdictions where we conduct business; Aspen Holdings or Aspen
Bermuda becoming subject to income taxes in the United States or
the United Kingdom; loss of key personnel; and increased
counterparty risk due to the credit impairment of financial
institutions. For a more detailed description of these
uncertainties and other factors, please see the "Risk Factors"
section in Aspen's Annual Report on Form 10-K as filed with the US
Securities and Exchange Commission on February 28, 2012. 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.
In addition, any estimates relating to loss events involve the
exercise of considerable judgment and reflect a combination of
ground-up evaluations, information available to date from brokers
and cedants, market intelligence, initial tentative loss reports
and other sources. Due to the complexity of factors contributing to
the losses and the preliminary nature of the information used to
prepare these estimates, there can be no assurance that Aspen's
ultimate losses will remain within the stated amount.
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.co.
(1) Annualized Operating Return on Average Equity (“Operating
ROE”) is a non-GAAP financial measure. Annualized Operating
Return on Average Equity is calculated using operating income, as
defined below, and average equity is calculated as the arithmetic
average on a monthly basis for the stated periods of shareholders’
equity excluding the aggregate value of the liquidation preferences
of our preference shares net of issuance costs.
Aspen presents Operating ROE 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 23 of Aspen's financial supplement for a reconciliation of
operating income to net income and page 7 for a reconciliation of
average equity to closing shareholders’ 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 and unrealized capital gains or losses, including net
realized and unrealized gains or losses on interest rate swaps, and
after-tax net foreign exchange gains or losses, including net
realized and unrealized gains and losses from foreign exchange
contracts.
Aspen excludes these items 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 would distort 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 23 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.co.
(3) Diluted Book Value per Ordinary Share is a not a
non-GAAP financial measure. Aspen has included diluted book value
per ordinary share as it illustrates the effect on basic book value
per share of dilutive securities thereby providing a better
benchmark for comparison with other companies. Diluted book value
per share is calculated using the treasury stock method, defined on
page 22 of Aspen’s financial supplement, which can be obtained from
the Investor Relations section of Aspen’s website at
www.aspen.co.
(4) Diluted Operating Earnings per Share and Basic Operating
Earnings per Share are non-GAAP financial measures. Aspen
believes that the presentation of diluted operating earnings per
share and basic operating earnings per share supports meaningful
comparison from period to period and the analysis of normal
business operations. Diluted operating earnings per share and basic
operating earnings per share are calculated by dividing operating
income by the diluted or basic weighted average number of shares
outstanding for the period. See page 23 for a reconciliation of
diluted and basic operating earnings per share to basic earnings
per share. Aspen’s financial supplement can be obtained from the
Investor Relations section of Aspen’s website at www.aspen.co.
(5) Combined Ratio Excluding Catastrophes is a non-GAAP
financial measure. Aspen believes that the presentation of combined
ratio excluding catastrophes supports meaningful comparison from
period to period of the underlying performance of the business.
Combined ratio excluding catastrophes is calculated by dividing net
losses excluding catastrophe losses and net expenses by net earned
premiums excluding catastrophe related reinstatement premiums. We
have defined 2012 catastrophe losses as losses associated with the
severe weather in the US in February and March 2012 and Hurricane
Isaac in August 2012 and movements in losses associated with the
2011 catastrophe events. We have defined catastrophe losses in the
comparative period as losses associated with the US storms
(specifically related to Hurricane Irene which occurred in the
third quarter of 2011, and related to the tornadoes which occurred
in the second quarter of 2011), the Australian floods and the New
Zealand and Japanese earthquakes which occurred in the first
quarter of 2011, and movement in losses associated with the 2010
catastrophe events (Chilean and New Zealand earthquakes) which were
recognized in the third quarter of 2011.
Other
(1) Provision of ASU 2010-26. In 2012, Aspen
adopted the provision of ASU 2010-26, “Accounting for Costs
Associated with Acquiring or Renewing Insurance Contracts.” Under
the standard, Aspen is required to expense the proportion of its
general and administrative deferred acquisition costs not directly
related to successful business acquisition. The application of this
standard has resulted in a net $16.0 million write down of deferred
acquisition costs through retained earnings brought forward and the
restatement of our quarterly balance sheets from December 31, 2010
to December 31, 2011.
(2) Catastrophe Load included in our guidance is
an estimate of the average annual aggregate loss before reinsurance
and tax from natural catastrophe events based on 50,000 simulations
of our internal capital model which, in relation to its catastrophe
modeling components, is based on a combination of catastrophe
models selected by Aspen to best fit its current understanding of
the world wide natural catastrophe perils to which Aspen has known
exposures. It does not include losses from non-natural catastrophe
events such as terrorism or industrial accidents.
This load is attributed and then released quarter by quarter
based on historic claims patterns. For example, there is a higher
proportion allocated to the third quarter due to the historical
frequency of US Wind events in this period. As an organization,
Aspen monitors its current catastrophe losses to date against
expected and updates the projected numbers accordingly based on
this experience.
Actual catastrophe loss experience may materially differ from
the catastrophe load in any one year for reasons which include
natural variability in the frequency and severity of catastrophe
events, and limitations in one or more of the models or
uncertainties in the application of policy terms and limits.
Aspen Insurance (NYSE:AHL)
Historical Stock Chart
From Sep 2024 to Oct 2024
Aspen Insurance (NYSE:AHL)
Historical Stock Chart
From Oct 2023 to Oct 2024