Aspen Insurance Holdings Limited (“Aspen”) (NYSE:AHL) issued
today an investor presentation detailing the strong progress the
Company has made on its growth strategy and path for delivering
further growth in operating return on equity and shareholder
value.
Chris O’Kane, Chief Executive Officer, said: “Aspen is executing
on a clear strategy for delivering superior performance, as
evidenced by strong results across all parts of our business in the
first quarter, with a resulting annualized operating ROE of 14.8%.
Aspen is at an inflection point where the significant investments
we have made over the past several years are now paying off. As a
result, we are well positioned to achieve our 10% operating ROE
objective in 2014 and to deliver on our expectation that 2015
operating ROE will increase in the order of 100 basis points from
2014.”1
Key points in the presentation include the following:
- Aspen is a leading, diversified
specialty insurer and reinsurer, with $2.7 billion gross written
premiums for the twelve months ended March 31, 2014, strong balance
sheet and ratings, and keen focus on shareholder value.
- The Company has a long-term track
record of shareholder value creation. Aspen has generated over $3
billion in capital over the last 10 years while developing an
increasingly diverse mix of business.
- Aspen is successfully executing on its
strategic plan to build shareholder value through optimization of
its business portfolio, capital efficiency, and enhancing
investment return.
- The restructuring of Aspen’s ceded
reinsurance and retrocessional programs is expected to deliver an
estimated $25 million benefit to net income in 2014 and a further
$20 million in 2015.2
- Aspen is benefitting from its prior
investment in building a U.S. Specialty insurance platform. After
$150 million of investment since 2009, the platform build-out is
largely complete and the U.S. business achieved an underwriting
profit in each of the last five quarters. The Company expects to
reach $550 million of net earned premiums in 2015, resulting in a
forecasted G&A ratio of approximately 16% in the U.S. business,
down from 20.6% in 2013.2
- The Company will continue to benefit
from a well-established Lloyds platform with offerings across a
diverse range of risks and geographies, and a reinsurance business
that is an established leader and positioned for continued
profitable growth.
- Aspen has a strong record of proactive
capital management, including the repurchase of $341 million of
ordinary shares from January 1, 2013 through March 31, 2014, and
the Company expects to continue to opportunistically repurchase
ordinary shares.
- In its investment portfolio, the
Company is constantly evaluating ways to increase returns within
its risk tolerance, including investing a further $200 million in
equities in 2013 and $40 million in 1Q 2014.
The full investor presentation is available on the investor
relations tab of Company’s website at:
http://www.aspen.co/Investors-Media/Investor-Relations/Presentations/.
1 As at April 23, 2014. In 2014, ROE guidance assumes a pre-tax
catastrophe load of $185 million, normal loss experience and given
the current interest rate and insurance pricing environment. In
2015, ROE guidance assumes a pretax catastrophe load of $200
million, normal loss experience, Aspen’s expectations for rising
interest rates, and a less favorable insurance pricing environment.
See Safe Harbor disclosure at end of press release.
2 As at April 23, 2014. See Safe Harbor disclosure at end of
press release.
About Aspen Insurance Holdings Limited
Aspen 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 year ended December 31, 2013, Aspen reported $10.2 billion
in total assets, $4.7 billion in gross reserves, $3.3 billion in
shareholders’ equity and $2.6 billion in gross written premiums.
Its operating subsidiaries have been assigned a rating of “A”
(“Strong”) by Standard & Poor’s, an “A” (“Excellent”) by A.M.
Best and an “A2” (“Good”) by Moody’s.
Application of the Safe Harbor of the Private Securities
Litigation Reform Act of 1995
This press release contains written or oral "forward-looking
statements" within the meaning of the U.S. federal securities laws.
