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Aspen reports net income of US$76.8 million for Q2 2017


July 27, 2017   by Canadian Underwriter


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Aspen Insurance Holdings Limited released its financial results for the second quarter and first half of 2017 on Wednesday, reporting a net income after tax of US$75.8 million for Q2 2017.

Gross written premiums (GWP) in the second quarter of 2017 ending June 30 totalled US$822.1 million, an increase of 2.5% from US$801.7 million in Q2 2016, Hamilton, Bermuda-based Aspen said in a press release.

In Insurance, GWP increased 3.7% to US$486.5 million from US$469.1 million in Q2 2016, primarily due to growth in the Financial and Professional lines sub-segment, offset by decreases in the Property and Casualty and Marine, Aviation and Energy sub-segments, Aspen reported. Reinsurance GWP increased 0.9% from US$332.6 million to US$335.6 million in the most recent quarter, primarily due to growth in the Specialty sub-segment, offset by decreases in the Property Catastrophe, Other Property and Casualty sub-segments.

Net written premiums (NWP) decreased 20.2% to US$578.7 million in Q2 2017 from US$724.8 million in the second quarter of 2016 “as Aspen is making more efficient use of reinsurance to reduce volatility,” the insurer said in the release. In particular, Insurance NWP decreased 29.9% to US$293.2 million from US$418 million in Q2 2016, “primarily due to increased use of quota share reinsurance to reduce volatility across our businesses.” NWP for Reinsurance decreased 6.9% to US$285.5 million in the most recent quarter from US$306.8 million in Q2 2016, primarily due to “increased cessions to Aspen Capital Markets.”

“We continue to make progress in both Reinsurance and Insurance to enhance further our competitive position and profitability,” said Chris O’Kane, Aspen CEO, in the release. “With a strong regional network and deep local relationships, the Aspen Re team has been able to capture new opportunities and again deliver strong results in an operating environment that remains challenging,” he added. “The Aspen Insurance team remains focused on lines that provide the best opportunities for long-term profitable growth such as Professional Liability, with its excellent track record of growth and strong underwriting performance.”

The company’s loss ratio for Q2 2017 was 61.6% compared to 65% in Q2 2016. The loss ratio included pre-tax catastrophe losses, net of reinsurance recoveries, of US$37.4 million in the second quarter of 2017. Pre-tax catastrophe losses, net of reinsurance recoveries and reinstatement premiums, totalled $65.1 million, in the second quarter of 2016, Aspen reported.

Net favourable development on prior year loss reserves in the second quarter of 2017 benefitted from a US$28.5 million reinsurance recovery in respect of an offshore energy-related loss that occurred in Africa in 2016. Net favourable development on prior year loss reserves, excluding this reinsurance recovery, in Q2 2017 was US$20.2 million compared with US$21.2 million in the second quarter of 2016, the release noted.

For the first six months of 2017 ending June 30, GWP increased by 2.4% to US$1.82 billion in the first half of 2017 compared with US$1.78 billion in the first half of 2016. NWP decreased by 17% to US$1.26 billion in H1 2017 compared with US$1.52 billion in H1 2016.

H1 2017 loss ratio of 59% compared with 59.5% for H1 2016. The loss ratio included pre-tax cat losses, net of reinsurance recoveries and reinstatement premiums, of US$66.5 million in H1 2017, compared to US$83.8 million of pre-tax cat losses, net of reinsurance recoveries and reinstatement premiums, in the first half of 2016.

Net favourable development on prior year loss reserves of US$74.9 million benefitted the loss ratio by 6.6 percentage points in the first half of 2017. This included an additional US$28.5 million reinsurance recovery in respect of the offshore energy-related loss that occurred in Africa in 2016, and which benefited the Insurance and Reinsurance segments largely evenly. In the first half of 2016, net favourable development of $42.8 million benefited the loss ratio by 3.2 percentage points, the release said.

Aspen 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, 2016, Aspen reported US$12.1 billion in total assets, US$5.3 billion in gross reserves, US$3.6 billion in total shareholders’ equity and US$3.1 billion in GWP.