Net Income Return on Equity of 5.4% for the
Full Year 2016
Operating Return on Equity of 4.8% for the
Full Year 2016
Diluted Book Value Per Share of $46.72, up
1.6% from December 31, 2015
Announces New $250 million Share Repurchase
Authorization
Aspen Insurance Holdings Limited (“Aspen”) (NYSE:AHL) reported
today a net loss after tax of $(71.5) million, or $(1.41) per
diluted share, and operating loss after tax of $(7.4) million, or
$(0.34) per diluted share, for the fourth quarter of 2016.
Chris O’Kane, Chief Executive Officer, commented: “2016 was an
important year in positioning Aspen for the future. Our Reinsurance
business performed strongly once again despite a much higher level
of catastrophe losses. We expanded further our geographic
footprint, successfully integrated our diversifying AgriLogic
business and continued to target opportunities for profitable
growth in what continues to be a challenging market environment.
During the year, our Insurance team took significant actions to
reposition product lines where returns are not expected to meet our
requirements while at the same time working to identify and invest
in the best opportunities for long-term profitable growth.
"While the repositioning of our Insurance segment had a
significant negative impact on the fourth quarter’s results, we are
confident that the actions taken are the right ones and that the
underlying quality of our book of business is very strong. We
remain intensely focused on driving growth and profitability by
offering innovative solutions to meet our clients’ needs and risks,
diversifying and expanding our global product offering, and
enhancing capital efficiency. Our business is now firmly on course
for the next stage of profitable growth.”(1)
_____________________
Non-GAAP financial measures are used throughout this release as
defined at the end of this press release.(1) Refer to
"Forward-looking Statements Safe Harbor" at the end of this press
release.
Operating highlights for the quarter ended December 31,
2016
- Gross written premiums of $606.1
million in the fourth quarter of 2016, a decrease of 4.5% compared
with $634.8 million in the fourth quarter of 2015
- Insurance: Gross written premiums of
$409.0 million, a decrease of 8.7% compared with $448.0 million in
the fourth quarter of 2015, primarily due to a decrease in the
Property and Casualty sub-segment reflecting Aspen's reduced
appetite for Programs and Primary Casualty business, and lower
premiums in the Marine, Aviation and Energy Sub-segment
- Reinsurance: Gross written premiums of
$197.1 million, an increase of 5.5% from $186.8 million in the
fourth quarter of 2015, including $18.4 million of premiums from AG
Logic Holdings, LLC (“AgriLogic”) in the Specialty sub-segment
- Loss ratio of 63.2% in the
fourth quarter of 2016 compared with 53.0% in the fourth quarter of
2015. The loss ratio included pre-tax catastrophe losses, net of
reinsurance recoveries, of $54.6 million, or 8.9 percentage points,
in the fourth quarter of 2016. Pre-tax catastrophe losses, net of
reinsurance recoveries, totaled $45.9 million, or 7.3 percentage
points, in the fourth quarter of 2015
- Insurance: Loss ratio of 68.5% compared
with 65.1% in the fourth quarter of 2015. Pre-tax catastrophe
losses, net of reinsurance recoveries, of $17.0 million, totaled
5.2 percentage points in the fourth quarter of 2016 primarily
related to Hurricane Matthew and other weather-related events in
the U.S. Pre-tax catastrophe losses net of reinsurance recoveries
in the fourth quarter of 2015 totaled $23.3 million, or 6.5
percentage points. The loss ratio in the fourth quarter of 2016
also reflected a higher level of loss activity in lines that are
being exited or re-positioned compared with the fourth quarter of
2015
- Reinsurance: Loss ratio of 57.2%
compared with 37.0% in the fourth quarter of 2015. The loss ratio
included pre-tax catastrophe losses, net of reinsurance recoveries,
of $37.6 million, or 13.2 percentage points, in the fourth quarter
of 2016, primarily as a result of Hurricane Matthew and the
Tennessee wildfires in the U.S., and an earthquake in New Zealand.