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,"
"do not believe," "aim," "project," "anticipate," "seek," "will,"
"likely," "estimate," "may," "continue," "guidance," “outlook,”
“trends,” “future,” “could,” “target,” and similar expressions of a
future or forward-looking nature. All forward-looking statements
rely on a number of assumptions, estimates and data concerning
future results and events and are subject to a number of
uncertainties and other factors, many of which are outside Aspen’s
control that could cause actual results to differ materially from
such statements. Forward-looking statements do not reflect the
potential impact of any future collaboration, acquisition, merger,
disposition, joint venture or investments that Aspen may enter into
or make, and the risks, uncertainties and other factors relating to
such statements might also relate to the counterparty in any such
transaction if entered into or made by Aspen. 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: our ability to successfully implement steps to further
optimize the business portfolio, ensure capital efficiency and
enhance investment returns; the possibility of greater frequency or
severity of claims and loss activity, including as a result of
natural or man-made (including economic and political risks)
catastrophic or material loss events, than our underwriting,
reserving, reinsurance purchasing or investment practices have
anticipated; the assumptions and uncertainties underlying reserve
levels that may be impacted by future payments for settlements of
claims and expenses or by other factors causing adverse or
favorable development; the reliability of, and changes in
assumptions to, natural and man-made catastrophe pricing,
accumulation and estimated loss models; decreased demand for our
insurance or reinsurance products and cyclical changes in the
highly competitive insurance and reinsurance industry; increased
competition from existing insurers and reinsurers and from
alternative capital providers and insurance-linked funds and
collateralized special purpose insurers on the basis of pricing,
capacity, coverage terms, new capital, binding authorities to
brokers or other factors and the related demand and supply dynamics
as contracts come up for renewal; changes in general economic
conditions, including inflation, deflation, foreign currency
exchange rates, interest rates and other factors that could affect
our financial results; the risk of a material decline in the value
or liquidity of all or parts of our investment portfolio; evolving
issues with respect to interpretation of coverage after major loss
events; our ability to adequately model and price the effect of
climate cycles and climate change; any intervening legislative or
governmental action and changing judicial interpretation and
judgements on insurers’ liability to various risks; the
effectiveness of our risk management loss limitation methods,
including our reinsurance purchasing; changes in the total industry
losses, or our share of total industry losses, resulting from past
events and, with respect to such events, our reliance on loss
reports received from cedants and loss adjustors, our reliance on
industry loss estimates and those generated by modeling techniques,
changes in rulings on flood damage or other exclusions as a result
of prevailing lawsuits and case law; the impact of one or more
large losses from events other than natural catastrophes or by an
unexpected accumulation of attritional losses; the impact of acts
of terrorism, acts of war and related legislation; any changes in
our reinsurers’ credit quality and the amount and timing of
reinsurance recoverables; changes in the availability, cost or
quality of reinsurance or retrocessional coverage; the continuing
and uncertain impact of the current depressed lower growth economic
environment in many of the countries in which we operate; the level
of inflation in repair costs due to limited availability of labor
and materials after catastrophes; a decline in our operating
subsidiaries’ ratings with S&P, A.M. Best or Moody’s; the
failure of our reinsurers, policyholders, brokers or other
intermediaries to honor their payment obligations; our ability to
execute our business plan to enter new markets, introduce new
products and develop new distribution channels, including their
integration into our existing operations; our reliance on the
assessment and pricing of individual risks by third parties; our
dependence on a few brokers for a large portion of our revenues;
the persistence of heightened financial risks, including excess
sovereign debt, the banking system and the Eurozone debt crisis;
changes in our ability to exercise capital management initiatives
(including our share repurchase program) or to arrange banking
facilities as a result of prevailing market changes or changes in
our financial position; changes in government regulations or tax
laws in jurisdictions where we conduct business; changes in
accounting principles or policies or in the application of such
accounting principles or policies; Aspen or Aspen Bermuda Limited
becoming subject to income taxes in the United States or the United
Kingdom; loss of one or more of our senior underwriters or key
personnel; our reliance on information and technology and third
party service providers for our operations and systems; and
increased counterparty risk due to the credit impairment of
financial institutions. For a more detailed description of these
uncertainties and other factors, 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 20, 2014. 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.
The guidance in this press release relating to 10% Operating ROE
in 2014 and with a further 100 basis point increase over 2014 in
2015 is made as at April 23, 2014. Such guidance assumes for 2014 a
pre-tax catastrophe load of $185 million per annum, normal loss
experience and given the current interest rate and insurance
pricing environment and for 2015 a pre-tax catastrophe load of $200
million, normal loss experience, our expectations for rising
interest rates, and a less favorable insurance pricing environment.
Aspen has identified and described in the presentation filed today
actions and additional underlying assumptions in each of its three
operating return on equity levers – optimization of the business
portfolio, capital efficiency and enhancing investment returns – to
seek to achieve the targeted operating ROE in 2014 and 2015. These
forward looking statements are subject to the assumptions, risks
and uncertainties, as discussed above and in the following slides,
which could cause actual results to differ materially from these
statements.
In addition, any estimates relating to loss events involve the
exercise of considerable judgment and reflect a combination of
ground-up evaluations, information available to date from brokers
and cedants, market intelligence, initial tentative loss reports
and other sources. The actuarial range of reserves and management's
best estimate represents a distribution from our internal capital
model for reserving risk based on our then current state of
knowledge and explicit and implicit assumptions relating to the
incurred pattern of claims, the expected ultimate settlement
amount, inflation and dependencies between lines of business. Due
to the complexity of factors contributing to the losses and the
preliminary nature of the information used to prepare these
estimates, there can be no assurance that Aspen’s ultimate losses
will remain within the stated amounts.
Please visit www.aspen.coorInvestorsAspenKerry Calaiaro,
Senior Vice President, Investor Relations+1 (646) 502
1076Kerry.Calaiaro@aspen.coorAspenKathleen de Guzman, Vice
President, Investor Relations+1 (646) 289
4912kathleen.deguzman@aspen.coorMediaAspenSteve Colton, Head
of Communications+44 20 7184 8337Steve.Colton@aspen.coorNorth
America – Sard Verbinnen & CoPaul Scarpetta or Jamie Tully+1
(212) 687 8080orInternational – Citigate Dewe RogersonPatrick
Donovan or Caroline Merrell+44 20 7638
9571patrick.donovan@citigatedr.co.ukcaroline.merrell@citigatedr.co.uk
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