Annualized Operating ROE of 14.8% Highest in
Over Three Years
Diluted Operating Income Per Share Increased
46% from First Quarter of 2013
Diluted Book Value Per Share Up 4.4% from
December 31, 2013
Quarterly Dividend On Ordinary Shares
Increased 11.1%
Aspen Insurance Holdings Limited (“Aspen”) (NYSE: AHL) today
reported net income after tax of $120.4 million, or $1.66 diluted
net income per share, for the quarter ended March 31, 2014.
Chris O’Kane, Chief Executive Officer, commented, “We are very
pleased with our strong results this quarter, which reflect the
successful execution and growing impact of our three strategic
levers: capital management, enhanced investment returns and
optimization of our business portfolio. Our annualized operating
return on average equity was 14.8%, the highest quarterly ROE since
we began significant investments in our U.S. insurance lines in
2010. The U.S. Insurance teams continued their trajectory of
profitable growth and International Insurance achieved a solid
quarter. Our Reinsurance business had yet another strong quarter
and remains a preferred trading partner for our clients.
“We continue to execute on targeted growth opportunities
building off of our prior investments and the strength of our
teams. Historically, we invested in both Insurance and Reinsurance
to position our businesses for profitable growth. Those investments
are paying dividends and driving meaningful improvements in our
results. We expect the benefits garnered from those investments to
continue to increase in the coming years and to drive premium
growth faster than both expenses and allocated risk capital, which
will result in continued improvement in ROE.”
Operating highlights for the quarter ended March 31,
2014
- Gross written premiums increased
overall by 10.6% to $855.5 million in the first quarter of 2014
from the first quarter of 2013. Gross written premiums in
Reinsurance and Insurance increased by 7.4% and 14.8% respectively
from the first quarter of 2013
- Combined ratio of 87.6% (87.0%
excluding non-recurring corporate expenses) for the first quarter
of 2014 compared with 90.1% for the first quarter of 2013. There
were $10.6 million, or 1.9 combined ratio points, of catastrophe
losses pre-tax net of reinsurance recoveries and reinstatement
premiums in the first quarter of 2014 compared with no catastrophe
losses in the first quarter of 2013
- Net favorable development on prior year
loss reserves of $28.2 million, or 5.0 combined ratio points, for
the first quarter of 2014 compared with $26.2 million, or 5.1
combined ratio points, for the first quarter of 2013
- The loss ratio of 50.9% for the first
quarter of 2014 compared with 52.6% for the first quarter of 2013.
The accident year ex-catastrophe loss ratio of 54.0% compared with
57.7% for the first quarter of 2013
Financial highlights for the quarter ended March 31,
2014
- Annualized net income return on average
equity of 16.0% and annualized operating return on average equity
of 14.8% for the first quarter of 2014 compared with 11.6% and
10.8%, respectively, for the first quarter of 2013(1)
- Diluted net income per share of $1.66
for the quarter ended March 31, 2014 an increase of 44% from
diluted net income per share of $1.15 for the first quarter of
2013
- Diluted operating income per share of
$1.55 for the quarter ended March 31, 2014 an increase of 46% from
$1.06 for the first quarter of 2013(1)
- On a pre-tax basis, net catastrophe
losses were $10.6 million, or $0.16 per diluted share, for the
first quarter of 2014 compared with no catastrophe losses in the
first quarter of 2013
- Diluted book value per share of $42.72
at March 31, 2014, up 4.4% from December 31, 2013 and up 5.0% from
March 31, 2013
(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 March
31, 2014 include:
- Gross written premiums of $472.2
million increased 7.4% compared with $439.6 million for the first
quarter of 2013
- Combined ratio of 72.6% compared with
78.5% for the first quarter of 2013
- Favorable prior year loss reserve
development of $21.2 million, or 7.9 combined ratio points,
compared with $20.1 million favorable prior year loss reserve
development, or 7.8 combined ratio points, for the first quarter of
2013
The increase in gross written premiums was primarily
attributable to growth in Catastrophe and Other Property lines of
business.
The combined ratio of 72.6% for the first quarter of 2014
included $5.5 million, or 2.1 percentage points, of catastrophe
losses, pre-tax net of reinsurance recoveries and reinstatement
premiums related to Japanese snowstorms and U.S. winter storms. The
combined ratio of 78.5% for the first quarter of 2013 included no
catastrophe losses. The accident year ex-catastrophe loss ratio for
the Reinsurance segment was 47.2% compared with 52.3% for the first
quarter of 2013.
