Net Income Return on Equity of 11.1% for the
year 2014
Operating Return on Equity of 11.5% for the
year 2014
Diluted Book Value Per Share of $45.13, up
10.3% from December 31, 2013
Announces new $500 million share repurchase
authorization to replace prior plan
Aspen Insurance Holdings Limited (“Aspen”) (NYSE: AHL) today
reported net income after tax of $67.2 million, or $0.90 diluted
net income per share, for the fourth quarter of 2014.
Chris O’Kane, Chief Executive Officer, commented, “In 2014 Aspen
achieved Book Value per Share growth of 10.3% and a strong
Operating Return on Equity of 11.5%. 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.”
Operating highlights for the quarter ended December 31,
2014
- Gross written premiums increased by
1.8% to $615.4 million in the fourth quarter of 2014 from the
fourth quarter of 2013
- Combined ratio of 94.1% 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 the year ended December 31,
2014
- Gross written premiums increased by
9.7% 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% in Reinsurance and 14.4% in Insurance
compared to 2013
- Combined ratio of 91.7% (90.5%
excluding bid defense costs) for 2014 compared with 92.6% 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 for the year ended December 31,
2014
- Annualized net income return on average
equity of 11.1% (12.1% 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%
and 9.7%, respectively, for 2013(1)
- 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(1)
- 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% from December 31,
2013, excluding bid defense costs
(1) See definition of non-GAAP financial measures at the end of
this release.
Segment highlights
Reinsurance
Operating highlights for Reinsurance for the quarter ended
December 31, 2014 include:
- Gross written premiums of $145.3
million, a decrease of 17.5% from $176.2 million in the fourth
quarter of 2013
- Combined ratio of 82.7% compared with
58.6% for the fourth quarter of 2013
- Prior year favorable reserve
development of $23.4 million, or 8.9 combined ratio points,
compared with $46.1 million prior year favorable loss reserve
development, or 16.2 combined ratio points, for the fourth quarter
of 2013
The combined ratio of 82.7% for the fourth quarter of 2014
included $15.0 million, or 5.7 percentage points, of pre-tax
catastrophe losses. The combined ratio of 58.6% for the fourth
quarter of 2013 included $29.4 million, or 10.4 percentage points,
of pre-tax catastrophe losses, net of reinsurance recoveries. For
the quarter ended December 31, 2014 the Reinsurance accident year
ex-catastrophe loss ratio was 52.8% compared with 36.3% a year
ago.(1) There was a higher frequency of non-correlated mid-sized
losses of $29.8 million in the quarter which accounted for 11.3
percentage points on the loss ratio.
Stephen Postlewhite, CEO of Reinsurance, commented on the year,
“Reinsurance had a very strong performance in 2014. For the full
year we grew premiums slightly while achieving an accident year ex
cat loss ratio of 50.9%. At the important January 1, 2015 renewal
season we continued our trajectory of modest growth while
maintaining our underwriting discipline. As a result of our client
relationships and access to risk, we were able to withdraw capital
from areas where rates and terms and conditions did not meet our
requirements and deploy it in areas where the business was better
rated. While there was continued rate pressure in Property Cat we
were able to renew the rest of our book, which accounts for
approximately 70% of the total renewal, with rates down only 3%.
Our strategic positioning, focused on product and regional
diversification has resulted in an ability to access and select the
better priced risks to retain. We were also able to write a
meaningful amount of new, well rated business. As we navigate the
marketplace, we anticipate capitalizing on our established regional
strategy and continuing to grow in Asia and Latin America as well
as expanding our Aspen Capital Markets offerings and leveraging our
access to third party capital.”
