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Aspen Reports Results For The Quarter And Year Ended December 31, 2012

Aspen Insurance Holdings Limited (“Aspen”) (NYSE: AHL) today reported net income after tax of $280.4 million for the year and $2.0 million for the fourth quarter of 2012. This is equivalent to diluted net income per share of $3.38 for the year and a diluted net loss per share of $0.09 for the fourth quarter of 2012.

Results for the quarter were impacted by net catastrophe losses of $170 million, after tax and net of reinsurance and reinstatements, including $175 million from Superstorm Sandy and favorable development on the 2012 US storms.

Chris O’Kane, Chief Executive Officer commented, “In 2012 Aspen celebrated its 10 year anniversary. Our success reflects the support of our clients, with whom we have built strong relationships, the hard work and skill of all our people, and the diversified Reinsurance and Insurance platform that we have built together. In 2012, despite the impact of Superstorm Sandy, we made strong progress against our strategic objectives and generated an operating return on equity of 8.5%.

In 2013, we will be intensely focused on further improving return on equity, against a backdrop of modestly improving insurance pricing, lackluster global economies, and a continued low interest rate environment. We will allocate capital efficiently to profitable underwriting opportunities, scale back in certain lines whose performance has not been consistent with our targeted risk profile, and return excess capital to shareholders through our expanded share repurchase authorization. We will also strive to generate increased returns from our investment portfolio while ensuring that our investments remain within our risk tolerance.”

Operating highlights for the quarter ended December 31, 2012

  • Diluted net loss per share of $0.09 for the quarter ended December 31, 2012 compared with diluted net earnings per share of $0.09 in the fourth quarter of 2011 (1)
  • Diluted operating loss per share of $0.15 for the quarter ended December 31, 2012 compared with diluted operating loss per share of $0.01 in the fourth quarter of 2011 (1)(2)
  • Diluted book value per share of $40.65, up 6.4% from the year ended 2011 (1)(2)
  • Annualized net return on average equity of (0.8)% and annualized operating return on average equity of (1.6)% for the fourth quarter of 2012 compared with 0.8% and Nil%, respectively in the fourth quarter of 2011 (1)(2)
  • Gross written premiums of $576.2 million in the fourth quarter of 2012 increased 25.6% from the fourth quarter of 2011 with the majority of the growth resulting from a 40.2% increase in the insurance segment
  • Combined ratio of 108.0% or 72.0% excluding catastrophes, pre-tax and net of reinsurance and reinstatements, for the fourth quarter of 2012 compared with a combined ratio of 114.3% (1) or 85.9% excluding catastrophes for the fourth quarter 2011
  • Net favorable development on prior year loss reserves of $42.0 million, or 7.5 combined ratio points, for the fourth quarter 2012 compared with $22.0 million, or 4.5 combined ratio points, for the fourth quarter of 2011

Operating highlights for the year ended December 31, 2012

  • Net return on average equity of 8.5% and operating return on average equity of 8.5% for 2012 compared with (4.8)% and (3.4)%, respectively in 2011 (1)(2)
  • Gross written premiums of $2,583.3 million, up 17.0% from 2011, with growth principally in the insurance segment
  • Combined ratio for 2012 of 94.3%, including $205.0 million or 10.8 percentage points of pre-tax catastrophe losses, net of reinsurance and reinstatements compared with 115.9% for 2011, which included 31.5 percentage points of net losses from catastrophes
  • Net favorable development on prior year loss reserves of $137.4 million, or 6.6 combined ratio points, for the year compared with $92.3 million, or 4.9 combined ratio points, for 2011

Segment highlights

Reinsurance

Operating highlights for Reinsurance for the quarter ended December 31, 2012 include:

  • Gross written premiums of $194.4 million, up 4.3% compared with $186.3 million for the fourth quarter of 2011, primarily due to increased reinstatement premiums and premium adjustments to business written in prior years
  • Combined ratio of 107.1% compared with 124.2% for the fourth quarter of 2011
  • Favorable prior year loss reserve development of $37.8 million, or 12.6 combined ratio points, with a favorable development in each of the four principal lines of business compared with $14.6 million favorable prior year loss reserve development, or 5.1 combined ratio points, in the fourth quarter of 2011

The combined ratio for the fourth quarter of 2012 was 107.1%, and was impacted by $124.0 million of net catastrophe losses, pre-tax net of reinsurance and reinstatements, including $129.5 million from Superstorm Sandy. Excluding catastrophe losses, the combined ratio was 55.0 %. Favorable reserve movements in the quarter included a $16.1 million release for the 2010 and 2011 catastrophe events. In comparison, the combined ratio for the fourth quarter of 2011 was 124.2% or 76.1% (1)(2) excluding catastrophe losses. The acquisition ratio was 13.7% for the fourth quarter of 2012 compared to 16.4% for the fourth quarter of 2011 due to a combination of increased reinstatement premiums and a $4.2 million reduction in profit commissions.

The segment underwriting loss for the fourth quarter of 2012 was $21.4 million compared with an underwriting loss of $70.0 million for the fourth quarter of 2011. (1)

Operating highlights for Reinsurance for the twelve months ended December 31, 2012 include:

  • Gross written premiums of $1,227.9 million, up 3.4% compared with $1,187.5 million for the twelve months ended December 31, 2011 as a result of improved market conditions in Property Other and Casualty sub segments, specifically US Casualty
  • Combined ratio of 85.4% compared with 125.6% for the twelve months ended December 31, 2011 (1)
  • Favorable prior year loss reserve development for 2012 was $102.2 million or 9.0 combined ratio points compared with $72.3 million favorable prior year loss reserve development or 6.5 combined ratio points, for 2011

The segment underwriting profit for the twelve months ended December 31, 2012 was $165.4 million compared with an underwriting loss of $284.5 million (1) for the twelve months ended December 31, 2011 which was severely impacted by natural catastrophes, primarily the Japan and New Zealand earthquakes, Thailand floods and US tornadoes.

The combined ratio for the twelve months of 2012, excluding net catastrophe losses, pre-tax and net of reinsurance recoveries and reinstatement premiums was 69.4%. In comparison, the combined ratio on the same basis for the full year 2011 was 73.6% (1)(2).

Insurance

Operating highlights for Insurance for the quarter ended December 31, 2012 include:

  • Gross written premiums of $381.8 million, up 40.2% compared with $272.4 million in the fourth quarter of 2011
  • Combined ratio of 104.2% compared with 93.7% for the fourth quarter of 2011 (1)
  • Favorable prior year loss reserve development of $4.2 million or 1.6 combined ratio points compared with $7.4 million or 3.7 combined ratio points in the fourth quarter of 2011

The increase in gross written premiums was mainly attributable to growth in our US based insurance operations. The combined ratio for the fourth quarter of 2012 was 104.2%, negatively impacted by $61.1 million catastrophe losses, pre-tax and net of reinsurance and reinstatements, primarily from Superstorm Sandy.

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