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Aspen wraps up “transitional” 2019 with $48mn operating loss

17th March 2020 - Author: Charlie Wood

Bermuda domiciled re/insurer Aspen fell to a $48.4 million operating loss in 2019, as the company navigated what it describes as a “transitional year.”

AspenLosses, which also included a net loss of $241.7 million, were driven by costs relating to the acquisition of the company by certain investment funds managed by affiliates of Apollo Global, restructuring costs, reserve strengthening, unrealised investment losses and exchange rate impact.

The combined ratio, excluding non-operating expenses, climbed to 108.5% and was impacted by 5.8 percentage points from legacy and U.S. agriculture business.

Catastrophe losses, net of reinstatement premiums, stood at $143.2 million in 2019 (against $262.9 million in 2018) evidencing the continued reduction in catastrophe risk exposure.

General and administrative expenses, excluding non-operating expenses, was $396.0 million down from $414.5 million in 2018 with an operating expense ratio of 17.3% compared with 18.7% in 2018.

Gross written premiums broadly in line with 2018, at $3,442.4 million for 2019, compared to $3,446.9 million for 2018.

Excluding legacy and US agriculture business, insurance and reinsurance segments produced accident year ex-catastrophe net loss ratios of 57.8% and 56.8%, respectively.

“2019 was both a challenging and transitional year for our Group,” said Mark Cloutier, Group Executive Chairman and Chief Executive Officer.

“Since completion of the merger transaction early in the year we have undertaken a number of initiatives targeted at protecting the financial strength of the company, while also driving change geared at improving performance over the medium and longer term – all with a focus on long term total value creation.

“These actions include refocusing the products we underwrite, strengthening our balance sheet, enhancing our management team, and simplifying our global footprint and operating structure.

“During 2019, we saw sustained improvement to wider insurance market conditions, including reduced capacity and limits in a number of our core product lines, which has contributed to improving rates, terms, and conditions,” Cloutier added.

“Within reinsurance, we also saw pockets of corrections over 2018, which extended to improvements in rate across the majority of classes and regions throughout 2019. We have seen these trends continue into 2020.

“These trends are indeed positive but we continue to take a cautious and selective approach to growth as evidenced in our year-over-year gross written premium numbers.

“While our financial results for 2019 are disappointing, given the impact of deal related costs, restructuring charges and specific actions taken to improve underwriting performance and strengthen reserves, it is rewarding to see that underlying trends in our forward trading businesses are showing significant improvement.

“I am confident that the decisive actions we have taken are the right ones and will see us realize our objective of becoming a top quartile specialty (re)insurer in the near term.”

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