Insurance
Operating highlights for Insurance for the quarter ended
December 31, 2014 include:
- Gross written premiums of $470.1
million, an increase of 9.8% compared with $428.2 million in the
fourth quarter of 2013
- Combined ratio of 97.1% compared with
121.6% for the fourth quarter of 2013
- Prior year reserve strengthening of
$11.9 million, or an adverse impact of 3.4 combined ratio points,
compared with prior year reserve strengthening of $25.6 million, or
an adverse impact of 8.9 combined ratio points, for the fourth
quarter of 2013. In the fourth quarter of 2014, there was adverse
prior year development in the Marine, Aviation and Energy line of
business.
Gross written premiums increased across all sub-segments,
especially Property and Casualty and Marine, Aviation and Energy
lines, primarily resulting from the continued growth from the U.S.
teams. The U.S. Insurance teams produced profitable results for the
second consecutive year and achieved a loss ratio of 58.4% for
2014.
The combined ratio of 97.1% for the fourth quarter of 2014
included $0.7 million, or 0.2 percentage points, of pre-tax
catastrophe losses related to U.S. storms. The combined ratio for
the fourth quarter of 2013 included $5.3 million, or 1.9 percentage
points, of pre-tax catastrophe losses related to U.S. storms. For
the quarter ended December 31, 2014 the Insurance accident year ex
catastrophe loss ratio improved 17.9 percentage points to 56.3%
compared with 74.2% a year ago.(1)
Mario Vitale, CEO of Insurance, commented, “2014 was a year of
continued progress for the Insurance segment. We had top line
growth of 14% while achieving flat rates across the book from a
year ago and an 8 point improvement in combined ratio. Our
Insurance business is reaping the benefits of prior investments.
Our International business continues to service niche markets with
close to $500 million of the business placed through our
established Lloyd's platform. This quarter marks two years of
profitability for our U.S. platform, which had a loss ratio of
56.7% for the fourth quarter and 58.4% for 2014. For the year, the
U.S. platform delivered net earned premium of $529.0 million
with a G&A ratio of 18.3%. We are now on track to achieve $600
million of net earned premium and surpass our previously stated
goal of $550 million net earned premium by the end of 2015. At that
time, we expect a corresponding G&A ratio of approximately
16%.”(2)
Investment performance
Aspen’s investment portfolio continues to be comprised primarily
of high quality fixed income securities with an average credit
quality of “AA-”. The average duration of the fixed income
portfolio was 3.50 years at December 31, 2014 excluding the
impact of interest rate swaps, or 3.29 years including the impact
of interest rate swaps. The total return on Aspen’s investment
portfolio was 0.77% for the fourth quarter of 2014, and 3.05% for
the twelve months ended December 31, 2014.
Book yield as at December 31, 2014 on the fixed income
portfolio was 2.65% compared to 2.74% at December 31, 2013.
Capital
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 twelve
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 today 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.
Outlook
Aspen expects to achieve an operating return on equity of 11% in
2015(2).
Commenting on Aspen’s outlook, Chris O’Kane, Chief Executive
Officer, 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% 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.”(2)
January 2015 Reinsurance Renewals
During the January 2015 renewal season, Aspen underwrote $531.3
million in gross written premiums in Reinsurance, an increase of
2.1% compared with the prior year. The renewal data does not
include U.S. agriculture premiums.
Below is a table reflecting gross written premiums written
during the January 2015 renewal season, including new business, by
Property Catastrophe, Other Property, Casualty and Specialty
Reinsurance.
January Gross Written Premiums (underwriting year
basis) 2015
2014
Increase (Decrease)
($ in millions) % Property Catastrophe $ 144.8
$ 164.1 (11.8 )% Other Property 124.0 111.9 10.8 % Casualty
117.7 118.3 (0.5 )% Specialty 144.8 125.9 15.0 % $
531.3 $ 520.2 2.1 %
Note: The January premiums shown in the above table include
premiums written on a proportional basis which are recognized
throughout the year to reflect the expected inception of the
underlying risks and therefore do not represent Aspen’s reported
gross written premium for each of these periods. Prior year amounts
have been conformed to current year presentation.
See “Forward-looking Statements Safe Harbor” below.