Pre-tax catastrophe losses, net of reinsurance recoveries, totaled
$22.6 million, or 8.4 percentage points, in the fourth quarter of
2015. The loss ratio in the fourth quarter of 2016 also reflected
an increase of approximately $25 million in energy and
property-related losses compared with the fourth quarter of
2015
- Net favorable development on
prior year loss reserves benefited the loss ratio by $51.1 million,
or 8.3 percentage points, in the fourth quarter of 2016 compared
with $58.9 million, or 9.4 percentage points, in the comparable
period
- Insurance: Prior year net favorable
reserve development of $16.2 million, or 5.0 percentage points,
compared with $21.5 million, or 6.0 percentage points, in the
fourth quarter of 2015
- Reinsurance: Prior year net favorable
reserve development of $34.9 million, or 12.2 percentage points,
compared with $37.4 million, or 13.8 percentage points, in the
fourth quarter of 2015
- Accident year loss ratio excluding
catastrophes was 62.6% in the fourth quarter of 2016 compared
with 55.1% in the fourth quarter of 2015
- Insurance: Accident year loss ratio
excluding catastrophes for the quarter ended December 31, 2016
was 68.3% compared with 64.6% a year ago
- Reinsurance: Accident year loss ratio
excluding catastrophes for the quarter ended December 31, 2016
was 56.2% compared with 42.4% a year ago
- Policy acquisition expense ratio
for the Insurance segment of 23.8% in the fourth quarter of 2016
compared with 17.3% in the fourth quarter of 2015. The increase
reflected $11.6 million of one-time costs associated with the lines
that we have repositioned. In addition, profit commissions
increased by $7.7 million, mainly due to favorable commission
adjustments in the fourth quarter of 2015
- Policy acquisition expense ratio
for the Reinsurance segment of 22.1% in the fourth quarter of 2016
compared with 20.8% in the fourth quarter of 2015, primarily due to
$8.9 million of one-time commission-related adjustments in the
fourth quarter of 2016
- Net loss after tax of $(71.5)
million, or $(1.41) per diluted share, and operating loss after
tax of $(7.4) million, or $(0.34) per diluted share, in the
fourth quarter of 2016. This compares to net income of $117.9
million, or $1.75 per diluted share, and operating income of $84.0
million, or $1.21 per diluted share, in the fourth quarter of
2015
- Annualized net income return on
average equity of (11.6)% and annualized operating return on
average equity of (2.8)% for the quarter ended
December 31, 2016 compared with 15.2% and 10.4%, respectively,
for the fourth quarter of 2015
Operating highlights for the twelve months ended
December 31, 2016
- Gross written premiums increased
by 5.0% to $3,147.0 million in the full year of 2016 compared with
$2,997.3 million in the full year of 2015
- Loss ratio of 59.8% for the full
year of 2016 compared with 55.2% for the full year of 2015. The
loss ratio included pre-tax catastrophe losses, net of reinsurance
recoveries and $2.0 million of reinstatement premiums, of $164.4
million, or 6.3 percentage points, in the full year of 2016. This
compared with $90.5 million, or 3.7 percentage points, of pre-tax
catastrophe losses, net of reinsurance recoveries, in the full year
of 2015
- Net favorable development on
prior year loss reserves of $129.3 million benefited the loss ratio
by 4.9 percentage points for the full year of 2016 compared with
$156.5 million, or 6.3 percentage points, for the full year of
2015
- Accident year loss ratio excluding
catastrophes of 58.4% for the full year of 2016 compared with
57.8% for the full year of 2015.
- Expense ratio of 38.3% for the
full year of 2016 compared with 36.7% for the full year of 2015,
reflecting increases in both the general and administrative expense
ratio and the policy acquisition expense ratio
- Net income per diluted share of
$2.61 and operating income per diluted share of $2.33 for
the twelve months ended December 31, 2016. This compares to
net income per diluted share of $4.54 and operating income per
diluted share of $4.51 for the twelve months ended
December 31, 2015
- Annualized net income return on
average equity of 5.4% and annualized operating return on
average equity of 4.8% for the full year of 2016 compared with
10.0% and 10.0%, respectively, for the full year of 2015
Investment performance
- Investment income of $43.2 million in
the fourth quarter of 2016 decreased by (6.9)% compared to $46.4
million in the fourth quarter of 2015
- The total return on Aspen’s aggregate
investment portfolio was (1.80)% for the three months ended
December 31, 2016 and reflects net realized and unrealized
gains and losses in both the fixed income and equity portfolios.
For the twelve months ended December 31, 2016, Aspen's aggregate
investment portfolio had a total return of 2.16%
- Aspen’s investment portfolio continues
to be comprised primarily of high quality fixed income securities
with an average credit quality of “AA-”. The average duration of
the fixed income portfolio was 3.89 years as at December 31,
2016
- Book yield as at December 31, 2016
on the fixed income portfolio was 2.49% compared to 2.59% as at
December 31, 2015
Capital
- Total shareholders’ equity was $3.6
billion as at December 31, 2016.
