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TheStreet Open House

Aspen Reports Results For The Quarter And Six Months Ended June 30, 2013

Stocks in this article: AHL

Aspen Insurance Holdings Limited (“Aspen”) (NYSE: AHL) today reported net income after tax of $40.1 million, or $0.36 diluted net income per share, for the second quarter of 2013.

Chris O’Kane, Chief Executive Officer commented, “In the second quarter, Aspen delivered solid operating results in an above average catastrophe quarter, with our combined ratio excluding catastrophes improving modestly from last year. We continue to make progress on the three initiatives we outlined earlier this year to drive increased profitability. We have released $70 million of capital in our U.S. property insurance line and our U.S. operations overall continue to gain scale and momentum towards sustainable profitability. We executed over $240 million of share repurchases in the first six months of the year and continued to carefully reallocate a portion of our investment portfolio to achieve higher risk-adjusted returns. We remain intensely focused on executing these initiatives and achieving increased profitability.”

Operating highlights for the quarter ended June 30, 2013

  • Gross written premiums increased overall by 3.1% to $687.3 million in the second quarter of 2013 from the second quarter of 2012. Gross written premiums in Reinsurance were flat while Insurance grew 6.0%
  • Combined ratio of 97.1% for the second quarter of 2013 compared with a combined ratio of 87.3% for the second quarter of 2012. This increase was due to $58.7 million or 10.9 percentage points, of pre-tax catastrophe losses net of reinsurance recoveries and $5.2 million of reinstatement premiums in the second quarter of 2013 compared with no catastrophe losses in the second quarter of 2012
  • Net favorable development on prior year loss reserves of $27.4 million, or 5.0 combined ratio points, for the second quarter of 2013 compared with $28.6 million, or 5.6 combined ratio points, for the second quarter of 2012

Financial highlights for the quarter and six months ended June 30, 2013

  • Annualized net income return on average equity of 4.4% and annualized operating return on average equity of 6.4% for the second quarter of 2013 compared with 10.8% and 13.6%, respectively in the second quarter of 2012 (1)
  • Annualized net income return on average equity of 8.0% and annualized operating return on average equity of 8.6% for the first half of 2013 compared with 10.6% and 11.4%, respectively in the first half of 2012 (1)
  • Diluted net income per share of $0.36 for the quarter ended June 30, 2013 compared with diluted net income per share of $1.03 for the second quarter of 2012, and diluted net income per share of $1.52 for the six months ended June 30, 2013 compared with diluted net income per share of $2.02 for the six months ended June 30, 2012
  • Diluted operating income per share of $0.63 for the quarter ended June 30, 2013 compared with diluted operating income per share of $1.32 for the second quarter of 2012 (1) and diluted operating income per share of $1.70 for the six months ended June 30, 2013 compared with diluted net income per share of $2.20 for the six months ended June 30, 2012
  • On an after-tax basis, catastrophe losses were $53.7 million, or $0.77 per share, for the second quarter of 2013, and $53.7 million, or $0.75 per share, for the first six months of 2013
  • Diluted book value per share of $38.87 at June 30, 2013 down 4.4% from March 31, 2013 (1) mainly due to the $138.4 million of unrealized losses in the investment portfolio as a result of widening credit spreads and interest rate movements
  • On April 25, 2013, Aspen issued 11.0 million 5.950% Preference Shares with a liquidation preference of $25 for an aggregate amount of $275.0 million and net proceeds of approximately $270.4 million from this issuance

Segment highlights

Reinsurance

Operating highlights for Reinsurance for the quarter ended June 30, 2013 include:

  • Gross written premiums of $298.6 million, largely flat compared with $299.8 million for the second quarter of 2012
  • Combined ratio of 88.9% compared with 79.0% for the second quarter of 2012
  • Favorable prior year loss reserve development of $24.1 million, or 8.7 combined ratio points, compared with $14.1 million favorable prior year loss reserve development, or 5.0 combined ratio points, for the second quarter of 2012

The combined ratio of 88.9% for the second quarter of 2013 included $51.8 million, or 19.4 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries and $5.2 million of reinstatement premiums, related to flooding in Central Europe, Canada and India, and tornadoes and hailstorms in the U.S. The combined ratio of 79.0% for the second quarter of 2012 included no natural catastrophe losses.

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