Earnings conference call and webcast
Aspen will host a conference call to discuss the results at 8:00
am (EDT) on Friday, February 6, 2015.
To participate in the February 6 conference call by
phonePlease call to register at least 10 minutes before the
conference call begins by dialing:
+1 (888) 868 3191 (US toll free) or+1 (973) 321 1024
(international)Conference ID 61208203
To listen live onlineAspen will provide a live webcast on
Aspen’s website at www.aspen.co.
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 61208203
The recording will be also available at www.aspen.co on the Event
Calendar page within the Investor Relations section.
Aspen Insurance Holdings
Limited
Summary consolidated balance sheet
(unaudited)
$ in millions, except per share data
As atDecember 31,
2014 As atDecember 31, 2013
ASSETS Total investments
$ 7,428.9 $ 6,959.8 Cash and
cash equivalents
1,178.5 1,293.6 Reinsurance recoverables
556.8 484.6 Premiums receivable
1,011.7 999.0 Other
assets
540.4 493.5 Total assets
$
10,716.3 $ 10,230.5 LIABILITIES Losses and
loss adjustment expenses
$ 4,750.8 $ 4,678.9 Unearned
premiums
1,441.8 1,280.6 Other payables
484.6 372.4
Silverton loan notes
70.7 50.0 Long-term debt
549.1
549.0 Total liabilities
$ 7,297.0 $ 6,930.9
SHAREHOLDERS’ EQUITY Total shareholders’ equity
3,419.3 3,299.6 Total liabilities and shareholders’
equity
$ 10,716.3 $ 10,230.5 Book value
per share
$ 46.16 $ 41.87 Diluted book value per
share (treasury stock method)
$ 45.13 $ 40.90
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Three Months Ended December 31,
2014 December 31, 2013 UNDERWRITING
REVENUES Gross written premiums
$ 615.4 $ 604.4
Premiums ceded
(61.4 ) (56.4 ) Net written premiums
554.0 548.0 Change in unearned premiums
58.2
24.6 Net earned premiums
612.2 572.6
UNDERWRITING EXPENSES Losses and loss adjustment expenses
339.6 331.4 Amortization of deferred policy acquisition
costs
114.8 99.7 General, administrative and corporate
expenses (excluding non-recurring corporate expenses)
121.5
94.9 Total underwriting expenses
575.9
526.0 Underwriting income including corporate expenses
36.3 46.6 OTHER OPERATING REVENUE Net
investment income
46.7 47.2 Interest expense
(7.4
) (9.5 ) Other (expense) income
(3.9 ) 3.5
Total other operating revenue
35.4 41.2
OPERATING INCOME BEFORE TAX
71.7
87.8 Net realized and unrealized exchange
(losses)
(2.8 ) (3.8 ) Net realized and unrealized
investment (losses) gains
(0.9 ) 9.6 INCOME
BEFORE TAX
68.0 93.6 Income tax expense
(0.8 )
(3.6 ) NET INCOME AFTER TAX
67.2 90.0 Dividends paid on
ordinary shares
(12.4 ) (11.8 ) Dividends paid on
preference shares
(9.4 ) (9.4 ) Dividends paid to
non-controlling interest
(0.1 ) (0.1 ) Proportion due
to non-controlling interest
(0.8 ) 0.2
Retained income
$ 44.5 $ 68.9
Components of net income (after tax) Operating income
$ 71.3 $ 84.4 Net realized and unrealized exchange
(losses) after tax
(3.1 ) (3.8 ) Net realized
investment (losses) gains after tax
(1.0 ) 9.4
NET INCOME AFTER TAX
$ 67.2 $ 90.0
Loss ratio
