Gross Written Premiums up 3.2% in the Fourth
Quarter and 3.3% in the year 2015
Net Income Return on Equity of 10.0% for the
year 2015
Operating Return on Equity of 10.0% for the
year 2015
Diluted Book Value Per Share of $46.00, up
1.9% from December 31, 2014
Aspen Insurance Holdings Limited (“Aspen”) (NYSE:AHL) reported
today net income after tax of $117.9 million, or $1.75 per diluted
share, and operating income after tax of $84.0 million, or $1.21
per diluted share, for the fourth quarter of 2015.
Chris O’Kane, Chief Executive Officer, commented, “2015 was a
year of significant progress across Aspen. We continued to
diversify further our Reinsurance and Insurance operations,
expanding both by product and geography. Aspen Re had a very
successful year in the face of market conditions that remained
challenging, delivering an excellent performance, with growth
focused on the Specialty and Other Property sub-segments. Our
Insurance business continued to find opportunities for profitable
growth, primarily in the U.S. and select international
markets.”
He continued, “Looking to the next chapter for expanding our
business, we recently launched our global insurance product lines
strategy which, we believe, will create opportunities to deploy
products more widely, increase scale where we choose and bring us
closer to our brokers and clients. Our aim is to deliver
consistent, high quality returns across all cycles. We also
recently announced the acquisition of AgriLogic, a specialist U.S.
crop business with an integrated agricultural consultancy, a
company we know well and with strong underwriting skills, and deep
intellectual capital, technical and risk management expertise. As
we grow the Aspen business, we remain committed to driving
efficiency and consistency across our company to generate increased
profitability over the long-term.”(1)
_________________
Non-GAAP financial measures are used
throughout this release as defined at the end of this press
release.(1) Refer to Safe Harbor disclosure.
Operating highlights for the quarter ended December 31,
2015
- Gross written premiums increased by
3.2% to $634.8 million in the fourth quarter of 2015 compared with
$615.4 million in the fourth quarter of 2014
- Combined ratio of 91.8% for the fourth
quarter of 2015 compared with 94.1% for the fourth quarter of 2014.
Net favorable development on prior year loss reserves of $58.9
million, or 9.4 combined ratio points, for the fourth quarter of
2015 compared with $11.5 million, or 1.9 combined ratio points, in
the comparable period
- Pre-tax catastrophe losses, net of
reinsurance recoveries, totaled $45.9 million, or 7.3 combined
ratio points, in the fourth quarter of 2015 compared with $15.7
million, or 2.6 combined ratio points, of pre-tax catastrophe
losses, net of reinsurance recoveries, in the fourth quarter of
2014. In addition, there were several large non-correlated losses,
totaling $34.3 million, in the fourth quarter of 2015, including
$17.0 million, or 2.7 combined ratio points, of losses related to
the collapse of a dam in Brazil.
Operating highlights for the year ended December 31,
2015
- Gross written premiums increased by
3.3% to $2,997.3 million for the year ended December 31, 2015
compared with $2,902.7 million in 2014
- Combined ratio of 91.9% for 2015
compared with 91.7% for 2014. Net favorable development on prior
year loss reserves of $156.5 million, or 6.3 combined ratio points,
in 2015 compared with $104.1 million or 4.3 combined ratio points,
in 2014
- Pre-tax catastrophe losses, net of
reinsurance recoveries, totaled $90.5 million, or 3.7 combined
ratio points, in 2015 compared with $65.5 million, or 2.7 combined
ratio points, of pre-tax catastrophe losses, net of reinsurance
recoveries, in 2014
Financial highlights for the quarter and twelve months ended
December 31, 2015
- Annualized net income return on average
equity of 15.2% and annualized operating return on average equity
of 10.4% for the quarter ended December 31, 2015 compared with
8.0% and 8.8%, respectively, for the fourth quarter of 2014
- Net income return on average equity of
10.0% and operating return on average equity of 10.0% for the full
year of 2015 compared with 11.1% and 11.5%, respectively, for the
full year of 2014
- Net income per diluted share of $1.75
for the quarter ended December 31, 2015 compared with net
income per diluted share of $0.90 for the quarter ended
December 31, 2014, and net income per diluted share of $4.54
for the twelve months ended December 31, 2015 compared with
net income per diluted share of $4.82 for the twelve months ended
December 31, 2014
- Operating income per diluted share of
$1.21 for the quarter ended December 31, 2015 compared with
operating income per diluted share of $0.97 for the quarter ended
December 31, 2014, and operating income per diluted share of
$4.51 for the twelve months ended December 31, 2015 compared
with operating income per diluted share of $5.01 for the twelve
months ended December 31, 2014
- Diluted book value per share of $46.00
at December 31, 2015 up 1.9% from December 31, 2014.
