Aspen Reports Results for the Fourth Quarter and Twelve Months Ended December 31, 2017

HAMILTON, Bermuda--(BUSINESS WIRE)-- Aspen Insurance Holdings Limited (“Aspen”) (NYSE: AHL) reported today a net loss after tax of $(184.9) million, or $(3.25) per diluted ordinary share, and an operating loss after tax of $(178.1) million, or $(3.14) per diluted ordinary share, for the fourth quarter of 2017.

Chris O’Kane, Chief Executive Officer, commented: “Aspen's fourth quarter 2017 results were well below acceptable levels. While some of the losses we reported arose from abnormally high natural catastrophe activity, we recognize that despite prior actions to strengthen our Insurance book, we need to take further actions to deliver substantially better results.

“We are redoubling our efforts to reduce volatility and improve Aspen’s profitability. Most of our non-natural catastrophe losses were concentrated in a limited number of lines within Aspen Insurance. We are actively reviewing these lines, and our focus is on taking all actions necessary to mitigate our residual exposure and deliver value to our shareholders. Our loss reserves are strong, and we continue to focus on achieving appropriate loss ratios and realizing the benefits to our expense ratio from the successful implementation of our operational effectiveness and efficiency program.”⁽¹⁾

Operating highlights for the quarter ended December 31, 2017

• Gross written premiums of $688.3 million in the fourth quarter of 2017, an increase of 13.6% compared with $606.1 million in the fourth quarter of 2016
  • Insurance: Gross written premiums of $472.2 million, an increase of 15.5% compared with $409.0 million in the fourth quarter of 2016, due to growth in all sub-segments
  • Reinsurance: Gross written premiums of $216.1 million, an increase of 9.6% compared with $197.1 million in the fourth quarter of 2016, primarily due to growth in the Specialty sub-segment as a result of AgriLogic
• Net written premiums of $340.2 million in the fourth quarter of 2017, a decrease of 21.0% compared with $430.8 million in the fourth quarter of 2016 as Aspen continues to make more efficient use of ceded reinsurance to seek to reduce volatility. The retention ratio in the fourth quarter of 2017 was 49.4% compared with 71.1% in the fourth quarter of 2016
  • Insurance: Net written premiums of $187.5 million, a decrease of 19.3% compared with $232.4 million in the fourth quarter of 2016, primarily due to increased use of quota share reinsurance to seek to reduce volatility. The retention ratio in the fourth quarter of 2017 was 39.7% compared with 56.8% in the fourth quarter of 2016
  • Reinsurance: Net written premiums of $152.7 million, a decrease of 23.0% compared with $198.4 million in the fourth quarter of 2016, primarily due to transitional changes to ceding of premiums following the sale of AgriLogic in the fourth quarter of 2017
• Loss ratio of 106.5% in the fourth quarter of 2017 compared with 63.2% in the fourth quarter of 2016. The loss ratio included pre-tax catastrophe losses of $137.6 million, or 27.0 percentage points, net of reinsurance recoveries and $1.6 million of reinstatement premiums, in the fourth quarter of 2017, including $133.8 million related to wildfires in California. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $54.6 million, or 8.9 percentage points, in the fourth quarter of 2016
  • Insurance: Loss ratio of 95.2% compared with 68.5% in the fourth quarter of 2016. The loss ratio included pre-tax catastrophe losses of $2.4 million, or 1.0 percentage points, net of reinsurance recoveries and a $(0.7) million credit for reinstatement premiums, in the fourth quarter of 2017. Total pre-tax catastrophe losses in the Insurance segment included $10.2 million of losses related to the wildfires in California offset by favorable development related primarily to other weather-related events in the U.S. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $17.0 million, or 5.2 percentage points, in the fourth quarter of 2016