55.5 % 57.9 % Policy acquisition
expense ratio
18.8 % 17.4 % General, administrative
and corporate expense ratio
19.8 % 16.6 % General,
administrative and corporate expense ratio (excluding non-recurring
corporate expenses)
19.8 % 16.6 % Expense ratio
38.6 % 34.0 % Expense ratio (excluding non-recurring
corporate expenses)
38.6 % 34.0 % Combined ratio
94.1 % 91.9 % Combined ratio (excluding non-recurring
corporate expenses)
94.1 % 91.9 %
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratio
Twelve Months Ended December
31, 2014 December 31, 2013
UNDERWRITING REVENUES Gross written premiums
$
2,902.7 $ 2,646.7 Premiums ceded
(387.5 )
(347.0 ) Net written premiums
2,515.2 2,299.7 Change in
unearned premiums
(109.9 ) (127.9 ) Net earned
premiums
2,405.3 2,171.8 UNDERWRITING EXPENSES
Losses and loss adjustment expenses
1,307.5 1,223.7
Amortization of deferred policy acquisition costs
451.2
422.0 General, administrative and corporate expenses (excluding
non-recurring corporate expenses)
417.2 368.1
Total underwriting expenses
2,175.9 2,013.8
Underwriting income including corporate expenses
229.4
158.0 OTHER OPERATING REVENUE Net investment income
190.3 186.4 Interest expense
(29.5 ) (32.7 )
Other (expense) income
(9.8 ) 6.5 Total other
operating revenue
151.0 160.2
OPERATING INCOME BEFORE TAX
380.4 318.2
Non-recurring corporate expenses (bid defense costs)
(28.5 ) — Net realized and unrealized exchange
(losses)
(2.4 ) (14.5 ) Net realized and unrealized
investment gains
18.4 39.0 INCOME BEFORE TAX
367.9 342.7 Income tax expense
(12.1 ) (13.4 )
NET INCOME AFTER TAX
355.8 329.3 Dividends paid on ordinary
shares
(50.3 ) (47.8 ) Dividends paid on preference
shares
(37.8 ) (35.5 ) Dividends paid to
non-controlling interest
(0.1 ) (0.1 ) Change in
redemption value
— (7.1 ) Proportion due to non-controlling
interest
(0.8 ) 0.5 Retained income
$
266.8 $ 239.3 Components of net income (after
tax) Operating income
$ 368.5 $ 304.3
Non-recurring corporate expenses
(28.5 ) — Net
realized and unrealized exchange (losses) after tax
(2.2
) (13.3 ) Net realized investment gains after tax
18.0 38.3 NET INCOME AFTER TAX
$
355.8 $ 329.3 Loss ratio
54.4
% 56.3 % Policy acquisition expense ratio
18.8
% 19.4 % General, administrative and corporate expense ratio
18.5 % 16.9 % General, administrative and corporate
expense ratio (excluding non-recurring corporate expenses)
17.3 % 16.9 % Expense ratio
37.3 % 36.3
% Expense ratio (excluding non-recurring corporate expenses)
36.1 % 36.3 % Combined ratio
91.7 %
92.6 % Combined ratio (excluding non-recurring corporate expenses)
90.5 % 92.6 %
Aspen Insurance Holdings
Limited
Summary consolidated financial data
(unaudited)
$ in millions, except number of shares
Three Months Ended
Twelve Months Ended December 31, 2014
December 31, 2013 December 31, 2014
December 31, 2013 Basic earnings per ordinary
share Net income adjusted for preference share dividend
$0.92 $1.23
$4.92 $4.29 Operating income adjusted for
preference share dividend
$0.99 $1.15
$5.11 $4.03
