Aspen Reports Results for Quarter Ended March 31, 2017
Annualized Net Income Return on Equity of 11.6% for the First Quarter 2017
Annualized Operating Return on Equity of 6.8% for the First Quarter 2017
Diluted Book Value Per Share of
Quarterly Dividend on Ordinary Share increased by 9.1%
Chris OâKane, Chief Executive Officer, commented: âAspen recorded positive underwriting contributions from both our Insurance and Reinsurance businesses in the first quarter. At
_____________________ |
Non-GAAP financial measures are used throughout this release as defined at the end of this press release. |
(1) Refer to "Forward-looking Statements Safe Harbor" at the end of this press release. |
 |
Operating highlights for the quarter ended
- Gross written premiums of
$998.0 million in the first quarter of 2017, an increase of 2.3% compared with$975.7 million in the first quarter of 2016- Insurance: Gross written premiums of
$432.7 million , a decrease of 5.5% compared with$458.1 million in the first quarter of 2016, primarily due to decreases in the Property and Casualty, and Marine, Aviation and Energy sub-segments, partially offset by growth in the Financial and Professional lines sub-segment - Reinsurance: Gross written premiums of
$565.3 million , an increase of 9.2% from$517.6 million in the first quarter of 2016, primarily due to growth in the Other Property, Casualty and Specialty sub-segments
- Insurance: Gross written premiums of
- Loss ratio of 56.5% in the first quarter of 2017 compared with 53.9% in the first quarter of 2016. The loss ratio included pre-tax catastrophe losses, net of reinsurance recoveries, of
$29.1 million , or 5.0 percentage points, in the first quarter of 2017. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled$18.7 million , or 2.8 percentage points, in the first quarter of 2016- Insurance: Loss ratio of 61.0% compared with 58.2% in the first quarter of 2016. Pre-tax catastrophe losses, net of reinsurance recoveries, of
$4.5 million , totaled 1.5 percentage points in the first quarter of 2017 primarily related to weather-related events in theU.S. Pre-tax catastrophe losses net of reinsurance recoveries totaled$8.0 million , or 2.1 percentage points, in the first quarter of 2016 - Reinsurance: Loss ratio of 51.6% compared with 48.0% in the first quarter of 2016. The loss ratio included pre-tax catastrophe losses, net of reinsurance recoveries, of
$24.6 million , or 8.9 percentage points, in the first quarter of 2017 primarily as a result of a tornado inMississippi , Cyclone Debbie inAustralia , and other weather-related events. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled$10.7 million , or 3.8 percentage points, in the first quarter of 2016
- Insurance: Loss ratio of 61.0% compared with 58.2% in the first quarter of 2016. Pre-tax catastrophe losses, net of reinsurance recoveries, of
- Net favorable development on prior year loss reserves benefited the loss ratio by
$26.2 million , or 4.5 percentage points, in the first quarter of 2017 compared with$21.6 million , or 3.3 percentage points, in the comparable period- Insurance: Prior year net favorable reserve development of
$5.0 million , or 1.6 percentage points, compared with$3.4 million , or 0.9 percentage points, in the first quarter of 2016. Prior year net favorable development in the first quarter of 2017 included$17.7 million of adverse development as a result of the Ogden rate change - Reinsurance: Prior year net favorable reserve development of
$21.2 million , or 7.6 percentage points, compared with$18.2 million , or 6.5% percentage points, in the first quarter of 2016. Prior year net favorable development in the first quarter of 2017 included$12.8 million of adverse development as a result of the Ogden rate change
- Insurance: Prior year net favorable reserve development of
- Accident year loss ratio excluding catastrophes was 56.0% in the first quarter of 2017 compared with 54.4% in the first quarter of 2016
