Annualized Net Income Return on Equity of
11.6% for the First Quarter 2017
Annualized Operating Return on Equity of
6.8% for the First Quarter 2017
Diluted Book Value Per Share of $47.89, up
2.5% from December 31, 2016
Quarterly Dividend on Ordinary Share
increased by 9.1%
Aspen Insurance Holdings Limited (“Aspen”) (NYSE:AHL) reported
today net income after tax of $96.5 million, or $1.36 per diluted
ordinary share, and operating income after tax of $59.8 million, or
$0.79 per diluted ordinary share, for the first quarter of
2017.
Chris O’Kane, Chief Executive Officer, commented: “Aspen
recorded positive underwriting contributions from both our
Insurance and Reinsurance businesses in the first quarter. At Aspen
Insurance, we are focused on areas of expertise where we can
provide our clients with the best service and capitalize on
opportunities for profitable growth. Aspen Re’s diversified
business model, strong client relationships and highly innovative
solutions continue to provide a winning combination, resulting once
again in strong results for the quarter. For the sixth consecutive
year, and reflecting our continued confidence in Aspen’s future
prospects, the Aspen Board approved today an increase in the
dividend on our ordinary shares.”(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 March 31,
2017
- Gross written premiums of $998.0
million in the first quarter of 2017, an increase of 2.3% compared
with $975.7 million in the first quarter of 2016
- Insurance: Gross written premiums of
$432.7 million, a decrease of 5.5% compared with $458.1 million in
the first quarter of 2016, primarily due to decreases in the
Property and Casualty, and Marine, Aviation and Energy
sub-segments, partially offset by growth in the Financial and
Professional lines sub-segment
- Reinsurance: Gross written premiums of
$565.3 million, an increase of 9.2% from $517.6 million in the
first quarter of 2016, primarily due to growth in the Other
Property, Casualty and Specialty sub-segments
- Loss ratio of 56.5% in the first
quarter of 2017 compared with 53.9% in the first quarter of 2016.
The loss ratio included pre-tax catastrophe losses, net of
reinsurance recoveries, of $29.1 million, or 5.0 percentage points,
in the first quarter of 2017. Pre-tax catastrophe losses, net of
reinsurance recoveries, totaled $18.7 million, or 2.8 percentage
points, in the first quarter of 2016
- Insurance: Loss ratio of 61.0% compared
with 58.2% in the first quarter of 2016. Pre-tax catastrophe
losses, net of reinsurance recoveries, of $4.5 million, totaled 1.5
percentage points in the first quarter of 2017 primarily related to
weather-related events in the U.S. Pre-tax catastrophe losses net
of reinsurance recoveries totaled $8.0 million, or 2.1 percentage
points, in the first quarter of 2016
- Reinsurance: Loss ratio of 51.6%
compared with 48.0% in the first quarter of 2016. The loss ratio
included pre-tax catastrophe losses, net of reinsurance recoveries,
of $24.6 million, or 8.9 percentage points, in the first quarter of
2017 primarily as a result of a tornado in Mississippi, Cyclone
Debbie in Australia, and other weather-related events. Pre-tax
catastrophe losses, net of reinsurance recoveries, totaled $10.7
million, or 3.8 percentage points, in the first quarter of
2016
- Net favorable development on
prior year loss reserves benefited the loss ratio by $26.2 million,
or 4.5 percentage points, in the first quarter of 2017 compared
with $21.6 million, or 3.3 percentage points, in the comparable
period
- Insurance: Prior year net favorable
reserve development of $5.0 million, or 1.6 percentage points,
compared with $3.4 million, or 0.9 percentage points, in the first
quarter of 2016. Prior year net favorable development in the first
quarter of 2017 included $17.7 million of adverse development as a
result of the Ogden rate change
- Reinsurance: Prior year net favorable
reserve development of $21.2 million, or 7.6 percentage points,
compared with $18.2 million, or 6.5% percentage points, in the
first quarter of 2016. Prior year net favorable development in the
first quarter of 2017 included $12.8 million of adverse development
as a result of the Ogden rate change
- Accident year loss ratio excluding
catastrophes was 56.0% in the first quarter of 2017 compared
with 54.4% in the first quarter of 2016
- Insurance: Accident year loss ratio
excluding catastrophes for the quarter ended March 31, 2017
was 61.1% compared with 57.0% a year ago. In the first quarter of
2017, there were approximately $14.8 million of mid-sized losses,
