Aspen Insurance Holdings Limited has reported a return to profit for 2021 with net income of $29.8 million compared with a loss of $56.4 million in 2020, driven by an improved underwriting performance.
Across the group, adjusted underwriting income amounted to $28.3 million 2021, against a loss of $87 million a year earlier, resulting in an adjusted combined ratio of 98.8%, compared with 103.4% in 2020.
In 2021, Aspen’s underwriting result included catastrophe losses of $326.7 million, or 13.6 percentage points of the combined ratio, compared with losses of $360.8 million in 2020, or 14.3 percentage points of the combined ratio.
Catastrophe losses in 2021 were associated with Texas winter storms, Hurricane Ida, European floods and other weather-related events.
Gross written premiums (GWP) increased by 6.5%, year-on-year, to almost $4 billion in 2021, driven primarily by rate improvements in financial and professional insurance lines, casualty and liability insurance lines and organic growth in casualty reinsurance lines.
Within its reinsurance business, Aspen has recorded GWP of more than $1.5 billion for 2021, which is a decline of 3.6% on the prior year, driven mainly by the sale of the firm’s U.S. crop reinsurance business which contributed $334.8 million of its U.S. agricultural business in 2020 in specialty reinsurance lines. This was partially offset by an increase in property catastrophe, casualty reinsurance and other property reinsurance lines premiums, says Aspen.
Net written premiums in reinsurance also declined, by 7.6% to $1.2 billion in 2021, while the retention ratio moved to 75.1% in 2021 from 78.3% in 2020.
Year-on-year, the company’s reinsurance arm did see its loss ratio come down from 74.4% in 2020 to 63% in 2021. Aspen says that prior year net favourable reserve development of $134.4 million brought down the 2021 loss ratio by 12 percentage points.
Turning to Aspen’s primary insurance business, and GWP increased from $2 billion in 2020 to $2.3 billion in 2021, driven by rate improvements in both financial and professional insurance lines and casualty and liability insurance lines. Although, Aspen notes that this was partially offset by the decrease in first party and specialty insurance due to its decision to cease underwriting in accident and health, international marine and energy liability business which are currently part of its legacy lines.
NWP also increased within insurance, by 8.5% to $1.4 billion, driven mostly by growth in GWP. The retention ratio was 59.3% for 2021, compared with 62.7% a year earlier.
In contrast to the reinsurance segment, Aspen’s insurance division has reported a higher loss ratio of 76.5% for 2021, compared with 71.1% a year earlier. For 2021, the loss ratio included net catastrophe losses of $71.7 million, or 5.6 percentage points.
The insurance segment’s loss ratio was driven higher by prior year net unfavourable reserve development of $179.5 million in 2021, compared with prior year net unfavourable reserve development of $35.2 million in 2020.
On the asset side of the balance sheet, Aspen has reported investment income of $147.5 million for 2021, which is down slightly on the $154.6 million seen in 2020.
Mark Cloutier, Group Executive Chairman and Chief Executive Officer (CEO), commented: “I am pleased to report that 2021 was a further year of good progress at Aspen, with the business reporting a net income of $29.8 million and an operating income of $95.1 million, a significant improvement over 2020.
“Moreover, this performance occurred in a year that saw the world continuing to adapt to the effects of the ongoing global pandemic. Now as we enter May 2022, our world continues to be rocked by the horrific events unfolding as a result of the invasion in Ukraine. Our thoughts and prayers are with all those whose lives continue to be forever impacted.”
“Looking ahead, while we are mindful of broader macroeconomic uncertainty and continued inflationary claims trends, we are confident in the outlook and positioning of our business. We are successfully shifting from ‘transforming’ Aspen to ‘activating’ its true potential, and I am excited by the energy, enthusiasm and commitment I see from our people, the differentiated solutions our platforms are creating for clients and what I believe we can accomplish in 2022 and beyond,” he added.