- Insurance: Accident year loss ratio excluding catastrophes for the quarter ended
March 31, 2017 was 61.1% compared with 57.0% a year ago. In the first quarter of 2017, there were approximately$14.8 million of mid-sized losses, including a$4.8 million energy-related loss and$10.0 million of fire-related losses, which together equated to 4.9 percentage points on the accident year ex-cat loss ratio - Reinsurance: Accident year loss ratio excluding catastrophes for the quarter ended
March 31, 2017 was 50.3% compared with 50.7% a year ago
- Insurance: Accident year loss ratio excluding catastrophes for the quarter ended
- Total expense ratio of 40.5% and total expense ratio (excluding amortization and non-recurring expenses) of 40.1% in the first quarter of 2017 compared with 37.7% and 37.7%, respectively, in the first quarter of 2016. The policy acquisition expense ratio was 19.6% in the first quarter of 2017, the same as the first quarter of 2016. General and administrative expenses (excluding amortization and non-recurring expenses) were
$119.1 million in the first quarter of 2017, largely unchanged from the first quarter of 2016. Due to lower net earned premium, the general and administrative expense ratio (excluding amortization and non-recurring expenses) increased to 20.5% from 18.1% in the first quarter of 2016 - Net income after tax of
$96.5 million , or$1.36 per diluted share, and operating income after tax of$59.8 million , or$0.79 per diluted share, in the first quarter of 2017. This compares with net income of$114.4 million , or$1.68 per diluted share, and operating income of$89.9 million , or$1.29 per diluted share, in the first quarter of 2016 - Annualized net income return on average equity of 11.6% and annualized operating return on average equity of 6.8% for the quarter ended
March 31, 2017 compared with 14.4% and 11.2%, respectively, for the first quarter of 2016
Investment performance
- Investment income of
$47.7 million in the first quarter of 2017 decreased by 3.6% compared with$49.5 million in the first quarter of 2016 - The total return on Aspenâs aggregate investment portfolio was 1.09% for the three months ended
March 31, 2017 and reflects net realized and unrealized gains and losses in both the fixed income and equity portfolios. - Aspenâs investment portfolio continues to be comprised primarily of high quality fixed income securities with an average credit quality of âAA-â. The average duration of the fixed income portfolio was 3.89 years as at
March 31, 2017 - Book yield on the fixed income portfolio as at
March 31, 2017 was 2.53% compared with 2.49% as atDecember 31, 2016
Capital
- Total shareholdersâ equity was
$3.6 billion as atMarch 31, 2017 - Diluted book value per share was
$47.89 as atMarch 31, 2017 , up 2.5% fromDecember 31, 2016 - On
January 3, 2017 ,Aspen used$133.2 million of the proceeds from its 5.625% Perpetual Non-Cumulative Preference Shares to redeem its outstanding 7.401% Perpetual Non-Cumulative Preference Shares. As a result,Aspen did not repurchase any ordinary shares during the first quarter of 2017 - On
April 26, 2017 , the Board of Directors approved a 9.1% increase in quarterly ordinary dividend, from$0.22 per share to$0.24 per share
Earnings conference call and webcast
To participate in the
Please call to register at least 10 minutes before the conference call begins by dialing:
+1 (844) 378 6481 (US toll free) or
+1 (412) 542 4176 (international)
Conference ID 10103759
To listen live online
To download the materials
The earnings press release and a detailed financial supplement will also be published on Aspenâs website at www.aspen.co.
To listen later
A replay of the call will be available approximately two hours after the end of the live call for 14 days via phone. To listen to the replay by phone please dial:
+1 (877) 344 7529 (US toll free) or
+1 (412) 317 0088 (international)
Replay ID 10103759
The recording will be also available at www.aspen.co on the Event Calendar page within the Investor Relations section.
