Reinsurance News

Catastrophes significantly dent Aspen’s underwriting performance in Q4

7th February 2019 - Author: Luke Gallin

Aspen Insurance Holdings Limited has reported a net loss of $147 million for the fourth-quarter of 2018, as a slight increase in investment income was heavily offset by underwriting losses in both its insurance and reinsurance segments following the impacts of catastrophe losses in the period.

aspen logoNet of reinsurance and reinstatement premiums, Aspen reported pre-tax catastrophe losses of $164.1 million, compared with $137.6 million a year earlier. Overall, Aspen’s loss ratio hit 96.8% in Q4 2018, which included 30.9 percentage points from catastrophe losses.

By segment, Aspen’s insurance unit saw its loss ratio improve year-on-year to 86.6%, which included pre-tax cat losses of $27.8 million. In the reinsurance segment, Aspen’s loss ratio also improved but remained above 100% at 105.1%, which included pre-tax cat losses of $136.3 million.

Catastrophe events that impacted Aspen in Q4 include the California wildfires, hurricane Michael, typhoon Jebi, and a number of other weather-related events in the U.S. and Asia.

Aspen’s Chief Executive Officer (CEO), Chris O’Kane, commented: “Aspen’s fourth quarter 2018 results were impacted by the significant natural catastrophe activity that we witnessed across the industry during the period. However, we improved our underwriting performance for the full year and achieved our target for reducing our expense ratio.

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“We continue to focus on providing our clients and business partners with outstanding service and enhancing further our financial and operational performance.”

Reinsurance gross written premiums (GWP) fell in the quarter to $150 million while net written premiums (NWP) fell to $135 million. Net earned premiums increased slightly to $296 million, and overall, the reinsurance segment reported an underwriting loss of $106 million, compared with an underwriting loss of $146 million for the same period in 2017.

Aspen’s insurance segment saw its GWP hit $453 million and its NWP reach $247 million in Q4 2018, while net earned premiums improved slightly year-on-year to $242 million. The unit recorded an underwriting loss of $55 million compared with a loss of $80 million in Q4 2017.

Combined, Aspen recorded an underwriting loss of $160.7 million in the fourth-quarter of 2018, which, after accounting for investment income, realised and unrealised investment losses, expenses and so on, resulted in a net loss of $146.8 million for the fourth-quarter of 2018.

Aspen’s reinsurance combined ratio hit 135.7% and its insurance combined ratio totalled 122.6% in Q4 2018. Overall, the re/insurer reported a combined ratio for the fourth-quarter of 2018 of 132.8%, which although high, is an improvement on the 152.6% recorded in Q4 2017.

The shareholders of Bermuda-headquartered Aspen approved the company’s acquisition by funds under management of Apollo Global Management in December of last year, and CEO O’Kane commented on this.

“We are making good progress with our proposed transaction with the Apollo Funds and have received most of the required regulatory approvals. We anticipate completing the transaction during the first quarter of 2019,” he said.

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