- Diluted book value per share of $46.72
as at December 31, 2016 up 1.6% from December 31, 2015
- During the fourth quarter of 2016,
Aspen repurchased 472,748 ordinary shares at an average price of
$52.88 per share for a cost of $25.0 million. In 2016, Aspen
repurchased 1,595,076 ordinary shares at an average price of $47.02
per share for a total cost of $75.0 million.
- Aspen's Board of Directors replaced the
Company's existing share repurchase authorization with a new
authorization of $250 million, effective February 8, 2017. The
share repurchase authorization, which is effective through February
8, 2019, permits Aspen to effect repurchases from time to time
through a combination of transactions, including open market
repurchases, privately negotiated transactions and accelerated
share repurchase transactions.
January 2017 Reinsurance Renewals
During the January 2017 renewal season, Aspen underwrote $588.2
million in gross written premiums in Reinsurance, an increase of
1.7% compared with the prior year. The renewal data does not
include premiums related to AgriLogic.
Below is a table reflecting gross written premiums written
during the January 2017 renewal season, including new business, by
Property Catastrophe, Other Property, Casualty and Specialty
Reinsurance.
January Gross Written Premiums (underwriting year
basis) 2017 2016
Increase(Decrease)
($ in millions) % Property Catastrophe $ 126.4 $
129.8 (2.6 )% Other Property 137.3 133.5 2.8 % Casualty 145.9 136.4
7.0 % Specialty 178.6 178.7 (0.1 )% $ 588.2 $
578.4 1.7 %
Note: The January premiums shown in the
above table include premiums written on a proportional basis which
arerecognized throughout the year to reflect the expected inception
of the underlying risks and therefore do notrepresent Aspen’s
reported gross written premium for each of these periods. Prior
year amounts have beenconformed to current year presentation.
See “Forward-looking Statements Safe
Harbor” below.
Earnings conference call and webcast
Aspen will host a conference call to discuss the results at 8:00
am (ET) on Thursday, February 9, 2017.
To participate in the February 9 conference call by
phone
Please call to register at least 10 minutes before the
conference call begins by dialing:
+1 (844) 378 6481 (US toll free) or+1 (412) 542 4176
(international)Conference ID 10098381
To listen live online
Aspen will provide a live webcast on Aspen’s website at
www.aspen.co.
To download the materials
The earnings press release and a detailed financial supplement
will also be published on Aspen’s website at www.aspen.co.
To listen later
A replay of the call will be available approximately two hours
after the end of the live call for 14 days via phone and internet.
To listen to the replay by phone please dial:
+1 (877) 344 7529 (US toll free) or+1 (412) 317 0088
(international)Replay ID 10098381
The recording will be also available at www.aspen.co on the Event Calendar page within the
Investor Relations section.
Aspen Insurance Holdings
Limited
Summary consolidated balance sheet
(unaudited)
$ in millions, except per share data
As atDecember
31,2016
As atDecember
31,2015
ASSETS Total investments
$ 7,900.3 $ 7,712.2
Cash and cash equivalents
1,273.8 1,099.5 Reinsurance
recoverables
730.1 523.7 Premiums receivable
1,399.4
1,115.6 Other assets
700.7 597.8 Total assets
$
12,004.3 $ 11,048.8 LIABILITIES Losses and loss
adjustment expenses
$ 5,319.9 $ 4,938.2 Unearned
premiums
1,618.6 1,587.2 Other payables
753.2 451.3
Silverton loan notes
