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Aspen reports net loss after tax of US$253.8 million for Q3


October 31, 2017   by Canadian Underwriter


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Hamilton, Bermuda-based Aspen Insurance Holdings Limited has reported a net loss after tax of US$253.8 million for the third quarter of 2017 compared to net income of US$95.6 million in the same quarter last year.

“The third quarter was characterized by multiple, large-scale natural catastrophes across our industry,” noted Chris O’Kane, Aspen’s chief executive officer, in a press release last week announcing the company’s latest financial results. “While significant, Aspen’s estimated losses from these events are within our expectations for catastrophes of this nature. We are encouraged that, following several years of decline, the industry losses this quarter may be the catalyst that leads to improved market conditions and pricing.”

Aspen’s gross written premiums (GWP) of US$852.5 million for the third quarter of 2017 ending Sept. 30 increased 11.7% compared to US$763.5 million in Q3 2016. In particular, the Insurance segment’s GWP were US$421 million, up 5.9% compared to US$397.6 million in Q3 2016, primarily due to growth in the Financial and Professional lines sub-segment. The Reinsurance segment saw GWP of US$431.5 million, an increase of 17.9% from US$365.9 million in Q3 2016, primarily due to growth in the Specialty sub-segment, largely from AgriLogic. The growth in the Property Catastrophe and Other Property sub-segments was largely from reinstatement premiums, Aspen added in the release.

Net written premiums (NWP) of US$607.4 million in Q3 decreased 4.9% compared to US$638.4 million in Q3 2016 “as Aspen continues to make more efficient use of ceded reinsurance to reduce volatility.” Insurance NWP decreased 24.7% to US$243.8 million from US$323.9 million in the third quarter of 2016, “primarily due to increased use of quota share reinsurance to reduce volatility across our longer-tail businesses,” the release added. Reinsurance NWP’s increased 15.6% to US$363.6 million from US$314.5 million.

The loss ratio in Q3 2017 was up dramatically to 119% in the most recent quarter, compared with 57.2% in Q3 2016. The loss ratio included pre-tax catastrophe losses of US$360.3 million, or 55.9 percentage points, net of reinsurance recoveries and US$12.5 million of reinstatement premiums in Q3 2017, primarily due to Hurricanes Harvey, Irma and Maria, and other cats, including weather-related events and the Mexican earthquakes. Pre-tax cat losses, net of reinsurance recoveries and reinstatement premiums, totaled US$24.9 million, or 3.7 percentage points, in the third quarter of 2016.

By segment, Insurance’s loss ratio of 101.3% compared with 57.7% in the third quarter of 2016. Pre-tax cat losses, of US$84.0 million, or 30.3 percentage points, net of reinsurance recoveries and $(7.4) million of reinstatement premiums, in the third quarter of 2017 primarily due to hurricanes Harvey, Irma and Maria and weather-related events. Pre-tax catastrophe losses net of reinsurance recoveries totalled US$10.1 million, or 2.8 percentage points, in Q3 2016. Reinsurance’s loss ratio of 131.5% compared with 56.5% in the third quarter of 2016, the release said. The loss ratio included pre-tax cat losses, of US$276.3 million, or 74.6 percentage points, net of reinsurance recoveries and US$19.9 million of reinstatement premiums, in the third quarter of 2017 primarily due to hurricanes Harvey, Irma and Maria, and the Mexican earthquakes. Pre-tax catastrophe losses, net of reinsurance recoveries and reinstatement premiums, totalled US$14.8 million, or 4.7 percentage points, in the third quarter of 2016.

The accident year loss ratio excluding catastrophes was 65.9% in the third quarter of 2017 compared with 58.6% in the third quarter of 2016. For Insurance, the accident year loss ratio excluding catastrophes for the quarter ended Sept. 30 was 71.3%, which was affected by increased losses in short-tail insurance lines, primarily property. These losses totalled US$32.3 million, or 11.9 percentage points, on the accident year ex-cat loss ratio. The accident year loss ratio excluding catastrophes in the third quarter of 2016 was 59.1%. For Reinsurance, accident year loss ratio ex-cat for Q3 2017 was 61.7% compared with 58.2% a year ago. The increase was due largely to a change in business mix, primarily related to AgriLogic, Aspen noted in the release.

For the nine months ending Sept. 30, some operating highlights include:

  • GWP up 5.2% to US$2.67 billion compared to US$2.54 billion in 9M 2016;
  • NWP down by 13.4% to US$1.87 billion in the most recent quarter compared to US$2.16 billion in 9M 2016;
  • Loss ratio of 80.8% for the first nine months compared to 58.7% for 9M 2016. The loss ratio included US$424.3 million, or 23.9 percentage points, of pre-tax cat losses, net of reinsurance recoveries and US$12.5 million of reinstatement premiums, in the first nine months of 2017. This compared with US$108.7 million, or 5.4 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries and reinstatement premiums, in the first nine months of 2016; and
  • Accident year loss ratio ex-cat of 62.1% for the first nine months of 2017 compared with 57.2% for the first nine months of 2016;

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 gross written premiums.