Aspen Insurance Holdings Announces Initial Loss Estimate for the Tohoku Earthquake; Comments on Current Market Conditions
April 12 2011 - 5:00PM
Business Wire
Aspen Insurance Holdings Limited (“Aspen” or the “Company”)
(NYSE:AHL) today announced an estimate of losses from the Tohoku
Earthquake, which occurred off the coast of Northeast Japan and the
ensuing tsunami on March 11, 2011 (“the Tohoku Earthquake”) and
commented on current market conditions.
Chief Executive Officer Chris O’Kane said, “We wish to extend
our deepest sympathies to all of those impacted by the events in
Japan and throughout the Asia-Pacific region. We remain committed
to providing continued support to our clients at this very
difficult time.”
The Company’s initial estimate of losses from the Tohoku
Earthquake is approximately $160 million, post tax and net of
reinstatement premiums, and is consistent with an industry insured
loss of $30 billion. This represents 5 percent of shareholders’
equity as at December 31, 2010.
The estimate is based on the Company’s review of the market
loss, the individual treaties and policies expected to be impacted
and discussions with clients and brokers. Given the magnitude and
recent occurrence of these events, there is considerable
uncertainty associated with this estimate and actual losses may
differ materially.
Commenting on current market conditions, Chris O’Kane said, “The
Tohoku earthquake has contributed to an extremely active first
quarter in terms of natural catastrophe events, and we believe that
it is important to highlight a positive change in trading
conditions and market sentiment which took place in March. We had
anticipated that rates for our property reinsurance account would
reduce by between 5 percent and 10 percent in the April renewals
whereas we have achieved average rate increases of 5 percent. This
understates the improvement as approximately 40 percent of April
renewal premium was quoted or completed prior to the Tohoku
Earthquake. Furthermore, we are aware of 17 catastrophe programs
where the placement had initially been quoted pre the Tohoku
earthquake and, which had to be re-priced to secure
completion.”
Chris O’Kane further commented, “We believe that the catastrophe
events in the first quarter, combined with low investment returns
and the profound change in exposure modelling implied by the latest
release from one of the principle vendor modelling agencies, have
created conditions for much better pricing for catastrophe exposed
property lines of business. Up to 35 percent of our 2011 business
could consequently be subject to meaningful positive price changes.
Our balance sheet remains strong and we believe that we are well
positioned to benefit from an improved pricing environment.”
About Aspen Insurance Holdings Limited
The Company provides reinsurance and insurance coverage to
clients in various domestic and global markets through wholly-owned
subsidiaries and offices in Bermuda, France, Germany, Ireland,
Singapore, Switzerland, the United Kingdom and the United States.
For the twelve months ended December 31, 2010, the Company reported
gross written premiums of $2,076.8 million, net income of $312.7
million and total assets of $8.8 billion. Its operating
subsidiaries have been assigned a financial strength rating of “A”
(“Strong”) by Standard & Poor's, an “A” (“Excellent”) by A.M.
Best and an “A2” (“Good”) by Moody's Investors Service.
Application of the Safe Harbor of the Private Securities
Litigation Reform Act of 1995:
This press release contains written, and Aspen's officers may
make related oral, "forward-looking statements" within the meaning
of the U.S. federal securities laws regarding its initial estimate
of losses from the Tohoku Earthquake that took place on March 11,
2011, changes in market conditions and their impact on Aspen’s
business. 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,"
"project," "anticipate," "seek," "will," "estimate," "may,"
"continue," and similar expressions of a future or forward-looking
nature.
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, changes in demand
for our insurance and reinsurance products and cyclical changes in
insurance and reinsurance sectors, changes in insurance and
reinsurance market conditions and in respect of the losses from the
Tohoku Earthquake that took place on March 11, 2011, developing
information available from brokers, clients and loss adjusters, the
receipt of actual loss reports, forecasts of losses relating to
these events for the industry as a whole and for individual
companies, changes in the total industry losses or the Company's
share of such losses, the actual number of the Company’s insureds
incurring losses from these events, limitations in current modeling
techniques and their application, the impact of any demand surge on
claims, coverage issues, the impact of foreign exchange
fluctuations and the effectiveness of any of the Company’s loss
limitation methods. For a more detailed description of these
uncertainties and other factors which could cause results to differ
materially, 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 25, 2011. 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.
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