Segment Highlights
Insurance
Operating highlights for Insurance for the quarter ended
December 31, 2015 include:
- Gross written premiums of $448.0
million, a decrease of 4.7% compared with $470.1 million in the
fourth quarter of 2014
- Combined ratio of 99.6% compared with
97.1% for the fourth quarter of 2014
- Prior year favorable reserve
development of $21.5 million, or 6.0 combined ratio points,
compared with prior year reserve strengthening of $11.9 million, or
3.4 combined ratio points, for the fourth quarter of 2014
Growth in the Property and Casualty, and Financial and
Professional Lines sub-segments was offset by a decline in the
Marine, Aviation and Energy sub-segment, which includes a number of
lines with the strongest market rate pressure. The U.S. platform
continued to grow in the fourth quarter and achieved improved
profitability compared to the prior year period.
The combined ratio of 99.6% for the fourth quarter of 2015
included $23.3 million, or 6.5 percentage points, of pre-tax
catastrophe losses, net of reinsurance recoveries, including $25.7
million related to floods in the U.K. offset by $2.4 million of
reductions to previously reported catastrophe losses. The combined
ratio for the fourth quarter of 2014 included $0.7 million, or 0.2
percentage points, of pre-tax catastrophe losses net of reinsurance
recoveries. For the quarter ended December 31, 2015, the
Insurance accident year loss ratio excluding catastrophes was 64.6%
compared with 56.3% a year ago. There were several non-correlated
large losses, totaling $27.3 million, or 7.6 combined ratio points
in the fourth quarter of 2015.
Mario Vitale, CEO of Insurance, commented, “The Aspen Insurance
team achieved much in 2015. We continued to diversify our business
as part of our strategy to drive profitable growth. Our U.S.
platform delivered growth in our chosen markets, beat our
previously stated targets for net earned premiums and operating
expense ratio, and was profitable for the third consecutive year.
Our International platform entered new geographic markets such as
Singapore but, faced with a more challenging rate environment,
pulled back in areas where pricing did not reflect the underlying
risk and focused on better rated opportunities, delivering improved
profitability for the year. Looking forward to the next phase of
growth for Aspen Insurance, we are globalizing our approach to the
market, making it easier to deploy products more broadly, increase
scale, and strengthen our client and broker relationships. To help
us accomplish these ambitious objectives, we were able to add a
number of top specialist insurance professionals to our already
deep and talented team of underwriters.”(1)
Reinsurance
Operating highlights for Reinsurance for the quarter ended
December 31, 2015 include:
- Gross written premiums of $186.8
million, an increase of 28.6% from $145.3 million in the fourth
quarter of 2014
- Combined ratio of 74.1% compared with
82.7% for the fourth quarter of 2014
- Prior year favorable reserve
development of $37.4 million, or 13.8 combined ratio points,
compared with $23.4 million prior year favorable reserve
development, or 8.9 combined ratio points, for the fourth quarter
of 2014
The combined ratio of 74.1% for the fourth quarter of 2015
included $22.6 million, or 8.4% percentage points, of pre-tax
catastrophe losses, net of reinsurance recoveries, primarily
related to weather-related events in North America and Asia, and
floods in the U.K. 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, net of reinsurance recoveries.
For the quarter ended December 31, 2015, the Reinsurance
accident year loss ratio excluding catastrophes was 42.4% compared
with 52.8% a year ago.
