Canadian Underwriter

Combined ratio up 2.2 points, Q4 gross written premiums up 1.8% at Aspen Insurance

February 9, 2015   by Canadian Underwriter

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Aspen Insurance Holdings Ltd. recently reported its gross written premiums increased 9.7% in 2014 and that its fourth-quarter combined ratio improved 24.5 points in primary insurance while deteriorating 24.1 points in reinsurance, due in part to a higher frequency of non-correlated mid-sized losses in the three months ending Dec. 31.

Hamilton, Bermuda-based Aspen – which writes insurance in Canada through Aspen Insurance UK Ltd. – released Feb. 5 its financial results for the final quarter of 2014 and for the full year.

Aspen Insurance Holdings Ltd. reported a 1.8% increase in gross written premiums in Q4 2014 

For Aspen Insurance Holdings, gross written premiums were $2.903 billion in 2014, up 9.7% from $2.647 billion in 2013. All figures are in United States dollars.

For the final quarter, Aspen reported gross written premiums of $615.4 million in 2014, up 1.8% from $606.4 million during the same period in 2013. Of its Q4 2014 gross written premiums, $470.1 million (76%) was in insurance while the remainder $145.3 million was in reinsurance.

Aspen’s primary insurance includes property, casualty, marine, aviation, energy, construction, financial and professional lines. Its reinsurance lines include property (catastrophe and other), casualty and specialty.

Most of Aspen Insurance Holdings Ltd.'s primary insurance lines are in marine, energy, transportation and financial and professional lines

Aspen reported its loss ratio was 55.5% in the most recent quarter, a 2.4-point improvement over 57.9% in Q4 2013.

The combined ratio deteriorated 2.2 points, from 91.9% in Q4 2013 to 94.1% in the latest quarter.

The loss ratio in reinsurance increased 19.1 points (from 30.5% in Q4 2013 to 49.6% in Q4 2014) while the combined ratio in reinsurance increased 24.1 points over the same period.

Aspen Insurance Holdings reported its financial results for 2014

“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,” Aspen stated in a press release Feb. 5. “The combined ratio of 58.6% for the fourth quarter of 2013 included $29.4 million, or 10.4 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries. For the quarter ended December 31, 2014 the Reinsurance accident year ex-catastrophe loss ratio was 52.8% compared with 36.3% a year ago. There was a higher frequency of non-correlated mid-sized losses of $29.8 million in the quarter which accounted for 11.3 percentage points on the loss ratio.”

In primary insurance, the loss ratio improved 25.1 points (from 85% in Q4 2013 to 59.9% in Q4 2014) while the combined ratio improved 24.5 points, from 121.6% in Q4 2013 to 97.1% in Q4 2014.

“The combined ratio of 97.1% for the fourth quarter of 2014 included $0.7 million, or 0.2 percentage points, of pre-tax catastrophe losses related to U.S. storms,” Aspen stated. “The combined ratio for the fourth quarter of 2013 included $5.3 million, or 1.9 percentage points, of pre-tax catastrophe losses related to U.S. storms. For the quarter ended December 31, 2014 the Insurance accident year ex catastrophe loss ratio improved 17.9 percentage points to 56.3% compared with 74.2% a year ago.”

For the full year, Aspen reported a 1.9-point improvement in its loss ratio, from 56.3% in 2013 to 54.4% last year. The combined ratio improved 0.9 points, from 92.6% in 2013 to 91.7% in 2014.

Underwriting income dropped from $55.8 million in Q4 2013 to $55.5 million in Q4 2014. For the full year, underwriting income increased 40.8%, from $209.2 million in 2013 to $294.7 million last year.

Of the $143.3 million in reinsurance gross written premiums reported in Q4 2014, $51.5 million was in specialty reinsurance, $1.1 million was in property catastrophe, $55.4 million was in other property and $37.3 million was in casualty.

Of the $470.1 million in insurance gross written premiums reported in the latest quarter, $58.1 million was in property, $85.3 million was in casualty, $145.8 million was in marine, energy and transportation, $121.8 million was in financial and professional lines and $59.1 million was in programs.

In the Lloyd’s market, Aspen operates Aspen Managing Agency Ltd. in London, which manages Lloyd’s Syndicate 4711. Aspen Underwriting Ltd. provides the underwriting capacity for that Lloyd’s syndicate, which offers a variety of coverage, including aviation, contract frustration, political risk, terrorism, political violence, kidnap and ransom, marine, energy and construction liability and space reinsurance.

In addition to Bermuda and Britain, Aspen has offices in the U.S., France, Germany, Ireland, Singapore and Switzerland. It does not have a physical presence in Canada but has a Toronto attorney acting as Aspen’s agent in Canada.

On April 14, 2014, Aspen announced its board of directors unanimously rejected a takeover offer – valued at about US$3.2 billion – from another Hamilton, Bermuda insurer, Endurance Specialty Holdings Ltd. Two months later, Endurance said it was mailing cards to Aspen shareholders, asking them to support a court-ordered shareholders’ meeting, where they would consider and vote on a scheme of arrangement, and to authorize a special general meeting to increase the size – from 12 to 19 – of Aspen’s board. Aspen later reported shareholders holding a majority of voting shares did not support either of the proposed meetings. Endurance announced July 30 it was withdrawing its offer.

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