including a $4.8 million energy-related loss and $10.0 million of
fire-related losses, which together equated to 4.9 percentage
points on the accident year ex-cat loss ratio
- Reinsurance: Accident year loss ratio
excluding catastrophes for the quarter ended March 31, 2017
was 50.3% compared with 50.7% a year ago
- Total expense ratio of 40.5% and
total expense ratio (excluding amortization and non-recurring
expenses) of 40.1% in the first quarter of 2017 compared with
37.7% and 37.7%, respectively, in the first quarter of 2016. The
policy acquisition expense ratio was 19.6% in the first quarter of
2017, the same as the first quarter of 2016. General and
administrative expenses (excluding amortization and non-recurring
expenses) were $119.1 million in the first quarter of 2017, largely
unchanged from the first quarter of 2016. Due to lower net earned
premium, the general and administrative expense ratio (excluding
amortization and non-recurring expenses) increased to 20.5% from
18.1% in the first quarter of 2016
- Net income after tax of $96.5
million, or $1.36 per diluted share, and operating income after
tax of $59.8 million, or $0.79 per diluted share, in the first
quarter of 2017. This compares with net income of $114.4 million,
or $1.68 per diluted share, and operating income of $89.9 million,
or $1.29 per diluted share, in the first quarter of 2016
- Annualized net income return on
average equity of 11.6% and annualized operating return on
average equity of 6.8% for the quarter ended
March 31, 2017 compared with 14.4% and 11.2%, respectively,
for the first quarter of 2016
Investment performance
- Investment income of $47.7 million in
the first quarter of 2017 decreased by 3.6% compared with $49.5
million in the first quarter of 2016
- The total return on Aspen’s aggregate
investment portfolio was 1.09% for the three months ended
March 31, 2017 and reflects net realized and unrealized gains
and losses in both the fixed income and equity portfolios.
- 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 March 31,
2017
- Book yield on the fixed income
portfolio as at March 31, 2017 was 2.53% compared with 2.49%
as at December 31, 2016
Capital
- Total shareholders’ equity was $3.6
billion as at March 31, 2017
- Diluted book value per share was $47.89
as at March 31, 2017, up 2.5% from December 31, 2016
- On January 3, 2017, Aspen used $133.2
million of the proceeds from its 5.625% Perpetual Non-Cumulative
Preference Shares to redeem its outstanding 7.401% Perpetual
Non-Cumulative Preference Shares. As a result, Aspen did not
repurchase any ordinary shares during the first quarter of
2017
- On April 26, 2017, the Board of
Directors approved a 9.1% increase in quarterly ordinary dividend,
from $0.22 per share to $0.24 per share
Earnings conference call and webcast
Aspen will host a conference call to discuss the results at 8:00
am (ET) on Thursday, April 27, 2017.
To participate in the April 27 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 10103759
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. To listen to
the replay by phone please dial:
+1 (877) 344 7529 (US toll free) or+1 (412) 317 0088
(international)Replay ID 10103759
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 at
As at
March 31,
December 31,
2017
2016
ASSETS Total investments
$ 7,996.1 $
7,900.3
Cash and cash equivalents
873.1 1,273.8 Reinsurance
recoverables
1,040.6 815.9 Premiums receivable
1,557.8 1,399.4 Other assets
777.1 700.7
Total assets
$ 12,244.7 $ 12,090.1
LIABILITIES Losses and loss adjustment expenses
$ 5,365.9 $ 5,319.9 Unearned premiums
1,891.8
1,618.6 Other payables
733.0 839.0 Silverton loan notes
110.2 115.0 Long-term debt
549.4 549.3
Total liabilities
$ 8,650.3 $ 8,441.8
SHAREHOLDERS’ EQUITY Total shareholders’ equity
3,594.4
3,648.3 Total liabilities and shareholders’ equity
$ 12,244.7 $ 12,090.1 Book value
per share
$ 48.79 $ 47.68 Diluted book value per
share (treasury stock method)
$ 47.89 $ 46.72
Aspen Insurance Holdings
Limited
Summary consolidated statement of
income (unaudited)
$ in millions, except ratios
Three Months Ended March 31, 2017
March 31, 2016 UNDERWRITING REVENUES Gross written
premiums
$ 998.0 $ 975.7 Premiums ceded
(311.8
) (176.0 ) Net written premiums
686.2 799.7 Change in
unearned premiums
(105.1 ) (136.6 ) Net earned
premiums
581.1 663.1 UNDERWRITING EXPENSES
Losses and loss adjustment expenses
328.2 357.4 Amortization
of deferred policy acquisition costs
113.7 130.2 General,
administrative and corporate expenses
119.1 119.8
Total underwriting expenses
561.0 607.4
Underwriting income including corporate expenses
