Bermuda-based insurer and reinsurer, Aspen Insurance Holdings, has reported a better underwriting result across the group as it posted underwriting income of $47.9 million in Q3’23, up significantly from a loss of $70 million in Q3’22, driven by its reinsurance business.
The combined ratio was 92.7% for the group in Q3’23, compared to 110.3% in Q3’22, as the loss ratio and expense ratio fell year-on-year.
Across the group, the re/insurer reported an increase in operating income to $79 million, as net income attributable to common shareholders improved significantly to $86 million, compared with a loss of $161 million a year earlier.
The rise in net income was driven by strong improvement in underwriting results, improved investment income and lower net realised and unrealised investment and foreign exchange gains/losses, says the firm.
Aspen reported a 27.9% decrease in gross written premiums (GWP) for its reinsurance segment for Q3’23, as net written premiums (NWP) hit $261.2 million in Q3’23, a decrease of 38.9% compared with $427.6 million in Q3’22.
However, while efforts to reduce exposure led to lower premiums within reinsurance, the unit posted underwriting income of $52.5 million compared to a loss of $2.7 million a year earlier. The combined ratio was 92.4% for the reinsurance segment in Q3’23, compared to 111.3 in Q3’22.
Aspen notes that the repositioning of the portfolio into higher attachment points and significant rate increase helped reduce the loss ratio, which fell by 18.5 percentage points compared with prior year, while the catastrophe loss ratio improved considerably.
Turning to Aspen’s primary insurance business, GWP increased to $615.2 million in Q3’23 from $600.8 million in Q3’22, primarily due to strong new business activity within financial and professional lines, partially offset by the firm’s decision to reduce writing certain programs within its casualty and liability insurance portfolio.
NWP increased within insurance by 3.1% to $367.4 million in Q3’23, compared with $356.52 million in Q3’22.
The insurance segment posted an underwriting loss of $4.6 million in Q3’23, compared to a loss of $67.3 million in Q3’22. The combined ratio was 91.2% for the insurance segment in Q3’23, compared to 101.1 in Q3’22.
Across the group, GWP was $987.2 million in Q3’23, which was lower compared to the same period last year.
On the asset side of the balance sheet, Aspen has reported net investment income of $77.9 million in the quarter, which is an increase of 63% from $47.7 million in the third quarter of 2022. This is a result of active repositioning of investments to take advantage of higher interest rates.
Mark Cloutier, Executive Chairman and Group Chief Executive Officer, commented: “Aspen’s focus on disciplined underwriting, careful portfolio management and operational efficiency has delivered an excellent result for the quarter, with the business achieving an adjusted combined ratio of 91.7% and operating income of $79 million, both significant improvements over the same period last year. Our results also benefited from increased investment income, driven by a higher rate environment, as well as increased Aspen Capital Markets fee income which enhanced the quality of our earnings.”
“It is encouraging to see our third quarter results add to the positive trends of the first half of 2023, achieving an adjusted combined ratio of 87.1% and annualized operating return on average equity of 20.7% for the nine months ended September 30, 2023.”
“As we move into 2024, we anticipate that market conditions will remain favourable in most of our classes. Aspen’s strong capital position, well-balanced portfolio and healthy team culture position us well to continue to provide meaningful capacity, services and solutions to our customers and trading partners, while earning top quartile returns for our shareholders,” Cloutier concluded.