115.0 103.0 Long-term debt
549.3
549.2 Total liabilities
$ 8,356.0 $ 7,628.9
SHAREHOLDERS’ EQUITY Total shareholders’ equity
3,648.3
3,419.9 Total liabilities and shareholders’ equity
$
12,004.3 $ 11,048.8 Book value per share
$
47.68 $ 46.99 Diluted book value per share (treasury stock
method)
$ 46.72 $ 46.00
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Three Months Ended
December 31,2016
December 31,2015
UNDERWRITING REVENUES Gross written premiums
$ 606.1
$ 634.8 Premiums ceded
(175.3 ) (48.0 ) Net written
premiums
430.8 586.8 Change in unearned premiums
181.6 42.9 Net earned premiums
612.4
629.7 UNDERWRITING EXPENSES Losses and loss
adjustment expenses
387.3 334.0 Amortization of deferred
policy acquisition costs
141.1 118.2 General, administrative
and corporate expenses
125.5 125.9 Total
underwriting expenses
653.9 578.1
Underwriting (loss) income including corporate expenses
(41.5 ) 51.6 Net investment income
43.2 46.4 Interest expense
(7.4 ) (7.4 ) Other
expenses
(1.3 ) (5.4 ) Total other revenue
34.5 33.6 Amortization and
non-recurring expenses
(3.4 ) — Net realized and
unrealized exchange (losses) gains
(5.6 ) 6.1 Net
realized and unrealized investment (losses) gains
(58.1
) 31.9 (LOSS) INCOME BEFORE TAX
(74.1 )
123.2 Income tax expense
2.6 (5.3 ) NET (LOSS) INCOME
AFTER TAX
(71.5 ) 117.9 Dividends paid on ordinary
shares
(13.2 ) (12.8 ) Dividends paid on preference
shares
(13.4 ) (9.4 ) Dividends paid to
non-controlling interest
— (0.1 ) Proportion due to
non-controlling interest
(0.1 ) — Retained
(loss) income
$ (98.2 ) $ 95.6
Loss ratio
63.2 % 53.0 % Policy acquisition expense
ratio
23.0 % 18.8 % General, administrative and
corporate expense ratio
20.5 % 20.0 % Expense ratio
43.5 % 38.8 % Combined ratio
106.7 %
91.8 %
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Twelve Months Ended
December 31,2016
December 31,2015
UNDERWRITING REVENUES Gross written premiums
$
3,147.0 $ 2,997.3 Premiums ceded
(553.3 )
(351.1 ) Net written premiums
2,593.7 2,646.2 Change in
unearned premiums
43.6 (172.9 ) Net earned premiums
2,637.3 2,473.3 UNDERWRITING EXPENSES Losses
and loss adjustment expenses
1,576.1 1,366.2 Amortization of
deferred policy acquisition costs
528.9 483.6 General,
administrative and corporate expenses
480.4 424.0
Total underwriting expenses
2,585.4 2,273.8
Underwriting income including corporate
expenses
51.9 199.5 Net investment
income
187.1 185.5 Interest expense
(29.5 )
(29.5 ) Other expenses
(12.7 ) (20.3 ) Total other
revenue
144.9 135.7 Amortization and
non-recurring expenses
(9.7 ) — Net realized and
unrealized exchange (losses)
(19.7 ) (9.8 ) Net
realized and unrealized investment gains
42.1 12.1
INCOME BEFORE TAX
209.5 337.5 Income tax expense
(6.1 ) (14.4 ) NET INCOME AFTER TAX
203.4
323.1 Dividends paid on ordinary shares
(52.7 ) (50.9
) Dividends paid on preference shares
(41.8 ) (37.8 )
Dividends paid to non-controlling interest
— (0.1 )
Proportion due to non-controlling interest
(0.1 )
(0.8 ) Retained income
$ 108.8 $ 233.5
Loss ratio
59.8 % 55.2 % Policy acquisition
expense ratio
20.1 % 19.6 % General, administrative
and corporate expense ratio
18.2 % 17.1 % Expense
ratio
38.3 % 36.7 % Combined ratio
98.1
% 91.9 %
Aspen Insurance Holdings
Limited Operating income reconciliation (unaudited)
$ in millions, except per share
amounts
Net income is adjusted to exclude
after-tax change in net foreign exchange gains and losses, realized
gains and losses in investments and non-recurring items.