|
||||||||
Summary consolidated balance sheet (unaudited) |
||||||||
$ in millions, except per share data |
||||||||
 | ||||||||
 |
As at |
 |
As at |
|||||
|
|
|||||||
2017 |
2016 |
|||||||
 | ||||||||
ASSETS | ||||||||
Total investments | $ | 7,996.1 | $ |
7,900.3 |
 |
|||
Cash and cash equivalents | 873.1 | 1,273.8 | ||||||
Reinsurance recoverables | 1,040.6 | 815.9 | ||||||
Premiums receivable | 1,557.8 | 1,399.4 | ||||||
Other assets | 777.1 | Â | 700.7 | Â | ||||
Total assets | $ | 12,244.7 | Â | $ | 12,090.1 | Â | ||
 | ||||||||
LIABILITIES | ||||||||
Losses and loss adjustment expenses | $ | 5,365.9 | $ | 5,319.9 | ||||
Unearned premiums | 1,891.8 | 1,618.6 | ||||||
Other payables | 733.0 | 839.0 | ||||||
|
110.2 | 115.0 | ||||||
Long-term debt | 549.4 | Â | 549.3 | Â | ||||
Total liabilities | $ | 8,650.3 | $ | 8,441.8 | ||||
 | ||||||||
SHAREHOLDERSâ EQUITY | ||||||||
Total shareholdersâ equity | 3,594.4 | Â | 3,648.3 | Â | ||||
Total liabilities and shareholdersâ equity | $ | 12,244.7 | Â | $ | 12,090.1 | Â | ||
 | ||||||||
Book value per share | $ | 48.79 | $ | 47.68 | ||||
Diluted book value per share (treasury stock method) | $ | 47.89 | Â | $ | 46.72 | Â | ||
 |
|
||||||||
Summary consolidated statement of income (unaudited) |
||||||||
$ in millions, except ratios |
||||||||
 | ||||||||
 | Three Months Ended | |||||||
|
 | |
||||||
UNDERWRITING REVENUES | ||||||||
Gross written premiums | $ | 998.0 | $ | 975.7 | ||||
Premiums ceded | (311.8 | ) | (176.0 | ) | ||||
Net written premiums | 686.2 | 799.7 | ||||||
Change in unearned premiums | (105.1 | ) | (136.6 | ) | ||||
Net earned premiums | 581.1 | Â | 663.1 | Â | ||||
UNDERWRITING EXPENSES | ||||||||
Losses and loss adjustment expenses | 328.2 | 357.4 | ||||||
Amortization of deferred policy acquisition costs | 113.7 | 130.2 | ||||||
General, administrative and corporate expenses | 119.1 | Â | 119.8 | Â | ||||
Total underwriting expenses | 561.0 | Â | 607.4 | Â | ||||
 |  | |||||||
Underwriting income including corporate expenses | 20.1 | Â | 55.7 | Â | ||||
 | ||||||||
Net investment income | 47.7 | 49.5 | ||||||
Interest expense | (7.4 | ) | (7.4 | ) | ||||
Other expenses | 0.7 | Â | (3.0 | ) | ||||
Total other revenue | 41.0 | Â | 39.1 | Â | ||||
 | ||||||||
Amortization and non-recurring expenses | (2.2 | ) | â | |||||
Net realized and unrealized exchange (losses) | (5.8 | ) | (20.1 | ) | ||||
Net realized and unrealized investment gains | 46.2 | Â | 42.2 | Â | ||||
INCOME BEFORE TAX | 99.3 | 116.9 | ||||||
Income tax expense | (2.8 | ) | (2.5 | ) | ||||
NET INCOME AFTER TAX | 96.5 | 114.4 | ||||||
Dividends paid on ordinary shares | (13.2 | ) | (12.8 | ) | ||||
Dividends paid on preference shares | (10.5 | ) | (9.5 | ) | ||||
Dividends paid to non-controlling interest | â | â | ||||||
Preference share redemption costs | (2.4 | ) | â | |||||
Proportion due to non-controlling interest | (0.1 | ) | 0.2 | Â | ||||
Retained income | $ | 70.3 | Â | $ | 92.3 | Â | ||
 | ||||||||
Loss ratio | 56.5 | % | 53.9 | % | ||||
Policy acquisition expense ratio | 19.6 | % | 19.6 | % | ||||
General, administrative and corporate expense ratio | 20.9 | % | 18.1 | % | ||||
General, administrative and corporate expense ratio (excluding amortization and non-recurring expenses) | 20.5 | % | 18.1 | % | ||||
Expense ratio | 40.5 | % | 37.7 | % | ||||
Expense ratio (excluding amortization and non-recurring expenses) | 40.1 | % | 37.7 | % | ||||
Combined ratio | 97.0 | % | 91.6 | % | ||||
Combined ratio (excluding amortization and non-recurring expenses) | 96.6 | % | 91.6 | % | ||||
 |
|
||||||||
Operating income reconciliation (unaudited) |
||||||||
$ in millions, except per share amounts |
||||||||
 | ||||||||
 | Three Months Ended | |||||||
|
 |
|
||||||
(in US$ millions except where stated) |
2017 |
2016 |