Insurance
Operating highlights for Insurance for the quarter ended March
31, 2014 include:
- Gross written premiums of $383.3
million increased 14.8% compared with $333.8 million for the first
quarter of 2013
- Combined ratio of 95.1% compared with
96.8% for the first quarter of 2013
- Prior year favorable development of
$7.0 million, or 2.3 combined ratio points, compared with prior
year reserve favorable development of $6.1 million, or 2.4 combined
ratio points, for the first quarter of 2013.
The increase in gross written premiums was mainly attributable
to continued growth from the U.S. teams. The U.S. Insurance teams
were again profitable in the quarter with a combined ratio of
98.8%.
The combined ratio of 95.1% for the first quarter of 2014
included $5.1 million, or 1.7 percentage points, of net catastrophe
losses, pre-tax net of reinsurance recoveries, related to U.S.
winter storms and U.K. floods. The accident year ex-catastrophe
loss ratio for the Insurance segment was 59.9% compared with 63.1%
for the first quarter of 2013.
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 3.5 years at March 31, 2014, excluding the impact of
interest rate swaps, or 3.2 years including the impact of interest
rate swaps. The total return on Aspen’s investment portfolio was
1.0% for the first quarter of 2014, compared to 0.5% for the first
quarter of 2013. The equity portfolio had a gain of 2.4% for the
quarter compared to 8.7% for the first quarter of 2013.
Net investment income for the first quarter of 2014 was $49.5
million compared with $48.3 million for the first quarter of 2013.
Book yield as at March 31, 2014 on the fixed income portfolio was
2.68% compared to 2.74% at December 31, 2013 and 2.80% at March 31,
2013.
Net realized and unrealized investment gains included in net
income for the quarter were $8.3 million.
Dividend Increase
The Board of Directors has declared a quarterly cash dividend on
Aspen’s ordinary shares of $0.20 per ordinary share. The amount
payable increased by 11.1% from Aspen’s previous quarterly dividend
of $0.18 per ordinary share.
Capital
Total shareholders’ equity increased by $87.2 million in the
quarter to $3.4 billion at March 31, 2014.
During the first quarter of 2014, Aspen repurchased 770,505
ordinary shares in the open market at an average price of $40.08
per share for a total cost of $30.9 million. Aspen had $193.3
million remaining under its current share repurchase authorization
as at March 31, 2014.
Outlook
Aspen continues to expect to achieve an operating return on
equity of 10% in 2014, assuming a pre-tax catastrophe load of $185
million, normal loss experience and the current interest rate curve
and insurance pricing environment.
We expect operating return on equity to increase in each of 2015
and 2016. The building blocks for the expected acceleration of ROE
are growth in our U.S. Insurance business, portfolio optimization
initiatives, rising interest rates and capital management. We
expect to achieve premium scale in our U.S. Insurance business in
2015 and for that business to be a strong contributor to overall
results as Aspen gains greater premium leverage over time. Our U.S.
Insurance business net earned premiums grew 25% in the first
quarter over a year ago and we are experiencing continued growth
momentum with attractive loss ratios. Further, we expect our
portfolio optimization initiatives, including the restructuring of
our reinsurance and retrocession program, combined with a rising
interest rate environment, to be a more positive contributor to
operating income.
In the aggregate, assuming pretax catastrophe load of $200
million, normal loss experience, our expectations for rising
interest rates and a less favorable insurance pricing environment,
we would expect operating return on equity in 2015 to increase over
2014 on the order of 100 basis points, and beyond 2015 we expect to
obtain additional continued benefits to our ROE from increasing
operating leverage.
Earnings conference call and
webcast
Aspen will host a conference call to discuss the results at
8:30 am (EST) on Thursday, April 24, 2014.
To participate in the April 24
conference call by phone
Please 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 18692881
To listen live online
Aspen will provide a live webcast on
Aspen’s website at www.aspen.co.
To download the materials
The earnings press release and a detailed
financial supplement will also be published on Aspen’s website at
www.aspen.co.