Three Months Ended Twelve Months
Ended (in US$ millions except where stated)
December31, 2016
December31, 2015
December31, 2016
December31, 2015
Net (loss) income as reported
$ (71.5 )
$ 117.9
$ 203.4 $ 323.1 Net change attributable to
non-controlling interest
(0.1 ) —
(0.1
) (0.8 ) Preference share dividends
(13.4 )
(9.4 )
(41.8 ) (37.8 ) Net income available to
ordinary shareholders
(85.0 ) 108.5
161.5
284.5 Add (deduct) after tax income: Net foreign exchange losses
(gains)
4.1 (5.7 )
14.8 10.2 Net realized losses
(gains) on investments
57.1 (28.2 )
(41.0 )
(11.9 ) Non-operating (expenses)
2.9 —
8.7 — Operating (loss) income after tax
available to ordinary shareholders
(20.9 ) 74.6
144.0 282.8 Tax expense on operating income
0.4
1.2
10.9 13.8 Operating (loss)
income before tax available to ordinary shareholders
$
(20.5 ) $ 75.8
$ 154.9 $
296.6
Basic earnings per ordinary share Net
(loss) income adjusted for preference share dividends and
non-controlling interest
$ (1.41 ) $ 1.78
$ 2.67 $ 4.64 Add (deduct) after tax income: Net
foreign exchange losses (gains)
0.07 (0.09 )
0.24
0.17 Net realized losses (gains) on investments
0.95 (0.46 )
(0.68 ) (0.19 ) Non-operating (expenses)
0.05
—
0.14 — Operating (loss) income
adjusted for preference shares dividends and non-controlling
interest
$ (0.34 ) $ 1.23
$
2.37 $ 4.62
Diluted earnings per
ordinary share Net (loss) income adjusted for preference share
dividends and non-controlling interest
$ (1.41
) $ 1.75
$ 2.61 $ 4.54 Add (deduct) after tax
income: Net foreign exchange losses (gains)
0.07 (0.09 )
0.24 0.16 Net realized losses (gains) on investments
0.95 (0.45 )
(0.66 ) (0.19 ) Non-operating
(expenses)
0.05 —
0.14 —
Operating (loss) income adjusted for preference shares dividends
and non-controlling interest
$ (0.34 ) $ 1.21
$ 2.33 $ 4.51
Aspen Insurance Holdings
Limited
Summary consolidated financial data
(unaudited)
$ in millions, except number of shares
Three Months Ended Twelve
Months Ended
December 31, 2016
December 31, 2015
December 31, 2016
December 31, 2015
Basic earnings per ordinary share Net (loss) income adjusted
for preference share dividend and non-controlling interest
($1.41 ) $1.78
$2.67 $4.64 Operating (loss)
income adjusted for preference share dividend and non-controlling
interest
($0.34 ) $1.23
$2.37 $4.62 Diluted
earnings per ordinary share Net (loss) income adjusted for
preference share dividend and non-controlling interest
($1.41 ) $1.75
$2.61 $4.54 Operating (loss)
income adjusted for preference share dividend and non-controlling
interest
($0.34 ) $1.21
$2.33 $4.51
Weighted average number of ordinary shares outstanding (in
millions)
60.152 60.785
60.479 61.288 Weighted
average number of ordinary shares outstanding and dilutive
potential ordinary shares (in millions)
61.198 62.177
61.861 62.688 Book value per ordinary share
$47.68 $46.99
$47.68 $46.99 Diluted book value per
ordinary share (treasury stock method)
$46.72 $46.00
$46.72 $46.00 Ordinary shares outstanding at end of
the period (in millions)
59.774 60.918
59.774 60.918
Ordinary shares outstanding and dilutive potential ordinary
shares at end of the period (treasury stock method) (in millions)
61.001 62.240
61.001 62.240
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Three Months Ended December 31,
2016
Three Months Ended December 31,
2015
Reinsurance Insurance Total Reinsurance
Insurance Total Gross written premiums
$ 197.1 $ 409.0 $ 606.1 $
186.8 $ 448.0 $ 634.8 Net written premiums
198.4
232.4 430.8 178.5 408.3 586.8 Gross earned premiums
317.0 422.6 739.6 295.9 436.0 731.9 Net earned
premiums
285.9 326.5 612.4 270.3 359.4 629.7
Losses and loss adjustment expenses
163.6 223.7
387.3 99.9 234.1 334.0 Amortization of deferred policy
acquisition expenses
63.3 77.8 141.1 56.1 62.1
118.2 General and administrative expenses
47.6
54.7 102.3 44.0 61.8
105.8 Underwriting income (loss)
$ 11.4
$ (29.7 ) $ (18.3 ) $
70.3 $ 1.4 $ 71.7 Net investment income
43.2 46.4 Net realized and unrealized investment (losses)
gains (1)
(58.1 ) 31.9 Corporate expenses
(23.2 ) (20.1 ) Amortization and non-recurring
expenses
(3.4 ) — Other expenses (2)
(1.3
) (5.4 ) Interest expense
(7.4 ) (7.4 ) Net
realized and unrealized foreign exchange (losses) gains (3)
(5.6 ) 6.1 Income before tax
$
(74.1 ) $ 123.2 Income tax expense