||||||
 | ||||||||
Net income as reported | $ | 96.5 | $ | 114.4 | ||||
Change in redemption value of preference shares | (2.4 | ) | â | |||||
Net change attributable to non-controlling interest | (0.1 | ) | 0.2 | |||||
Preference share dividends | (10.5 | ) | (9.5 | ) | ||||
Net income available to ordinary shareholders | 83.5 | 105.1 | ||||||
Add (deduct) after tax income: | ||||||||
Net foreign exchange losses | 5.1 | 16.9 | ||||||
Net realized (gains) on investments | (43.8 | ) | (41.4 | ) | ||||
Change in redemption value of preference shares | 2.4 | â | ||||||
Amortization and non-recurring expenses | 2.0 | Â | â | Â | ||||
Operating income after tax available to ordinary shareholders | 49.2 | 80.6 | ||||||
Tax expense on operating income | 1.3 | Â | 4.9 | Â | ||||
Operating income before tax available to ordinary shareholders | $ | 50.5 | Â | $ | 85.5 | Â | ||
 | ||||||||
Basic earnings per ordinary share | ||||||||
Net income adjusted for preference share dividends and non-controlling interest | $ | 1.39 | $ | 1.73 | ||||
Add (deduct) after tax income: | ||||||||
Net foreign exchange losses | 0.09 | 0.28 | ||||||
Net realized (gains) on investments | (0.73 | ) | (0.68 | ) | ||||
Change in redemption value of preference shares | 0.04 | â | ||||||
Amortization and non-recurring expenses | 0.03 | Â | â | Â | ||||
Operating income adjusted for preference shares dividends and non-controlling interest | $ | 0.82 | Â | $ | 1.33 | Â | ||
 | ||||||||
Diluted earnings per ordinary share | ||||||||
Net income adjusted for preference share dividends and non-controlling interest | $ | 1.36 | $ | 1.68 | ||||
Add (deduct) after tax income: | ||||||||
Net foreign exchange losses | 0.08 | 0.27 | ||||||
Net realized (gains) on investments | (0.72 | ) | (0.66 | ) | ||||
Change in redemption value of preference shares | 0.04 | â | ||||||
Amortization and non-recurring expenses | 0.03 | Â | â | Â | ||||
Operating income adjusted for preference shares dividends and non-controlling interest | $ | 0.79 | Â | $ | 1.29 | Â | ||
 |
|
||||||||
Summary consolidated financial data (unaudited) |
||||||||
$ in millions, except number of shares |
||||||||
 | ||||||||
 | Three Months Ended | |||||||
|
 |
|
||||||
2017 |
 |
2016 |
||||||
 | ||||||||
Basic earnings per ordinary share | ||||||||
Net income adjusted for preference share dividend and non-controlling interest | $ | 1.39 |
$ |
1.73 |
 |
|||
Operating income adjusted for preference share dividend and non-controlling interest | $ | 0.82 | $ | 1.33 | ||||
Diluted earnings per ordinary share | ||||||||
Net income adjusted for preference share dividend and non-controlling interest | $ | 1.36 | $ | 1.68 | ||||
Operating income adjusted for preference share dividend and non-controlling interest | $ | 0.79 | $ | 1.29 | ||||
 | ||||||||
Weighted average number of ordinary shares outstanding (in millions) | 59.863 | 60.868 | ||||||
 | ||||||||
Weighted average number of ordinary shares outstanding and dilutive potential ordinary shares (in millions) | 61.197 | 62.484 | ||||||
 | ||||||||
Book value per ordinary share | $ | 48.79 | $ | 49.45 | ||||
Diluted book value per ordinary share (treasury stock method) | $ | 47.89 | $ | 48.22 | ||||
 | ||||||||
Ordinary shares outstanding at end of the period (in millions) | 59.988 | 60.675 | ||||||
 | ||||||||
Ordinary shares outstanding and dilutive potential ordinary shares at end of the period (treasury stock method) (in millions) | 61.107 | 62.213 | ||||||
 |
|
||||||||||||||||||||||||
Summary consolidated segment information (unaudited) |
||||||||||||||||||||||||
$ in millions, except ratios |
||||||||||||||||||||||||
 | ||||||||||||||||||||||||
 | Three Months Ended |
 | Three Months Ended |
|||||||||||||||||||||
Reinsurance | Â | Insurance | Â | Total | Reinsurance | Â | Insurance | Â | Total | |||||||||||||||