Stephen Postlewhite, CEO of Reinsurance, commented, “Aspen Re
had another excellent year in 2015. Throughout the year, we
improved our share with selected clients and capitalized on new
business opportunities, including significant new partnerships. Our
growth was achieved primarily in our targeted Specialty and Other
Property sub-segments where we saw better priced opportunities. We
also delivered an excellent accident year ex-cat loss ratio, which
improved year over year to 49.7%. We continued to see excellent
deal flow throughout 2015 due to our deep relationships with
clients and distribution partners, and this has continued into the
important January 1 renewal season where we achieved premium growth
of 8.9%, driven by our Specialty, Other Property, and Casualty
sub-segments. In Property Cat, where rates remain most pressured,
we continued to manage down our book, reducing premiums by 10.4%.
In addition, we continue to leverage third party capital through
Aspen Capital Markets to further manage our exposures in this
book.”(1)
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 3.65 years at December 31, 2015 excluding the
impact of interest rate swaps, or 3.57 years including the impact
of interest rate swaps. The total return on Aspen’s aggregate
investment portfolio was 0.33% for the three months ended
December 31, 2015 and reflected $38.2 million of gains in the
equity portfolio. In the twelve months ended December 31,
2015, Aspen’s aggregate investment portfolio had a positive total
return of 1.10%.
Book yield as at December 31, 2015 on the fixed income
portfolio was 2.59% compared to 2.65% at December 31, 2014.
Capital
Total shareholders’ equity was $3.4 billion at December 31,
2015.
During the fourth quarter of 2015, no ordinary shares were
repurchased. Aspen repurchased 1,790,333 ordinary shares for a
total cost of $83.7 million during the full year of 2015. Aspen
continues to have $416.3 million remaining under its current share
repurchase authorization as at February 4, 2016.
January 2016 Reinsurance Renewals
During the January 2016 renewal season, Aspen underwrote $578.4
million in gross written premiums in Reinsurance, an increase of
8.9% compared with the prior year. The renewal data does not
include agriculture premiums.
Below is a table reflecting gross written premiums written
during the January 2016 renewal season, including new business, by
Property Catastrophe, Other Property, Casualty and Specialty
Reinsurance.
January Gross Written Premiums (underwriting year
basis) 2016 2015
Increase(Decrease)
($ in millions) % Property Catastrophe $ 129.8 $
144.8 (10.4 )% Other Property 133.5 124.0 7.7 % Casualty 136.4
117.7 15.9 % Specialty 178.7 144.8 23.4 % $ 578.4
$ 531.3 8.9 %
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 (ET) on Friday, February 5, 2016.
To participate in the February 5 conference call by
phonePlease call to register at least 10 minutes before the
conference call begins by dialing:
+1 (844) 378 6481 (US toll free) or+1 (412) 542 4176
(international)Conference ID 10077871
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
approximately two hours after the end of the live call for 14 days
via phone and internet. To listen to the replay by phone please
dial:
+1 (877) 344 7529 (US toll free) or+1 (412) 317 0088
(international)Replay ID 10077871
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
31,2015
As atDecember
31,2014
ASSETS Total investments
$ 7,712.2 $ 7,428.9
Cash and cash equivalents
1,099.5 1,178.5 Reinsurance
recoverables
523.7 556.8 Premiums receivable
1,115.6
1,011.7 Other assets
597.8 540.4 Total assets
$ 11,048.8 $ 10,716.3 LIABILITIES
Losses and loss adjustment expenses
$ 4,938.2 $
4,750.8 Unearned premiums
1,587.2 1,441.8 Other payables
451.3 484.6 Silverton loan notes
103.0 70.7 Long-term
debt
549.2 549.1 Total liabilities
$
7,628.9 $ 7,297.0 SHAREHOLDERS’ EQUITY Total
shareholders’ equity
3,419.9 3,419.3 Total
liabilities and shareholders’ equity