2.6
(5.3 )
Net (loss) income $ (71.5 ) $
117.9
Ratios Loss ratio
57.2 %
68.5 % 63.2 % 37.0 % 65.1 % 53.0 %
Policy acquisition expense ratio
22.1 % 23.8
% 23.0 % 20.8 % 17.3 % 18.8 % General and
administrative expense ratio (4)
16.6 % 16.8
% 20.5 % 16.3 % 17.2 % 20.0 % Expense ratio
38.7 % 40.6 % 43.5 % 37.1
% 34.5 % 38.8 % Combined ratio
95.9 % 109.1
% 106.7 % 74.1 % 99.6 % 91.8 %
Accident
Year Ex-cat Loss Ratio Loss ratio
57.2 %
68.5 % 63.2 % 37.0 % 65.1 % 53.0 %
Prior year loss development
12.2 % 5.0
% 8.3 % 13.8 % 6.0 % 9.4 % Catastrophe losses
(13.2
)%
(5.2 )% (8.9 )% (8.4 )% (6.5 )% (7.3 )%
Accident year ex-cat loss ratio
56.2 % 68.3
% 62.6 % 42.4 % 64.6 % 55.1 %
(1) Includes realized and unrealized
capital gains and losses and realized and unrealized gains and
losses on interest rate swaps
(2) Other expenses in the fourth quarter
of 2016 and fourth quarter of 2015 included $3.4 million and $5.3
million, respectively, related to a change in the fair value of
loan notes issued by Silverton Re
(3) Includes realized and unrealized
foreign exchange gains and losses and realized and unrealized gains
and losses on foreign exchange contracts
(4) The total group general and
administrative expense ratio includes the impact from corporate
expenses
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Twelve Months Ended December 31,
2016
Twelve Months Ended December 31,
2015
Reinsurance Insurance Total Reinsurance
Insurance Total Gross written premiums
$ 1,413.2 $ 1,733.8 $
3,147.0 $ 1,248.9 $ 1,748.4 $ 2,997.3 Net written premiums
1,269.2 1,324.5 2,593.7 1,153.5 1,492.7
2,646.2 Gross earned premiums
1,317.9 1,768.4
3,086.3 1,153.5 1,703.3 2,856.8 Net earned premiums
1,181.9 1,455.4 2,637.3 1,072.6 1,400.7
2,473.3 Losses and loss adjustment expenses
657.9
918.2 1,576.1 491.6 874.6 1,366.2 Amortization of
deferred policy acquisition expenses
226.4 302.5
528.9 224.7 258.9 483.6 General and administrative expenses
178.2 228.4 406.6 146.5
213.6 360.1 Underwriting income (loss)
$ 119.4 $ 6.3 $
125.7 $ 209.8 $ 53.6 $ 263.4 Net
investment income
187.1 185.5 Net realized and unrealized
investment gains (1)
42.1 12.1 Corporate expenses
(73.8 ) (63.9 ) Amortization and non-recurring
expenses
(9.7 ) — Other expenses (2)
(12.7
) (20.3 ) Interest expense
(29.5 ) (29.5 ) Net
realized and unrealized foreign exchange (losses) (3)
(19.7
) (9.8 ) Income before tax
$ 209.5 $ 337.5
Income tax expense
(6.1 ) (14.4 )
Net income
$ 203.4 $ 323.1
Ratios
Loss ratio
55.7 % 63.1 % 59.8
% 45.8 % 62.4 % 55.2 % Policy acquisition expense ratio
19.2 % 20.8 % 20.1 % 20.9
% 18.5 % 19.6 % General and administrative expense ratio (4)
15.1 % 15.7 % 18.2 % 13.7
% 15.2 % 17.1 % Expense ratio
34.3 % 36.5
% 38.3 % 34.6 % 33.7 % 36.7 % Combined ratio
90.0 % 99.6 % 98.1 % 80.4
% 96.1 % 91.9 %
Accident Year Ex-cat Loss Ratio Loss ratio
55.7 % 63.1 % 59.8 % 45.8
% 62.4 % 55.2 % Prior year loss development
7.4 %
2.9 % 4.9 % 8.5 % 4.7 % 6.3 %
Catastrophe losses
(9.7 )% (3.5 )%
(6.3 )% (4.6 )% (2.9 )% (3.7 )% Accident year ex-cat
loss ratio
53.4 % 62.5 % 58.4
% 49.7 % 64.2 % 57.8 %
(1) Includes realized and unrealized
capital gains and losses and realized and unrealized gains and
losses on interest rate swaps
(2) Other expenses in the full year of
2016 and full year of 2015 included $17.1 million and $19.8
million, respectively, related to a change in the fair value of
loan notes issued by Silverton Re
(3) Includes realized and unrealized
foreign exchange gains and losses and realized and unrealized gains
and losses on foreign exchange contracts
(4) The total group general and
administrative expense ratio includes the impact from corporate
expenses
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 Australia, Bermuda, Canada, France,
Germany, Ireland, Singapore, Switzerland, the United Arab Emirates,
the United Kingdom and the United States. For the year ended
December 31, 2016, Aspen reported $12.0 billion in total assets,
$5.3 billion in gross reserves, $3.6 billion in total shareholders’
equity and $3.1 billion in gross written premiums. Its operating
subsidiaries have been assigned a rating of “A” by Standard &
Poor’s Financial Services LLC (“S&P”), an “A” (“Excellent”) by
A.M. Best Company Inc. (“A.M. Best”) and an “A2” by Moody’s
Investors Service, Inc. (“Moody’s”).