Diluted earnings per ordinary share Net income adjusted for
preference share dividend
$0.90 $1.21
$4.82 $4.14
Operating income adjusted for preference share dividend
$0.97 $1.13
$5.01 $3.88 Weighted average
number of ordinary shares outstanding (in millions)
62.206
65.594
64.536 66.872 Weighted average number of
ordinary shares outstanding and dilutive potential ordinary shares
(in millions)
63.605 67.052
65.873 69.418 Book
value per ordinary share
$46.16 $41.87
$46.16 $41.87
Diluted book value per ordinary share (treasury stock method)
$45.13 $40.90
$45.13 $40.90 Ordinary shares
outstanding at end of the period (in millions)
62.017 65.547
62.017 65.547 Ordinary shares outstanding and
dilutive potential ordinary shares at end of the period (treasury
stock method) (in millions)
63.445 67.090
63.445
67.090
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Three Months Ended December 31, 2014
Three Months Ended December 31, 2013 Reinsurance
Insurance Total Reinsurance Insurance
Total Gross written premiums
$ 145.3
$ 470.1 $ 615.4 $ 176.2 $ 428.2 $ 604.4
Net written premiums
143.6 410.4 554.0 174.5
373.5 548.0 Gross earned premiums
278.4 417.0
695.4 297.7 366.1 663.8 Net earned premiums
263.1
349.1 612.2 284.8 287.8 572.6 Losses and loss
adjustment expenses
130.4 209.2 339.6 86.8
244.6 331.4 Policy acquisition expenses
47.7 67.1
114.8 46.2 53.5 99.7 General and administrative expenses
39.4 62.9 102.3 33.8
51.9 85.7 Underwriting income (loss)
$
45.6 $ 9.9 $ 55.5
$ 118.0 $ (62.2 ) $ 55.8 Net investment income
46.7 47.2 Net realized and unrealized investment (losses)
gains (1)
(0.9 ) 9.6 Corporate expenses
(19.2
) (9.2 ) Other (expense) income
(3.9 ) 3.5
Interest expenses
(7.4 ) (9.5 ) Net realized and
unrealized foreign exchange (losses) (2)
(2.8 ) (3.8
) Income before tax
$ 68.0 $ 93.6 Income tax expense
(0.8 ) (3.6 )
Net income $ 67.2
$ 90.0
Ratios Loss ratio
49.6
% 59.9 % 55.5 % 30.5 % 85.0 %
57.9 % Policy acquisition expense ratio
18.1 %
19.2 % 18.8 % 16.2 % 18.6 % 17.4 %
General and administrative expense ratio (3)
15.0 %
18.0 % 19.8 % 11.9 % 18.0 % 16.6 %
General and administrative expense ratio (excluding non-recurring
corporate expenses) (3)
15.0 % 18.0 %
19.8 % 11.9 % 18.0 % 16.6 % Expense ratio
33.1
% 37.2 % 38.6 % 28.1 % 36.6 %
34.0 % Expense ratio (excluding non-recurring corporate expenses)
33.1 % 37.2 % 38.6 % 28.1
% 36.6 % 34.0 % Combined ratio
82.7 % 97.1
% 94.1 % 58.6 % 121.6 % 91.9 % Combined ratio
(excluding non-recurring corporate expenses)
82.7 %
97.1 % 94.1 % 58.6 % 121.6 % 91.9 %
(1) Includes realized and unrealized capital gains
and losses and realized and unrealized gains and losses on interest
rate swaps (2) Includes realized and unrealized foreign exchange
gains and losses and realized and unrealized gains and losses on
foreign exchange contracts (3) The total group general and
administrative expense ratio includes the impact from corporate
expenses
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Twelve Months Ended December 31, 2014
Twelve Months Ended December 31, 2013 Reinsurance