  • Reinsurance: Loss ratio of 116.3% compared with 57.2% in the fourth quarter of 2016. The loss ratio included pre-tax catastrophe losses of $135.2 million, or 49.6 percentage points, net of reinsurance recoveries and $2.3 million of reinstatement premiums, in the fourth quarter of 2017. Total pre-tax catastrophe losses in the Reinsurance segment included $123.6 million related to the wildfires in California while the remainder related primarily to other weather-related events. Pre-tax catastrophe losses, net of reinsurance recoveries, totaled $37.6 million, or 13.2 percentage points, in the fourth quarter of 2016
• Net favorable development on prior year loss reserves of $12.6 million benefited the loss ratio by 2.5 percentage points in the fourth quarter of 2017. Prior year net favorable reserve development of $51.1 million benefited the loss ratio by 8.3 percentage points in the fourth quarter of 2016
  • Insurance: Prior year net favorable reserve development of $1.8 million benefited the loss ratio by 0.8 percentage points in the fourth quarter of 2017. Prior year net favorable development of $16.2 million benefited the loss ratio by 5.0 percentage points in the fourth quarter of 2016
  • Reinsurance: Prior year net favorable reserve development of $10.8 million benefited the loss ratio by 4.0 percentage points in the fourth quarter of 2017. Prior year net favorable development of $34.9 million benefited the loss ratio by 12.2 percentage points in the fourth quarter of 2016
• Accident year loss ratio excluding catastrophes was 82.0% in the fourth quarter of 2017 compared with 62.6% in the fourth quarter of 2016
  • Insurance: Accident year loss ratio excluding catastrophes for the quarter ended December 31, 2017 was 95.0%. This included 25.0 percentage points related to an increased frequency of mid-sized and attritional losses in the fourth quarter of 2017 which totaled $59.3 million, net of reinstatement premiums. The accident year loss ratio excluding catastrophes in the fourth quarter of 2016 was 68.3%
  • Reinsurance: Accident year loss ratio excluding catastrophes for the quarter ended December 31, 2017 was 70.7%. This included 12.2 percentage points related to premium adjustments which reduced net earned premium by $33.5 million. The accident year loss ratio excluding catastrophes in the fourth quarter of 2016 was 56.2%
• Total expense ratio of 46.1% and total expense ratio (excluding amortization and non-recurring expenses) of 41.5% in the fourth quarter of 2017 compared with 44.0% and 43.5%, respectively, in the fourth quarter of 2016
  • The policy acquisition expense ratio was 16.7% in the fourth quarter of 2017 compared with 23.0% in the fourth quarter of 2016
  • General and administrative expenses (excluding amortization and non-recurring expenses) were $126.9 million in the fourth quarter of 2017, compared with $125.5 million in the fourth quarter of 2016. The general and administrative expense ratio (excluding amortization and non-recurring expenses) increased to 24.8% from 20.5% in the fourth quarter of 2016
• Net loss after tax of $(184.9) million, or $(3.25) per diluted ordinary share, in the fourth quarter of 2017 compared with net loss of $(71.5) million, or $(1.41) per diluted ordinary share, in the fourth quarter of 2016. Net income included $14.8 million of net realized and unrealized investment gains in the fourth quarter of 2017 compared with $(58.1) million net realized and unrealized investment losses in the fourth quarter of 2016. Operating loss after tax of $(178.1) million, or $(3.14) per diluted ordinary share, in the fourth quarter of 2017 compared with operating loss of $(7.4) million, or $(0.34) per diluted ordinary share, in the fourth quarter of 2016
• Annualized net income return on average equity of (30.4)% and annualized operating return on average equity of (29.6)% for the quarter ended December 31, 2017 compared with (11.6)% and (2.8)%, respectively, for the fourth quarter of 2016