$ 11,048.8
$ 10,716.3 Book value per share
$ 46.99
$ 46.16 Diluted book value per share (treasury stock method)
$ 46.00 $ 45.13
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Three Months Ended
December 31,2015
December 31,2014
UNDERWRITING REVENUES Gross written premiums
$ 634.8
$ 615.4 Premiums ceded
(48.0 ) (61.4 ) Net written
premiums
586.8 554.0 Change in unearned premiums
42.9
58.2 Net earned premiums
629.7 612.2
UNDERWRITING EXPENSES Losses and loss adjustment expenses
334.0 339.6 Amortization of deferred policy acquisition
costs
118.2 114.8 General, administrative and corporate
expenses
125.9 121.5 Total underwriting
expenses
578.1 575.9 Underwriting income
including corporate expenses
51.6 36.3 OTHER
OPERATING REVENUE Net investment income
46.4 46.7 Interest
expense
(7.4 ) (7.4 ) Other (expense)
(5.4
) (3.9 ) Total other operating revenue
33.6
35.4 OPERATING INCOME BEFORE TAX
85.2
71.7 Net realized and unrealized exchange
gains (losses)
6.1 (2.8 ) Net realized and unrealized
investment gains (losses)
31.9 (0.9 ) INCOME BEFORE
TAX
123.2 68.0 Income tax expense
(5.3 ) (0.8
) NET INCOME AFTER TAX
117.9 67.2 Dividends paid on ordinary
shares
(12.8 ) (12.4 ) 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 ) Retained income
$ 95.6 $ 44.5 Components of net income
(after tax) Operating income
$ 84.0 $ 71.3 Net
realized and unrealized exchange gains (losses) after tax
5.7 (3.1 ) Net realized investment gains (losses) after tax
28.2 (1.0 ) NET INCOME AFTER TAX
$
117.9 $ 67.2 Loss ratio
53.0
% 55.5 % Policy acquisition expense ratio
18.8
% 18.8 % General, administrative and corporate expense ratio
20.0 % 19.8 % Expense ratio
38.8 % 38.6
% Combined ratio
91.8 % 94.1 %
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Twelve Months Ended
December 31,2015
December 31,2014
UNDERWRITING REVENUES Gross written premiums
$
2,997.3 $ 2,902.7 Premiums ceded
(351.1 )
(387.5 ) Net written premiums
2,646.2 2,515.2 Change in
unearned premiums
(172.9 ) (109.9 ) Net earned
premiums
2,473.3 2,405.3 UNDERWRITING EXPENSES
Losses and loss adjustment expenses
1,366.2 1,307.5
Amortization of deferred policy acquisition costs
483.6
451.2
General, administrative and corporate
expenses (excluding non-recurringcorporate expenses)
424.0 417.2 Total underwriting expenses
2,273.8 2,175.9 Underwriting income including
corporate expenses
199.5 229.4 OTHER OPERATING
REVENUE Net investment income
185.5 190.3 Interest expense
(29.5 ) (29.5 ) Other (expense)
(20.3 )
(9.8 ) Total other operating revenue
135.7 151.0
OPERATING INCOME BEFORE TAX
335.2
380.4 Non-recurring corporate expenses (bid
defense costs) — (28.5 ) Net realized and unrealized exchange
(losses)
(9.8 ) (2.4 ) Net realized and unrealized
investment gains
12.1 18.4 INCOME BEFORE TAX
337.5 367.9 Income tax expense
(14.4 ) (12.1 )
NET INCOME AFTER TAX
323.1 355.8 Dividends paid on ordinary
shares
(50.9 ) (50.3 ) Dividends paid on preference
shares
(37.8 ) (37.8 ) Dividends paid to
non-controlling interest
(0.1 ) (0.1 ) Proportion due
to non-controlling interest
(0.8 ) (0.8 ) Retained
income
$ 233.5 $ 266.8 Components of
net income (after tax) Operating income
$ 321.4 $
368.5 Non-recurring corporate expenses — (28.5 ) Net realized and
unrealized exchange (losses) after tax
(10.2 ) (2.2 )
Net realized investment gains after tax
11.9 18.0
NET INCOME AFTER TAX
$ 323.1 $ 355.8
Loss ratio
55.2 % 54.4 % Policy
acquisition expense ratio
19.6 % 18.8 % General,
administrative and corporate expense ratio
17.1 %
18.5 %
General, administrative and corporate
expense ratio (excluding non-recurringcorporate expenses)
17.1 % 17.3 % Expense ratio
36.7 % 37.3
% Expense ratio (excluding non-recurring corporate expenses)
36.7 % 36.1 % Combined ratio
91.9 %
91.7 % Combined ratio (excluding non-recurring corporate expenses)
91.9 % 90.5 %
Aspen Insurance Holdings
Limited
Summary consolidated financial data
(unaudited)
$ in millions, except number of shares