20.1 55.7 Net investment income
47.7 49.5 Interest expense
(7.4 ) (7.4 ) Other
expenses
0.7 (3.0 ) Total other revenue
41.0
39.1 Amortization and non-recurring expenses
(2.2 ) — Net realized and unrealized exchange
(losses)
(5.8 ) (20.1 ) Net realized and unrealized
investment gains
46.2 42.2 INCOME BEFORE TAX
99.3 116.9 Income tax expense
(2.8 ) (2.5 )
NET INCOME AFTER TAX
96.5 114.4 Dividends paid on ordinary
shares
(13.2 ) (12.8 ) Dividends paid on preference
shares
(10.5 ) (9.5 ) Dividends paid to
non-controlling interest
— — Preference share redemption
costs
(2.4 ) — Proportion due to non-controlling
interest
(0.1 ) 0.2 Retained income
$
70.3 $ 92.3 Loss ratio
56.5
% 53.9 % Policy acquisition expense ratio
19.6
% 19.6 % General, administrative and corporate expense ratio
20.9 % 18.1 % General, administrative and corporate
expense ratio (excluding amortization and non-recurring expenses)
20.5 % 18.1 % Expense ratio
40.5 % 37.7
% Expense ratio (excluding amortization and non-recurring expenses)
40.1 % 37.7 % Combined ratio
97.0 %
91.6 % Combined ratio (excluding amortization and non-recurring
expenses)
96.6 % 91.6 %
Aspen Insurance Holdings
Limited
Operating income reconciliation
(unaudited)
$ in millions, except per share
amounts
Three Months Ended
March 31,
March 31,
(in US$ millions except where stated)
2017
2016
Net income as reported
$ 96.5 $ 114.4 Change
in redemption value of preference shares
(2.4 ) — Net
change attributable to non-controlling interest
(0.1
) 0.2 Preference share dividends
(10.5 ) (9.5
) Net income available to ordinary shareholders
83.5 105.1
Add (deduct) after tax income: Net foreign exchange losses
5.1 16.9 Net realized (gains) on investments
(43.8
) (41.4 ) Change in redemption value of preference shares
2.4 — Amortization and non-recurring expenses
2.0
— Operating income after tax available to ordinary
shareholders
49.2 80.6 Tax expense on operating income
1.3 4.9 Operating income before tax available
to ordinary shareholders
$ 50.5 $ 85.5
Basic earnings per ordinary share Net income adjusted
for preference share dividends and non-controlling interest
$ 1.39 $ 1.73 Add (deduct) after tax income: Net
foreign exchange losses
0.09 0.28 Net realized (gains) on
investments
(0.73 ) (0.68 ) Change in redemption
value of preference shares
0.04 — Amortization and
non-recurring expenses
0.03 — Operating income
adjusted for preference shares dividends and non-controlling
interest
$ 0.82 $ 1.33
Diluted earnings per ordinary share Net income adjusted for
preference share dividends and non-controlling interest
$
1.36 $ 1.68 Add (deduct) after tax income: Net foreign
exchange losses
0.08 0.27 Net realized (gains) on
investments
(0.72 ) (0.66 ) Change in redemption
value of preference shares
0.04 — Amortization and
non-recurring expenses
0.03 — Operating income
adjusted for preference shares dividends and non-controlling
interest
$ 0.79 $ 1.29
Aspen Insurance Holdings
Limited
Summary consolidated financial data
(unaudited)
$ in millions, except number of shares
Three Months Ended
March 31,
March 31,
2017
2016
Basic earnings per ordinary share Net income adjusted for
preference share dividend and non-controlling interest
$
1.39
$
1.73
Operating income adjusted for preference share dividend and
non-controlling interest
$ 0.82 $ 1.33 Diluted
earnings per ordinary share Net income adjusted for preference
share dividend and non-controlling interest
$ 1.36 $
1.68 Operating income adjusted for preference share dividend and
non-controlling interest
$ 0.79 $ 1.29
Weighted average number of ordinary shares outstanding (in
millions)
59.863 60.868 Weighted average number of
ordinary shares outstanding and dilutive potential ordinary shares
(in millions)
61.197 62.484 Book value per ordinary
share
$ 48.79 $ 49.45 Diluted book value per ordinary
share (treasury stock method)
$ 47.89 $ 48.22
Ordinary shares outstanding at end of the period (in millions)
59.988 60.675 Ordinary shares outstanding and
dilutive potential ordinary shares at end of the period (treasury
stock method) (in millions)
61.107 62.213
Aspen Insurance Holdings
Limited
Summary consolidated segment
information (unaudited)
$ in millions, except ratios
Three Months Ended March 31, 2017
Three Months Ended March 31, 2016 Reinsurance
Insurance Total Reinsurance
Insurance Total
Gross written premiums
$ 565.3 $ 432.7
$ 998.0 $ 517.6 $ 458.1 $ 975.7 Net written premiums
448.2 238.0 686.2 449.5 350.2 799.7 Gross
earned premiums
327.6 423.7 751.3 306.8 445.6
752.4 Net earned premiums
277.5 303.6 581.1
280.3 382.8 663.1 Losses and loss adjustment expenses