For more information about Aspen, please visit www.aspen.co.
(1) Forward-looking Statements Safe Harbor
This press release contains, and Aspen’s earnings conference
call will contain, 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,”
“assume,” “estimate,” “may,” “continue,” “guidance,” “objective,”
“outlook,” “trends,” “future,” “could,” “would,” “should,”
“target,” “on track” 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.
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,
including our assumptions on inflation costs associated with
long-tail casualty business which could differ materially from
actual experience; the impact of the vote and resulting
negotiations as a result of the vote by the U.K. electorate in
favor of a U.K. exit from the European Union in a recent
referendum; 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 insurance and
reinsurance industry; the models we use to assess our exposure to
losses from future natural catastrophes contain inherent
uncertainties and our actual losses may differ significantly from
expectations; our capital models may provide materially different
indications than actual results; 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; 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 acquisition strategy; changes in market conditions in the
agriculture industry, which may vary depending upon demand for
agricultural products, weather, commodity prices, natural
disasters, and changes in legislation and policies related to
agricultural products and producers; termination of, or changes in,
the terms of the U.S. Federal Multiple Peril Crop Insurance Program
or the U.S. Farm Bill, including modifications to the Standard
Reinsurance Agreement put in place by the Risk Management Agency of
the U.S. Department of Agriculture; the recent consolidation in the
(re)insurance industry; loss of one or more of our senior
underwriters or key personnel; our ability to exercise capital
management initiatives, including capital available to pursue our
share repurchase program at various levels or to declare dividends,
or to arrange banking facilities as a result of prevailing market
conditions, the level of catastrophes or other losses or changes in
our financial position; changes in the availability, cost or
quality of reinsurance or retrocessional coverage; 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; the risks associated with the management of capital on
behalf of investors; evolving issues with respect to interpretation
of coverage after major loss events; our ability to adequately
model and price the effects of climate cycles and climate change;
any intervening legislative or governmental action and changing
judicial interpretation and judgments on insurers’ liability to
various risks; the risks related to litigation; 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 and deterioration
with loss estimates; 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; the
continuing and uncertain impact of the current depressed lower
growth economic environment in many of the countries in which we
operate; our reliance on information and technology and third-party
service providers for our operations and systems; 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 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 crisis;
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; increased counterparty risk due to the credit impairment
of financial institutions; and Aspen or Aspen Bermuda Limited
becoming subject to income taxes in the United States or the United
Kingdom. 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 (the "SEC") on February 19, 2016. 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.
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 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 losses and the preliminary
nature of the information used to prepare estimates, there can be
no assurance that Aspen’s ultimate losses will remain within the
stated amounts.
Non-GAAP Financial Measures
In presenting Aspen’s results, management has included and
discussed certain “non-GAAP financial measures.” Management
believes that these non-GAAP financial measures, which may be
defined differently by other companies, better explain Aspen’s
results of operations in a manner that allows for a more complete
understanding of the underlying trends in Aspen’s business.
However, these measures should not be viewed as a substitute for
those determined in accordance with GAAP. The reconciliation of
such non-GAAP financial measures to their respective most directly
comparable GAAP financial measure is included in the financial
supplement or this release. Aspen's financial supplement and fourth
quarter 2016 earnings press release, which were filed with the SEC
on Form 8-K on February 8, 2017, can be obtained from the Investor
Relations section of Aspen’s website at www.aspen.co.