Three Months Ended Twelve
Months Ended
December 31, 2015
December 31, 2014
December 31, 2015
December 31, 2014
Basic earnings per ordinary share
Net income adjusted for preference share
dividend andnon-controlling interest
$ 1.78 $ 0.92
$ 4.64 $ 4.92
Operating income adjusted for preference
sharedividend and non-controlling interest
$ 1.23 $ 0.99
$ 4.62 $ 5.11 Diluted
earnings per ordinary share
Net income adjusted for preference share
dividend andnon-controlling interest
$ 1.75 $ 0.90
$ 4.54 $ 4.82
Operating income adjusted for preference
sharedividend and non-controlling interest
$ 1.21 $ 0.97
$ 4.51 $ 5.01
Weighted average number of ordinary shares
outstanding(in millions)
60.785 62.206
61.288 64.536
Weighted average number of ordinary shares
outstandingand dilutive potential ordinary shares (in millions)
62.177 63.605
62.688 65.873 Book value per
ordinary share
$ 46.99 $ 46.16
$ 46.99
$ 46.16
Diluted book value per ordinary share
(treasury stockmethod)
$ 46.00 $ 45.13
$ 46.00 $ 45.13
Ordinary shares outstanding at end of the
period (inmillions)
60.918 62.017
60.918 62.017
Ordinary shares outstanding and dilutive
potential ordinaryshares at end of the period (treasury stock
method) (inmillions)
62.240 63.445
62.240 63.445
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Three Months Ended December 31, 2015
Three Months Ended December 31, 2014 Reinsurance
Insurance Total Reinsurance Insurance
Total Gross written premiums
$ 186.8
$ 448.0 $ 634.8 $ 145.3 $ 470.1 $ 615.4
Net written premiums
178.5 408.3 586.8 143.6
410.4 554.0 Gross earned premiums
295.9 436.0
731.9 278.4 417.0 695.4 Net earned premiums
270.3
359.4 629.7 263.1 349.1 612.2
Losses and loss adjustmentexpenses
99.9 234.1 334.0 130.4 209.2 339.6 Policy
acquisition expenses
56.1 62.1 118.2 47.7 67.1
114.8
General and administrativeexpenses
44.0 61.8 105.8 39.4
62.9 102.3 Underwriting income
$
70.3 $ 1.4 $ 71.7
$ 45.6 $ 9.9 $ 55.5 Net investment income
46.4 46.7 Net realized and unrealized investment gains
(losses) (1)
31.9 (0.9 ) Corporate expenses
(20.1
) (19.2 ) Other (expense) (2)
(5.4 ) (3.9 )
Interest expense
(7.4 ) (7.4 ) Net realized and
unrealized foreign exchange gains (losses) (3)
6.1
(2.8 ) Income before tax
$ 123.2 $ 68.0 Income tax
expense
(5.3 ) (0.8 )
Net income $
117.9 $ 67.2
Ratios Loss ratio
37.0 % 65.1 % 53.0 % 49.6
% 59.9 % 55.5 % Policy acquisition expense ratio
20.8
% 17.3 % 18.8 % 18.1 % 19.2 %
18.8 %
General and administrative expenseratio
(4)
16.3 % 17.2 % 20.0 % 15.0
% 18.0 % 19.8 % Expense ratio
37.1 % 34.5
% 38.8 % 33.1 % 37.2 % 38.6 % Combined ratio
74.1 % 99.6 % 91.8 % 82.7
% 97.1 % 94.1 % (1) Includes realized and unrealized
capital gains and losses and realized and unrealized gains and
losses on interest rate swaps (2) Other (expense) in the fourth
quarter of 2015 and fourth quarter of 2014 included $5.3 million
and $4.1 million, respectively, related to a change in the fair
value of loan notes issued by Silverton Re (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
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Twelve Months Ended December 31, 2015
Twelve Months Ended December 31, 2014 Reinsurance
Insurance Total Reinsurance Insurance
Total Gross written premiums
$ 1,248.9
$ 1,748.4 $ 2,997.3 $ 1,172.8 $ 1,729.9
$ 2,902.7 Net written premiums
1,153.5 1,492.7
2,646.2 1,124.0 1,391.2 2,515.2 Gross earned premiums
1,153.5 1,703.3 2,856.8 1,137.6 1,599.0
2,736.6 Net earned premiums
1,072.6 1,400.7
2,473.3 1,088.2 1,317.1 2,405.3
Losses and loss adjustmentexpenses
491.6 874.6 1,366.2 497.8 809.7 1,307.5 Policy
acquisition expenses
224.7 258.9 483.6 200.0
251.2 451.2
General and administrativeexpenses
146.5 213.6 360.1 146.4
205.5 351.9 Underwriting income
$
209.8 $ 53.6 $
263.4 $ 244.0 $ 50.7 $ 294.7 Net
investment income
185.5 190.3 Net realized and unrealized
investment gains (1)
12.1 18.4 Corporate expenses
(63.9 ) (65.3 ) Non-recurring corporate expenses
— (28.5 ) Other (expense) (2)