Insurance Total Reinsurance Insurance
Total Gross written premiums
$ 1,172.8
$ 1,729.9 $ 2,902.7 $ 1,133.9 $ 1,512.8
$ 2,646.7 Net written premiums
1,124.0 1,391.2
2,515.2 1,082.0 1,217.7 2,299.7 Gross earned premiums
1,137.6 1,599.0 2,736.6 1,126.6 1,366.8
2,493.4 Net earned premiums
1,088.2 1,317.1
2,405.3 1,073.0 1,098.8 2,171.8 Losses and loss adjustment
expenses
497.8 809.7 1,307.5 481.7 742.0
1,223.7 Policy acquisition expenses
200.0 251.2
451.2 207.2 214.8 422.0 General and administrative expenses
146.4 205.5 351.9 131.0
185.9 316.9 Underwriting income (loss)
$ 244.0 $ 50.7 $
294.7 $ 253.1 $ (43.9 ) $ 209.2 Net investment
income
190.3 186.4 Net realized and unrealized investment
gains (1)
18.4 39.0 Corporate expenses
(65.3 )
(51.2 ) Non-recurring corporate expenses
(28.5 ) —
Other (expense) income
(9.8 ) 6.5 Interest expenses
(29.5 ) (32.7 ) Net realized and unrealized foreign
exchange (losses) (2)
(2.4 ) (14.5 ) Income before
tax
$ 367.9 $ 342.7 Income tax expense
(12.1
) (13.4 )
Net income $ 355.8 $
329.3
Ratios Loss ratio
45.7 %
61.5 % 54.4 % 44.9 % 67.5 % 56.3 %
Policy acquisition expense ratio
18.4 %
19.1 % 18.8 % 19.3 % 19.5 % 19.4 %
General and administrative expense ratio (3)
13.5 %
15.6 % 18.5 % 12.2 % 16.9 % 16.9 %
General and administrative expense ratio (excluding non-recurring
corporate expenses) (3)
13.5 % 15.6 %
17.3 % 12.2 % 16.9 % 16.9 % Expense ratio
31.9
% 34.7 % 37.3 % 31.5 % 36.4 %
36.3 % Expense ratio (excluding non-recurring corporate expenses)
31.9 % 34.7 % 36.1 % 31.5
% 36.4 % 36.3 % Combined ratio
77.6 % 96.2
% 91.7 % 76.4 % 103.9 % 92.6 % Combined ratio
(excluding non-recurring corporate expenses)
77.6 %
96.2 % 90.5 % 76.4 % 103.9 % 92.6 %
(1) Includes realized and unrealized capital gains
and losses and realized and unrealized gains and losses on interest
rate swaps (2) Includes realized and unrealized foreign exchange
gains and losses and realized and unrealized gains and losses on
foreign exchange contracts (3) 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, 2014, Aspen reported $10.7 billion
in total assets, $4.8 billion in gross reserves, $3.4 billion in
total shareholders’ equity and $2.9 billion in gross written
premiums. Its operating subsidiaries have been assigned a rating of
“A” (“Strong”) by Standard & Poor’s Financial Services LLC
(“S&P”), an “A” (“Excellent”) by A.M. Best Company Inc. (“A.M.
Best”) and an “A2” (“Good”) by Moody’s Investor Service, Inc.
(“Moody’s”).
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,” “likely,”
“assume,” “estimate,” “may,” “continue,” “guidance,” “objective,”
“outlook,” “trends,” “future,” “could,” “would,” “should,” “target”
and similar expressions of a future or forward-looking nature.
All forward-looking statements rely on a number of assumptions,
estimates and data concerning future results and events and are
subject to a number of uncertainties and other factors, many of
which are outside Aspen’s control that could cause actual results
to differ materially from such statements.