 |  |  |  | |||||||||||||||||||||
Gross written premiums | $ | 565.3 | $ | 432.7 | $ | 998.0 | $ | 517.6 | $ | 458.1 | $ | 975.7 | ||||||||||||
Net written premiums | 448.2 | 238.0 | 686.2 | 449.5 | 350.2 | 799.7 | ||||||||||||||||||
Gross earned premiums | 327.6 | 423.7 | 751.3 | 306.8 | 445.6 | 752.4 | ||||||||||||||||||
Net earned premiums | 277.5 | 303.6 | 581.1 | 280.3 | 382.8 | 663.1 | ||||||||||||||||||
Losses and loss adjustment expenses | 143.1 | 185.1 | 328.2 | 134.5 | 222.9 | 357.4 | ||||||||||||||||||
Amortization of deferred policy acquisition expenses | 59.5 | 54.2 | 113.7 | 59.4 | 70.8 | 130.2 | ||||||||||||||||||
General and administrative expenses | 43.9 | Â | Â | 61.8 | Â | Â | 105.7 | Â | 44.1 | Â | Â | 58.6 | Â | Â | 102.7 | Â | ||||||||
Underwriting income | $ | 31.0 | Â | Â | $ | 2.5 | Â | $ | 33.5 | $ | 42.3 | Â | Â | $ | 30.5 | Â | $ | 72.8 | ||||||
 | ||||||||||||||||||||||||
Net investment income | 47.7 | 49.5 | ||||||||||||||||||||||
Net realized and unrealized investment gains (1) | 46.2 | 42.2 | ||||||||||||||||||||||
Corporate expenses | (13.4 | ) | (17.1 | ) | ||||||||||||||||||||
Amortization and non-recurring expenses | (2.2 | ) | â | |||||||||||||||||||||
Other expenses (2) | 0.7 | (3.0 | ) | |||||||||||||||||||||
Interest expense | (7.4 | ) | (7.4 | ) | ||||||||||||||||||||
Net realized and unrealized foreign exchange (losses) (3) | (5.8 | ) | (20.1 | ) | ||||||||||||||||||||
Income before tax | $ | 99.3 | $ | 116.9 | ||||||||||||||||||||
Income tax expense | (2.8 | ) | (2.5 | ) | ||||||||||||||||||||
Net income | $ | 96.5 | Â | $ | 114.4 | Â | ||||||||||||||||||
 | ||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||
Loss ratio | 51.6 | % | 61.0 | % | 56.5 | % | 48.0 | % | 58.2 | % | 53.9 | % | ||||||||||||
Policy acquisition expense ratio | 21.4 | % | 17.9 | % | 19.6 | % | 21.2 | % | 18.5 | % | 19.6 | % | ||||||||||||
General and administrative expense ratio (4) | 15.8 | % | 20.4 | % | 20.9 | % | 15.7 | % | 15.3 | % | 18.1 | % | ||||||||||||
General and administrative expense ratio (excluding amortization and non-recurring expenses) (4) | 15.8 | % | 20.4 | % | 20.5 | % | 15.7 | % | 15.3 | % | 18.1 | % | ||||||||||||
Expense ratio | 37.2 | % | 38.3 | % | 40.5 | % | 36.9 | % | 33.8 | % | 37.7 | % | ||||||||||||
Expense ratio (excluding amortization and non-recurring expenses) | 37.2 | % | 38.3 | % | 40.1 | % | 36.9 | % | 33.8 | % | 37.7 | % | ||||||||||||
Combined ratio | 88.8 | % | 99.3 | % | 97.0 | % | 84.9 | % | 92.0 | % | 91.6 | % | ||||||||||||
Combined ratio (excluding amortization and non-recurring expenses) | 88.8 | % | 99.3 | % | 96.6 | % | 84.9 | % | 92.0 | % | 91.6 | % | ||||||||||||
Accident Year Ex-cat Loss Ratio | ||||||||||||||||||||||||
Loss ratio | 51.6 | % | 61.0 | % | 56.5 | % | 48.0 | % | 58.2 | % | 53.9 | % | ||||||||||||
Prior year loss development | 7.6 | % | 1.6 | % | 4.5 | % | 6.5 | % | 0.9 | % | 3.3 | % | ||||||||||||
Catastrophe losses | (8.9 | )% | (1.5 | )% | (5.0 | )% | (3.8 | )% | (2.1 | )% | (2.8 | )% | ||||||||||||
Accident year ex-cat loss ratio | 50.3 | % | 61.1 | % | 56.0 | % | 50.7 | % | 57.0 | % | 54.4 | % |
(1) | Â |
Includes realized and unrealized capital gains and losses and realized and unrealized gains and losses on interest rate swaps |
(2) |
Other expenses in the first quarter of 2017 and first quarter of 2016 included |
|
(3) |
Includes realized and unrealized foreign exchange gains and losses and realized and unrealized gains and losses on foreign exchange contracts |
|
(4) |
The total group general and administrative expense ratio includes the impact from corporate expenses |
|
 |
About
For more information about
(1) Forward-looking Statements Safe Harbor