Operating highlights for the twelve months ended December 31, 2017

• Gross written premiums increased by 6.8% to $3,360.9 million in the full year of 2017 compared with $3,147.0 million in the full year of 2016
• Net written premiums decreased by 14.7% to $2,212.5 million in the full year of 2017 compared with $2,593.7 million in the full year of 2016. The retention ratio in the full year of 2017 was 65.8% compared with 82.4% in the full year of 2016
• Loss ratio of 86.5% for the full year of 2017 compared with 59.8% for the full year of 2016. The loss ratio included $561.9 million, or 24.6 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries and $14.1 million of reinstatement premiums, in the full year of 2017. This compared with $164.4 million, or 6.3 percentage points, of pre-tax catastrophe losses, net of reinsurance recoveries and $2.0 million of reinstatement premiums, in the full year of 2016
• Net favorable development on prior year loss reserves of $105.4 million benefited the loss ratio by 4.6 percentage points in the full year of 2017. In the full year of 2016, net favorable development of $129.3 million benefited the loss ratio by 4.9 percentage points
• Accident year loss ratio excluding catastrophes of 66.5% for the full year of 2017 compared with 58.4% for the full year of 2016
• Total expense ratio of 39.2% and total expense ratio (excluding amortization and non-recurring expenses) of 37.8% for the full year of 2017 compared with 38.7% and 38.3%, respectively, for the full year of 2016, reflecting a decrease in the policy acquisition expense ratio and an increase in the general and administrative expense ratio
• Net loss after tax of $(266.4) million or $(5.22) per diluted ordinary share for the twelve months ended December 31, 2017 compared with net income of $203.4 million, or $2.61 per diluted ordinary share, for the twelve months ended December 31, 2016. Net loss included $120.5 million of net realized and unrealized investment gains in the full year of 2017 compared with $42.1 million in the full year of 2016. Operating loss after tax of $(355.7) million, or $(6.59) per diluted ordinary share, for the twelve months ended December 31, 2017 compared with operating income of $185.9 million, or $2.33 per diluted ordinary share, for the twelve months ended December 31, 2016
• Annualized net income return on average equity of (11.1)% and annualized operating return on average equity of (14.0)% for the full year of 2017 compared with 5.4% and 4.8%, respectively, for the full year of 2016

Investment performance

• Investment income of $47.5 million in the fourth quarter of 2017 compared with $43.2 million in the fourth quarter of 2016
• The total return on Aspen’s aggregate investment portfolio was 0.3% for the three months ended December 31, 2017 and reflects net realized and unrealized gains and losses in both the fixed income and equity portfolios. In the full year of 2017, Aspen's aggregate investment portfolio had a total return of 3.4%
• Aspen’s investment portfolio was comprised primarily of high quality fixed income securities with an average credit quality of “AA-”. The average duration of the fixed income portfolio was 3.9 years as at December 31, 2017 and December 31, 2016
• Book yield on the fixed income portfolio as at December 31, 2017 was 2.56% compared with 2.49% as at December 31, 2016

Capital

• Total shareholders’ equity was $2.9 billion as at December 31, 2017
• Diluted book value per share was $40.10 as at December 31, 2017, down 14.2% from December 31, 2016
• Aspen repurchased 648,941 ordinary shares in 2017 at an average price of $46.23 per ordinary share for a total cost of $30.0 million.
• During 2017, Aspen redeemed Perpetual Non-Cumulative Preference Shares in the aggregate amount of $293.2 million

Operational Effectiveness and Improvement Program

• Aspen recorded $11.1 million of expenses related to its operational effectiveness and improvement program in the fourth quarter of 2017 and $15.2 million in the full year of 2017

January 2018 Reinsurance Renewals

During the January 2018 renewal season, Aspen Re underwrote contracts representing $585.6 million in gross written premiums, a decrease of (0.4)% compared with the prior year. The renewal data does not include premiums related to AgriLogic.

Below is a table reflecting gross written premiums written during the January 2018 renewal season, including new business, by sub-segment:

Note: The January premiums shown in the above table include premiums written under contracts on a proportional basis which are recognized throughout the year to reflect the expected inception of the underlying risks and therefore do not represent Aspen’s reported gross written premiums for each of these periods. Prior year amounts have been conformed to current year presentation.

See “Forward-looking Statements Safe Harbor” below.

Earnings conference call and webcast

Aspen will host a conference call to discuss the results at 8:00 am (ET) on Thursday, February 8, 2018.

To participate in the February 8 conference call by phone
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 10114711

To listen live online
Aspen will provide a live webcast on Aspen’s website at www.aspen.co.

To download the materials
The earnings press release and a detailed financial supplement will also be published on Aspen’s 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 10114711

The webcast will be also available at www.aspen.co on the Event Calendar page within the Investor Relations section.

