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Aspen Insurance combined ratio up 7.1 points in Q2 2016, gross written premiums increase by 10.9%


July 28, 2016   by Canadian Underwriter


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Aspen Insurance Holdings Limited has reported a combined ratio of 100.7% for the second quarter of 2016 compared with 93.6% for the second quarter of 2015.

Hamilton, Bermuda-based Aspen Insurance also reported a net income after tax of US$64.9 million and operating income after tax of US$34.1 million for the second quarter of 2016. Gross written premiums (GWP) also increased by 10.9% to US$801.7 million in Q2 2016 from US$722.8 million in Q2 2015.

For the second quarter of 2016 ending June 30, net favourable development on prior year loss reserves of US$21.2 million, or 3.1 combined ratio points, for the second quarter of 2016 compared with US$31.1 million, or 5.1 combined ratio points, in the comparable period last year. Aspen Insurance added in a press release that pre-tax catastrophe losses, net of reinsurance recoveries and US$3.1 million of reinstatement premiums, totalled US$65.1 million, or 10.1 combined ratio points, in the second quarter of 2016 compared with US$11.9 million, or 2 combined ratio points, of pre-tax catastrophe losses, net of reinsurance recoveries, in the second quarter of 2015.

For the first six months of the year, GWP increased by 8.2% to nearly US$1.78 billion compared with US$1.64 billion in the first half of 2015. The combined ratio of 96.2% for H1 2016 compared with 91.2% for H1 2015. Net favourable development on prior year loss reserves of US$42.8 million, or 3.2 combined ratio points, for H1 2016 compared with US$58.6 million, or 4.9 combined ratio points, for H1 2015. Pre-tax catastrophe losses, net of reinsurance recoveries and US$3.1 million of reinstatement premiums, totalled US$83.8 million, or 6.5 combined ratio points, in the first half of 2016 up substantially from US$25.4 million, or 2.1 combined ratio points, of pre-tax catastrophe losses, net of reinsurance recoveries, in the first half of 2015.

For its Insurance segment, Aspen Insurance reported gross written premiums of US$469.1 million, an increase of 1.5% compared with US$462.1 million in Q2 2015. Growth in the Financial and Professional Lines and Property and Casualty sub-segments was offset by a decline in the Marine, Aviation and Energy sub-segment, which includes a number of lines that continue to be impacted by rate pressures, the release pointed out. The segment saw a loss ratio of 68.5% compared with 71.6% for the second quarter of 2015 and a combined ratio of 103.4% compared with 103.6% for the second quarter of 2015. Prior year favourable reserve development of US$7.4 million compared with prior year favourable reserve development of US$7 million for the second quarter of 2015.

The combined ratio of 103.4% for Insurance for Q2 2016 included US$16.5 million, or 4.3 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries, from weather-related events in the United States. The combined ratio for Q2 2015 included US$9.5 million of pre-tax catastrophe losses net of reinsurance recoveries.

For the quarter ending June 30, the Insurance accident year loss ratio excluding catastrophes was 66.1% compared with 70.9% a year ago. In the quarter, there were approximately US$41.7 million of mid-sized losses, including US$25.7 million of energy-related losses, US$11.8 million of fire-related losses and a US$4.2 million aviation loss, which together equated to 10.9 percentage points on the accident year ex-cat loss ratio.

The Reinsurance segment saw GWP of US$332.6 million, an increase of 27.6% from US$260.7 million in Q2 2015. Premium growth was driven primarily by the Specialty and Property Catastrophe sub-segments and, to a lesser degree, by the Casualty sub-segment, while the Other Property sub-segment was largely unchanged, the release said. Loss ratio of 60.5% compared with 43.3% for the second quarter of 2015; combined ratio of 90.5% compared with 75.3% for the second quarter of 2015. Prior year favourable reserve development of US$13.8 million compared with US$24.1 million prior year favourable reserve development for Q2 2015.

The Reinsurance combined ratio of 90.5% for the second quarter of 2016 included US$48.6 million, or 17.4 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries and US$3.1 million of reinstatement premiums, primarily as a result of the Fort McMurray wildfire, the earthquake in Japan and weather-related events in the U.S. The combined ratio of 75.3% for the second quarter of 2015 included $2.4 million of pre-tax catastrophe losses, net of reinsurance recoveries. The accident year loss ratio excluding catastrophes was 47.7% compared with 51.4% a year ago, Aspen Insurance reported.

Chris O’Kane, Aspen Insurance CEO, noted in the release that “on an accident year ex-catastrophe basis, the performance of both our Insurance and Reinsurance segments improved considerably. Our new leadership teams at Aspen Re and Aspen Insurance remain focused on disciplined underwriting, identifying and capturing attractive opportunities for profitable growth in our diversified businesses around the globe which, we believe, will create long-term value for our shareholders.”

Aspen Insurance provides reinsurance and insurance coverage to clients in various domestic and global markets through wholly-owned subsidiaries and offices in Australia, Bermuda, Canada, France, Germany, Ireland, Singapore, Switzerland, the United Arab Emirates, the United Kingdom and the United States. For the year ending Dec. 31, 2015, Aspen reported US$11 billion in total assets, US$4.9 billion in gross reserves and US$3 billion in gross written premiums.


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