To listen later
A 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
18692881
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 at As at March 31,
December 31, 2014 2013 ASSETS
Total investments
$7,006.1 $6,959.8 Cash and cash
equivalents
1,443.7 1,293.6 Reinsurance recoverables
573.4 484.6 Premiums receivable
1,189.5 999.0 Other
assets
550.5 493.5
$10,763.2
$10,230.5 LIABILITIES Losses and loss adjustment expenses
$4,760.7 $4,678.9 Unearned premiums
1,479.7 1,280.6
Other payables
533.6 372.4 Silverton Re loan notes
53.4 50.0 Long-term debt
549.0 549.0
7,376.4 6,930.9 SHAREHOLDERS’ EQUITY Total
shareholders’ equity
3,386.8 3,299.6 Total
liabilities and shareholders’ equity
$10,763.2
$10,230.5 Book value per share
$43.28 $41.87 Diluted
book value per share (treasury stock method)
$42.72
$40.90
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Three Months Ended March 31,
2014
March 31,
2013
UNDERWRITING REVENUES Gross written premiums
$855.5
$773.4 Premiums ceded
(158.0) (176.4) Net written
premiums
697.5 597.0 Change in unearned premiums
(131.0) (86.1) Net earned premiums
566.5
510.9 UNDERWRITING EXPENSES Losses and loss adjustment
expenses
288.1 268.7 Amortization of deferred policy
acquisition costs
112.0 104.6 General, administrative and
corporate expenses (excluding non-recurring corporate expenses)
92.6 86.6 Total underwriting expenses
492.7
459.9 Underwriting income including corporate expenses
73.8 51.0 OTHER OPERATING REVENUE Net investment
income
49.5 48.3 Interest expense
(7.4) (7.7) Other
income (expense)
(0.1) 0.5 Total other operating
revenue
42.0 41.1 OPERATING INCOME BEFORE TAX
115.8 92.1 Non-recurring corporate expenses
(3.0) — Net realized and unrealized exchange gains (losses)
3.1 (10.2) Net realized and unrealized investment gains
8.3 15.8 INCOME BEFORE TAX
124.2 97.7 Income
tax expense
(3.8) (5.9) NET INCOME AFTER TAX
120.4 91.8 Dividends paid on ordinary shares
(11.7)
(11.9) Dividends paid on preference shares
(9.5) (8.6)
Proportion due to non-controlling interest
(0.1) —
Retained income
$99.1 $71.3 Components of net income
(after tax) Operating income
$112.7 $85.7
Non-recurring corporate expenses
(3.0) — Net realized and
unrealized exchange gains (losses) after tax
2.6 (9.5) Net
realized investment gains after tax
8.1 15.6 NET
INCOME AFTER TAX
$120.4 $91.8 Loss ratio
50.9%
52.6% Policy acquisition expense ratio
19.8% 20.5% General,
administrative and corporate expense ratio
16.9% 17.0%
General, administrative and corporate expense ratio (excluding
non-recurring corporate expenses)
16.3% 17.0% Expense ratio
36.7% 37.5% Expense ratio (excluding non-recurring corporate
expenses)
36.1% 37.5% Combined ratio
87.6% 90.1%
Combined ratio (excluding non-recurring corporate expenses)
87.0% 90.1%
Summary consolidated financial data
(unaudited)
$ in millions, except number of shares
Three Months Ended March 31, 2014
March 31, 2013 Basic earnings per ordinary
share Net income adjusted for preference share dividend
$1.70 $1.21 Operating income adjusted for preference share
dividend
$1.59 $1.12 Diluted earnings per ordinary share Net
income adjusted for preference share dividend
$1.66 $1.15
Operating income adjusted for preference share dividend
$1.55 $1.06 Weighted average number of ordinary
shares outstanding (in millions)
65.289 68.854 Weighted
average number of ordinary shares outstanding and dilutive
potential ordinary shares (in millions)
66.566 72.453
Book value per ordinary share
$43.28 $43.14 Diluted book
value per ordinary share (treasury stock method)
$42.72
$40.67 Ordinary shares outstanding at end of the period (in
millions)
65.419 65.634 Ordinary shares outstanding and
dilutive potential ordinary shares at end of the period (treasury
stock method) (in millions)
66.281 69.611
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Three Months Ended March 31, 2014 Three
Months Ended March 31, 2013 Reinsurance
Insurance Total Reinsurance
Insurance Total
Gross written premiums
$472.2 $383.3 $855.5
$439.6 $333.8 $773.4 Net written premiums
442.6 254.9
697.5 400.5 196.5 597.0 Gross earned premiums
278.5
373.6 652.1 271.9 312.9 584.8 Net earned premiums
266.7 299.8 566.5 256.7 254.2 510.9 Losses and
loss adjustment expenses
110.4 177.7 288.1
114.3 154.4 268.7 Amortization of deferred policy acquisition costs
50.4 61.6 112.0 55.3 49.3 104.6 General and
administrative expenses
32.8 45.9
78.7 32.2 42.4 74.6 Underwriting income
$73.1 $14.6 $87.7 $54.9 $8.1
$63.0 Net investment income
49.5 48.3 Net realized
and unrealized investment gains (1)
8.3 15.8 Corporate
expenses
(13.9) (12.0) Non-recurring corporate expenses
(3.0) — Other (expense) income
(0.1) 0.5 Interest
expenses
(7.4) (7.7) Net realized and unrealized foreign