143.1
185.1 328.2 134.5 222.9 357.4 Amortization of
deferred policy acquisition expenses
59.5 54.2
113.7 59.4 70.8 130.2 General and administrative expenses
43.9 61.8 105.7
44.1 58.6 102.7
Underwriting income
$ 31.0 $
2.5 $ 33.5 $ 42.3 $ 30.5
$ 72.8 Net investment income
47.7 49.5 Net
realized and unrealized investment gains (1)
46.2 42.2
Corporate expenses
(13.4 ) (17.1 ) Amortization and
non-recurring expenses
(2.2 ) — Other expenses (2)
0.7 (3.0 ) Interest expense
(7.4 ) (7.4 ) Net
realized and unrealized foreign exchange (losses) (3)
(5.8
) (20.1 ) Income before tax
$ 99.3 $ 116.9
Income tax expense
(2.8 ) (2.5 )
Net income
$ 96.5 $ 114.4
Ratios
Loss ratio
51.6 % 61.0 % 56.5
% 48.0 % 58.2 % 53.9 % Policy acquisition expense ratio
21.4 % 17.9 % 19.6 % 21.2
% 18.5 % 19.6 % General and administrative expense ratio (4)
15.8 % 20.4 % 20.9 % 15.7
% 15.3 % 18.1 % General and administrative expense ratio (excluding
amortization and non-recurring expenses) (4)
15.8 %
20.4 % 20.5 % 15.7 % 15.3 % 18.1 %
Expense ratio
37.2 % 38.3 % 40.5
% 36.9 % 33.8 % 37.7 % Expense ratio (excluding amortization
and non-recurring expenses)
37.2 % 38.3
% 40.1 % 36.9 % 33.8 % 37.7 % Combined ratio
88.8 % 99.3 % 97.0 % 84.9
% 92.0 % 91.6 % Combined ratio (excluding amortization and
non-recurring expenses)
88.8 % 99.3 %
96.6 % 84.9 % 92.0 % 91.6 %
Accident Year Ex-cat
Loss Ratio Loss ratio
51.6 % 61.0 %
56.5 % 48.0 % 58.2 % 53.9 % Prior year loss
development
7.6 % 1.6 % 4.5
% 6.5 % 0.9 % 3.3 % Catastrophe losses
(8.9 )%
(1.5 )% (5.0 )% (3.8 )% (2.1 )% (2.8 )%
Accident year ex-cat loss ratio
50.3 % 61.1
% 56.0 % 50.7 % 57.0 % 54.4 % (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 first quarter of
2017 and first quarter of 2016 included $2.9 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
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 $12.1 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 political, regulatory and economic effects
arising from 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 the June 2016 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; 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 (re)insurers 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 teams 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 results; 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; a failure in our
operational systems or infrastructure or those of third parties,
including those caused by security breaches or cyber attacks;
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 events such as catastrophes
that have occurred in prior years or may occur 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 22, 2017. 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 first
quarter 2017 earnings press release, which were filed with the SEC
on Form 8-K on February 22, 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 21 of Aspen’s financial
supplement for a reconciliation of net income to operating income
and page 7 for a reconciliation of average shareholders’ equity to
average ordinary 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, net
realized gains or losses on investments, amortization of intangible
assets and certain non-recurring income and expenses. Also included
in the first quarter of 2017 was the issue cost associated with the
redemption of the 7.401% Perpetual Non-Cumulative Preference
Shares.
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 21 of Aspen’s financial supplement for a reconciliation of
net income to operating 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 20
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 21 of Aspen’s financial
supplement for a reconciliation of basic earnings per share to
diluted and basic operating 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 the first quarter of 2017 as losses
associated predominantly with a tornado in Mississippi, Cyclone
Debbie in Australia, and various other weather-related events.
Catastrophe losses in the first quarter of 2016 were defined as
losses associated with weather-related events in the U.S. and an
earthquake in Taiwan. Please see page 9 of this release for a
reconciliation of loss ratios to accident year loss ratios
excluding catastrophes.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426006664/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 or Jos
Bienemancaroline.merrell@citigatedr.co.ukjos.bieneman@citigatedr.co.uk+44-20-7638-9571orNorth
America - Sard Verbinnen & CoPaul Scarpetta or Jamie
Tully+1-212-687 8080
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