(20.3 ) (9.8 )
Interest expense
(29.5 ) (29.5 ) Net realized and
unrealized foreign exchange (losses)(3)
(9.8 ) (2.4 )
Income before tax
$ 337.5 $ 367.9 Income tax expense
(14.4 ) (12.1 )
Net income $
323.1 $ 355.8
Ratios Loss ratio
45.8 % 62.4 % 55.2 % 45.7
% 61.5 % 54.4 % Policy acquisition expense ratio
20.9
% 18.5 % 19.6 % 18.4 % 19.1 %
18.8 %
General and administrativeexpense ratio
(4)
13.7 % 15.2 % 17.1 % 13.5
% 15.6 % 18.5 %
General and administrativeexpense ratio
(excluding non-recurring corporate expenses) (4)
13.7 % 15.2 % 17.1 % 13.5
% 15.6 % 17.3 % Expense ratio
34.6 % 33.7
% 36.7 % 31.9 % 34.7 % 37.3 %
Expense ratio (excluding non-recurring
corporate expenses)
34.6 % 33.7 % 36.7 % 31.9
% 34.7 % 36.1 % Combined ratio
80.4 % 96.1
% 91.9 % 77.6 % 96.2 % 91.7 %
Combined ratio (excluding non-recurring
corporate expenses)
80.4 % 96.1 % 91.9 % 77.6
% 96.2 % 90.5 % (1) Includes realized and unrealized
capital gains and losses and realized and unrealized gains and
losses on interest rate swaps (2) Other (expense) in the twelve
months ended December 31, 2015 and December 31, 2014 included $19.8
million and $18.6 million, respectively, related to a change in the
fair value of loan notes issued by Silverton Re (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 Australia, Bermuda, France, Germany,
Ireland, Singapore, Switzerland, the United Kingdom and the United
States. For the year ended December 31, 2015, Aspen reported $11.0
billion in total assets, $4.9 billion in gross reserves, $3.4
billion in total shareholders’ equity and $3.0 billion in gross
written premiums. Its operating subsidiaries have been assigned a
rating of “A” by Standard & Poor’s Financial Services LLC
(“S&P”), an “A” (“Excellent”) by A.M. Best Company Inc. (“A.M.
Best”) and an “A2” by Moody’s Investor Service, Inc.
(“Moody’s”).
For more information about Aspen, please visit www.aspen.co.
(1) 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,” "on track" 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,
including our assumptions on inflation costs associated with
long-tail casualty business which could differ materially from
actual experience; 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
23, 2015. 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.
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 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.
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 gains or losses, including net realized and
unrealized gains and 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 amount 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 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.
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.
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.
Accident Year Loss Ratio Excluding Catastrophes is a
non-GAAP financial measure. Aspen believes that the presentation of
loss ratios excluding catastrophes and prior year reserve movements
supports meaningful comparison from period to period of the
underlying performance of the business. Accident year loss ratios
excluding catastrophes are 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 catastrophe losses in the
fourth quarter of 2015 as losses associated with floods in the U.K.
and weather related events in North America and Asia and, in the
fourth quarter of 2014, as losses predominantly associated with
North American, Asian and Australian storms. See pages 10 and 11 of
Aspen’s financial supplement for a reconciliation of loss ratios to
accident year loss ratios excluding catastrophes.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204006487/en/
InvestorsMark Jones, Senior Vice President, Investor
Relations, AspenMark.P.Jones@aspen.co+1 (646) 289
4945orMediaKaren Green, Office of the CEOKaren.Green@aspen.co+44 20 7184
8110orInternational - 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
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