exchange gains (losses) (2)
3.1 (10.2) Income before tax
$124.2 $97.7 Income tax expense
(3.8) (5.9)
Net
income $120.4 $91.8
Ratios Loss ratio
41.4% 59.3% 50.9% 44.5% 60.7% 52.6%
Policy acquisition expense ratio
18.9% 20.5%
19.8% 21.5% 19.4% 20.5% General and administrative expense
ratio (3)
12.3% 15.3% 16.9% 12.5% 16.7% 17.0%
General and administrative expense ratio (excluding non-recurring
corporate expenses)(3)
12.3% 15.3% 16.3% 12.5%
16.7% 17.0% Expense ratio
31.2% 35.8% 36.7%
34.0% 36.1% 37.5% Expense ratio (excluding non-recurring corporate
expenses)
31.2% 35.8% 36.1% 34.0% 36.1% 37.5%
Combined ratio
72.6% 95.1% 87.6% 78.5% 96.8%
90.1% Combined ratio (excluding non-recurring corporate expenses)
72.6% 95.1% 87.0% 78.5%
96.8% 90.1%
((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, 2013, Aspen reported $10.2 billion
in total assets, $4.7 billion in gross reserves, $3.3 billion in
total shareholders’ equity and $2.6 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,”
“estimate,” "may,” "continue,” “guidance,” “outlook,” “trends,”
“future,” “could” 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. Forward-looking
statements do not reflect the potential impact of any future
collaboration, acquisition, merger, disposition, joint venture or
investments that Aspen may enter into or make, and the risks,
uncertainties and other factors relating to such statements might
also relate to the counterparty in any such transaction if entered
into or made by Aspen.
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 highly competitive insurance and
reinsurance industry; 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;
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; 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 effectiveness of our 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; 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; 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
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
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 debt
crisis; 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 changes or
changes in our financial position; 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; Aspen or Aspen Bermuda
Limited becoming subject to income taxes in the United States or
the United Kingdom; loss of one or more of our senior underwriters
or key personnel; our reliance on information and technology and
third party service providers for our operations and systems; 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
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. 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
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.
(1) 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 22 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.
(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,
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 the first quarter
2014, non-recurring items included costs associated with defending
the unsolicited approach from Endurance Specialty Holdings Ltd. in
the amount of $3.0 million.
Aspen excludes these above items 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 22 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 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 21 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 22 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.
(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 catastrophe losses in 2014 as losses associated with
winter storms in the U.S., snowstorms in Japan and flooding in the
U.K. There were no catastrophe losses in the comparative period in
2013.
Other
(1) Catastrophe Load included in our guidance is an
estimate of the average annual aggregate loss before tax and after
reinsurance 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 worldwide 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 U.S. Wind events in this period. As an organization,
Aspen monitors its current catastrophe losses to date against
expected losses 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.
InvestorsAspenKerry Calaiaro, +1 (646) 502 1076Senior
Vice President, Investor
RelationsKerry.Calaiaro@aspen.coorAspenKathleen de Guzman, +1 (646)
289 4912Vice President, Investor
RelationsKathleen.deGuzman@aspen.coorMediaAspenSteve Colton,
+44 20 7184 8337Head of
CommunicationsSteve.Colton@aspen.coorInternational – Citigate Dewe
RogersonCaroline Merrell or Jos Bieneman+44 20 7638
9571caroline.merrell@citigatedr.co.ukjos.bieneman@citigatedr.co.ukorNorth
America – Sard Verbinnen & CoPaul Scarpetta or Jamie Tully+1
(212) 687 8080
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