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: our ability to
successfully implement steps to further optimize the business
portfolio, ensure capital efficiency and enhance investment
returns; 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
assumptions and uncertainties underlying reserve levels that may be
impacted by future payments for settlements of claims and expenses
or by other factors causing adverse or favorable development; the
reliability of, and changes in assumptions to, natural and man-made
catastrophe pricing, accumulation and estimated loss models;
decreased demand for our insurance or reinsurance products and
cyclical changes in the insurance and reinsurance industry; the
models we use to assess our exposure to losses from future natural
catastrophes contain inherent uncertainties and our actual losses
may differ significantly from expectations; our capital models may
provide materially different indications than actual results;
increased competition from existing insurers and reinsurers and
from alternative capital providers and insurance-linked funds and
collateralized special purpose insurers on the basis of pricing,
capacity, coverage terms, new capital, binding authorities to
brokers or other factors and the related demand and supply dynamics
as contracts come up for renewal; 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; our acquisition strategy; the recent
consolidation in the (re)insurance industry; loss of one or more of
our senior underwriters or key personnel; changes in our ability to
exercise capital management initiatives (including our share
repurchase program) or to arrange banking facilities as a result of
prevailing market conditions or changes in our financial position;
changes in the availability, cost or quality of reinsurance or
retrocessional coverage; changes in general economic conditions,
including inflation, deflation, foreign currency exchange rates,
interest rates and other factors that could affect our financial
results; the risk of a material decline in the value or liquidity
of all or parts of our investment portfolio; the risks associated
with the management of capital on behalf of investors; evolving
issues with respect to interpretation of coverage after major loss
events; our ability to adequately model and price the effects of
climate cycles and climate change; any intervening legislative or
governmental action and changing judicial interpretation and
judgments on insurers’ liability to various risks; the risks
related to litigation; the effectiveness of our risk management
loss limitation methods, including our reinsurance purchasing;
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 one or more large losses from events other
than natural catastrophes or by an unexpected accumulation of
attritional losses and deterioration with loss estimates; the
impact of acts of terrorism, acts of war and related legislation;
any changes in our reinsurers’ credit quality and the amount and
timing of reinsurance recoverables; the continuing and uncertain
impact of the current depressed lower growth economic environment
in many of the countries in which we operate; our reliance on
information and technology and third-party service providers for
our operations and systems; the level of inflation in repair costs
due to limited availability of labor and materials after
catastrophes; a decline in our operating subsidiaries’ ratings with
S&P, A.M. Best or Moody’s; the failure of our reinsurers,
policyholders, brokers or other intermediaries to honor their
payment obligations; our reliance on the assessment and pricing of
individual risks by third parties; our dependence on a few brokers
for a large portion of our revenues; the persistence of heightened
financial risks, including excess sovereign debt, the banking
system and the Eurozone crisis; changes in government regulations
or tax laws in jurisdictions where we conduct business; changes in
accounting principles or policies or in the application of such
accounting principles or policies; increased counterparty risk due
to the credit impairment of financial institutions; and Aspen or
Aspen Bermuda Limited becoming subject to income taxes in the
United States or the United Kingdom. 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 U.S. Securities and Exchange Commission on February
20, 2014. 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. The actuarial range of reserves and management’s
best estimate represents a distribution from our internal capital
model for reserving risk based on our then current state of
knowledge and explicit and implicit assumptions relating to the
incurred pattern of claims, the expected ultimate settlement
amount, inflation and dependencies between lines of business. 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.
(1) 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
financial 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.
Annualized Operating Return on Average Equity (“Operating
ROE”) is a non-GAAP financial measure. Operating ROE 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 and the total amount of
non-controlling interest. 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 ordinary shareholders’ equity to average shareholders’
equity. Aspen’s financial supplement can be obtained from the
Investor Relations section of Aspen’s website at www.aspen.co.
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,
after-tax net foreign exchange gains or losses, including net
realized and unrealized gains and losses from foreign exchange
contracts and certain non-recurring items. In 2014, non-recurring
items included costs associated with defending the unsolicited
approach from Endurance Specialty Holdings Ltd. in the amounts of
$Nil and $28.5 million for the three and twelve months ended
December 31, 2014, respectively.
Aspen excludes the items above from its calculation of operating
income because they are either not expected to recur and therefore
are not reflective of underlying performance or 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 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.
Diluted Book Value per Ordinary Share is 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.
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 of Aspen’s financial
supplement 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.