This press release contains, and Aspenâs earnings conference call will contain, written or oral âforward-looking statementsâ within the meaning of the
All forward-looking statements rely on a number of assumptions, estimates and data concerning future results and events and are subject to a number of uncertainties and other factors, many of which are outside Aspenâs control that could cause actual results to differ materially from such statements.
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements.
In addition, any estimates relating to loss events involve the exercise of considerable judgment and reflect a combination of ground-up evaluations, information available to date from brokers and cedants, market intelligence, initial tentative loss reports and other sources. The actuarial range of reserves and managementâs best estimate represents a distribution from our internal capital model for reserving risk based on our current state of knowledge and explicit and implicit assumptions relating to the incurred pattern of claims, the expected ultimate settlement amount, inflation and dependencies between lines of business. Due to the complexity of factors contributing to losses and the preliminary nature of the information used to prepare estimates, there can be no assurance that Aspenâs ultimate losses will remain within the stated amounts.
Non-GAAP Financial Measures
In presenting Aspenâs results, management has included and discussed certain ânon-GAAP financial measures.â Management believes that these non-GAAP financial measures, which may be defined differently by other companies, better explain Aspenâs results of operations in a manner that allows for a more complete understanding of the underlying trends in Aspenâs business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP. The reconciliation of such non-GAAP financial measures to their respective most directly comparable GAAP financial measure is included in the financial supplement or this release. Aspenâs financial supplement and first quarter 2017 earnings press release, which were filed with the
Annualized Operating Return on Average Equity (âOperating ROEâ) is a non-GAAP financial measure. Operating ROE is calculated using operating income, as defined below, and average equity is calculated as the arithmetic average on a monthly basis for the stated periods of shareholdersâ equity excluding the aggregate value of the liquidation preferences of our preference shares net of issuance costs and the total amount of non-controlling interest.
Operating Income is a non-GAAP financial measure. Operating income is an internal performance measure used by
Diluted Book Value per Ordinary Share is not a non-GAAP financial measure.
Diluted Operating Earnings per Share and Basic Operating Earnings per Share are non-GAAP financial measures.
Accident Year Loss Ratio Excluding Catastrophes is a non-GAAP financial measure. Aspen believes that the presentation of loss ratios excluding catastrophes and prior year reserve movements supports meaningful comparison from period to period of the underlying performance of the business. Accident year loss ratios excluding catastrophes are calculated by dividing net losses excluding catastrophe losses, net expenses and prior year reserve movements by net earned premiums excluding catastrophe-related reinstatement premiums. Aspen has defined catastrophe losses in the first quarter of 2017 as losses associated predominantly with a tornado in
View source version on businesswire.com: http://www.businesswire.com/news/home/20170426006664/en/
Investors
Senior Vice President, Investor Relations
[email protected]
or
Media
Group Head of Communications
[email protected]
or
International -
[email protected]
+44-20-7638-9571
or
Source:
CNO Financial Group Reports First Quarter 2017 Results
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News