Annualized Operating Return on Average Equity (“Operating
ROE”) is a non-GAAP financial measure. Operating ROE is
calculated using operating income, as defined below, and average
equity is calculated as the arithmetic average on a monthly basis
for the stated periods of shareholders’ equity excluding the
aggregate value of the liquidation preferences of our preference
shares net of issuance costs and the total amount of
non-controlling interest. Aspen presents Operating ROE as a measure
that is commonly recognized as a standard of performance by
investors, analysts, rating agencies and other users of its
financial information. Please see page 22 of Aspen’s financial
supplement for a reconciliation of operating income to net income
and page 7 for a reconciliation of average ordinary shareholders’
equity to average shareholders’ equity.
Operating Income is a non-GAAP financial measure.
Operating income is an internal performance measure used by Aspen
in the management of its operations and represents after-tax
operational results excluding, as applicable, after-tax net
realized and unrealized gains or losses, including net realized and
unrealized gains and losses on interest rate swaps, after-tax net
foreign exchange gains or losses, including net realized and
unrealized gains and losses from foreign exchange contracts and
certain non-operating income and expenses. In 2016, the
non-operating income and expenses relate to amortization of
intangible assets and other corporate activities.
Aspen excludes the items above from its calculation of operating
income because they are either not expected to recur and therefore
are not reflective of underlying performance or the amount of these
gains or losses is heavily influenced by, and fluctuates in part,
according to the availability of market opportunities. Aspen
believes these amounts are largely independent of its business and
underwriting process and including them would distort the analysis
of trends in its operations. In addition to presenting net income
determined in accordance with GAAP, Aspen believes that showing
operating income enables investors, analysts, rating agencies and
other users of its financial information to more easily analyze
Aspen’s results of operations in a manner similar to how management
analyzes Aspen’s underlying business performance. Operating income
should not be viewed as a substitute for GAAP net income. Please
see page 22 of Aspen’s financial supplement for a reconciliation of
operating income to net income.
Diluted Book Value per Ordinary Share is not a non-GAAP
financial measure. Aspen has included diluted book value per
ordinary share as it illustrates the effect on basic book value per
share of dilutive securities thereby providing a better benchmark
for comparison with other companies. Diluted book value per share
is calculated using the treasury stock method, defined on page 21
of Aspen’s financial supplement.
Diluted Operating Earnings per Share and Basic Operating
Earnings per Share are non-GAAP financial measures. Aspen
believes that the presentation of diluted operating earnings per
share and basic operating earnings per share supports meaningful
comparison from period to period and the analysis of normal
business operations. Diluted operating earnings per share and basic
operating earnings per share are calculated by dividing operating
income by the diluted or basic weighted average number of shares
outstanding for the period. Please see page 22 of Aspen’s financial
supplement for a reconciliation of diluted and basic operating
earnings per share to basic earnings per share.
Accident Year Loss Ratio Excluding Catastrophes is a
non-GAAP financial measure. Aspen believes that the presentation of
loss ratios excluding catastrophes and prior year reserve movements
supports meaningful comparison from period to period of the
underlying performance of the business. Accident year loss ratios
excluding catastrophes are calculated by dividing net losses
excluding catastrophe losses, net expenses and prior year reserve
movements by net earned premiums excluding catastrophe-related
reinstatement premiums. Aspen has defined catastrophe losses
in 2016 as losses associated predominantly with wildfires in North
America, Hurricane Matthew and other weather-related events in the
U.S., several earthquakes, and a hailstorm in the Netherlands.
Catastrophe losses in 2015 were defined as losses associated with
storms in the U.S., Europe, New Zealand and Australia, the Chilean
earthquake, wildfires in the U.S. and floods in the U.K. Please see
pages 12 and 13 of this release for a reconciliation of loss ratios
to accident year loss ratios excluding catastrophes.
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version on businesswire.com: http://www.businesswire.com/news/home/20170208006189/en/
InvestorsAspenMark Jones, +1 (646) 289 4945Senior Vice
President, Investor Relationsmark.p.jones@aspen.coorMediaAspenSteve
Colton, +44 20 7184 8337Group Head of Communicationssteve.colton@aspen.coorInternational - Citigate
Dewe RogersonCaroline Merrell, +44 20 7638 9571caroline.merrell@citigatedr.co.ukorJos Bieneman,
+44 20 7638 9571jos.bieneman@citigatedr.co.ukorNorth America -
Sard Verbinnen & CoPaul Scarpetta or Jamie Tully+1 (212) 687
8080
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