Combined Ratio Excluding Catastrophes is a non-GAAP
financial measure. Aspen has presented loss ratios both including
and excluding the impact from catastrophe losses to aid in the
analysis of the underlying performance of our segments. Aspen has
defined catastrophe losses in 2014 as losses associated with winter
storms in the U.S., snowstorms in Japan and flooding in the U.K.
which occurred in the first and second quarter of 2014, North
American and European storms in the third quarter of 2014 and North
American, Asian and Australian storms in the fourth quarter of
2014. We have defined major 2013 catastrophe losses as losses
associated with floods in Central Europe, Canada and India, as well
as tornadoes and hailstorms in the U.S. in the second quarter of
2013, hailstorms in Germany and floods in Canada and Mexico in the
third quarter of 2013, and storms and associated flooding in
Europe, India and the Philippines in the fourth quarter of
2013.
Accident Year Loss Ratio Excluding Catastrophes is a
non-GAAP financial measure. Aspen believes that the presentation of
loss ratio excluding catastrophes and prior year reserve movements
supports meaningful comparison from period to period of the
underlying performance of the business. Accident year loss ratio
excluding catastrophes is calculated by dividing net losses
excluding catastrophe losses, net expenses and prior year reserve
movements by net earned premiums excluding catastrophe related
reinstatement premiums. Aspen has defined the major 2014
catastrophe losses as losses associated with North American,
European, Asian and Australian storms and flood losses in the U.K.
We have defined major 2013 catastrophe losses as losses associated
with floods in Central Europe, Canada and India, as well as
tornadoes and hailstorms in the U.S. in the second quarter of 2013,
hailstorms in Germany and floods in Canada and Mexico in the third
quarter of 2013, and storms and associated flooding in Europe,
India and the Philippines in the fourth quarter of 2013.
Insurance Q4
2014 Full Year 2014 Q4 2013 Full Year 2013
Loss Ratio 59.9 61.5 85.0 67.5 Prior Year Loss Development (3.4 )
0.4 (8.9 ) (1.4 ) Catastrophe Losses (0.2 ) (1.7 ) (1.9 ) (1.4 )
Ex-cat Accident Year Loss Ratio 56.3 60.2 74.2
64.7
Reinsurance Q4 2014
Full Year 2014 Q4 2013 Full Year
2013 Loss Ratio 49.6 45.7 30.5 44.9 Prior Year Loss Development
8.9 9.1 16.2 11.4 Catastrophe Losses (5.7 ) (3.9 ) (10.4 ) (8.1 )
Ex-cat Accident Year Loss Ratio 52.8 50.9 36.3
48.2
(2) The outlook for 2015 assumes normal loss experience,
our current view of interest rates and our prospective view of the
insurance rate environment. Our outlook in 2015 is necessarily
subject to heightened sensitivity in relation to these assumptions
which are likely to be the subject of future change, amendment,
update and review, as necessary. For example, our assumptions for
rising interest rates in 2015 are subject to and dependent upon the
anticipated and actual monetary policy decisions taken by the
central banks in the jurisdictions in which we operate. Our
assumptions are also based on the retention of our senior
underwriters and client relationships. In addition, the models
underlying our normal loss experience assumptions will produce
different illustrative loss patterns if the modeling assumptions
are changed. Recent decreases in pricing in certain business lines,
if sustained, are also expected to have an adverse effect on
operating return on equity. This outlook is subject to change for
many reasons, including unusual or unpredictable items, such as
catastrophe losses, loss reserve development, investment results
and other items.
InvestorsKerry Calaiaro, +1 646-502 1076Senior Vice
President, Investor Relations, AspenKerry.Calaiaro@aspen.coorKathleen de Guzman, +1
646-289 4912Vice President, Investor Relations, AspenKathleen.deGuzman@aspen.coorMediaSteve
Colton, +44 20 7184 8337Head of Communications, AspenSteve.Colton@aspen.coorInternational - Citigate
Dewe RogersonCaroline Merrell or Jos BienemanCaroline.Merrell@citigatedr.co.ukJos.Bieneman@citigatedr.co.uk+44 20 7638
9571orNorth America - Sard Verbinnen & CoPaul Scarpetta or
Jamie Tully+1 212-687 8080
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