About Aspen Insurance Holdings Limited

Aspen provides reinsurance and insurance coverage to clients in various domestic and global markets through wholly-owned subsidiaries and offices in Australia, Bermuda, Canada, France, Germany, Ireland, Singapore, Switzerland, the United Arab Emirates, the United Kingdom and the United States. For the year ended December 31, 2017, Aspen reported $12.9 billion in total assets, $6.7 billion in gross reserves, $2.9 billion in total shareholders’ equity and $3.4 billion in gross written premiums. Its operating subsidiaries have been assigned a rating of “A” by Standard & Poor’s Financial Services LLC (“S&P”), an “A” (“Excellent”) by A.M. Best Company Inc. (“A.M. Best”) and an “A2” by Moody’s Investors Service, Inc. (“Moody’s”).

For more information about Aspen, please visit www.aspen.co.

(1) Forward-looking Statements Safe Harbor

This press release contains written, and Aspen’s earnings conference call will contain oral, “forward-looking statements” within the meaning of the U.S. federal securities laws. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “expect,” “intend,” “plan,” “believe,” “do not believe,” “aim,” “project,” “anticipate,” “seek,” “will,” “likely,” “assume,” “estimate,” “may,” “continue,” “guidance,” “objective,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” and similar expressions of a future or forward-looking nature.

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 Aspen’s control that could cause actual results to differ materially from such statements. Aspen believes these factors include, but are not limited to: the actual development of losses and expenses impacting estimates for the Northern and Southern California wildfires that occurred in the fourth quarter of 2017 and Hurricanes Harvey, Irma and Maria and the earthquakes in Mexico that occurred in the third quarter of 2017; the impact of complex and unique causation and coverage issues associated with the attribution of losses to wind or flood damage or other perils such as fire or business interruption relating to such events; potential uncertainties relating to reinsurance recoveries, reinstatement premiums and other factors inherent in loss estimation; our ability to successfully develop and execute the program to create operating and cost efficiencies through focus on improving several of our operational levers; our ability to successfully implement steps to further optimize the business portfolio, ensure capital efficiency and enhance investment returns; the possibility of greater frequency or severity of claims and loss activity, including as a result of natural or man-made (including economic and political risks) catastrophic or material loss events, than our underwriting, reserving, reinsurance purchasing or investment practices have anticipated; the assumptions and uncertainties underlying reserve levels that may be impacted by future payments for settlements of claims and expenses or by other factors causing adverse or favorable development, including our assumptions on inflation costs associated with long-tail casualty business which could differ materially from actual experience; the political, regulatory and economic effects arising from the vote by the U.K. electorate in favor of a U.K. exit from the European Union in the referendum held in June 2016 and resulting negotiations; the reliability of, and changes in assumptions to, natural and man-made catastrophe pricing, accumulation and estimated loss models; decreased demand for our insurance or reinsurance products; cyclical changes in the insurance and reinsurance industry; the models we use to assess our exposure to losses from future catastrophes contain inherent uncertainties and our actual losses may differ significantly from expectations; our capital models may provide materially different indications than actual results; increased competition from existing (re)insurers and from alternative capital providers and insurance-linked funds and collateralized special purpose insurers on the basis of pricing, capacity, coverage terms, new capital, binding authorities to brokers or other factors and the related demand and supply dynamics as contracts come up for renewal; our ability to execute our business plan to enter new markets, introduce new products and teams and develop new distribution channels, including their integration into our existing operations; our acquisition strategy; changes in market conditions in the agriculture industry, which may vary depending upon demand for agricultural products, weather, commodity prices, natural disasters, and changes in legislation and policies related to agricultural products and producers; termination of, or changes in, the terms of the U.S. Federal Multiple Peril Crop Insurance Program or the U.S. Farm Bill, including modifications to the Standard Reinsurance Agreement put in place by the Risk Management Agency of the U.S. Department of Agriculture; the recent consolidation in the (re)insurance industry; loss of one or more of our senior underwriters or key personnel; our ability to exercise capital management initiatives, including capital available to pursue our share repurchase program at various levels or to declare dividends, or to arrange banking facilities as a result of prevailing market conditions, the level of catastrophes or other losses or changes in our financial results; changes in general economic conditions, including inflation, deflation, foreign currency exchange rates, interest rates and other factors that could affect our financial results; the risk of a material decline in the value or liquidity of all or parts of our investment portfolio; the risks associated with the management of capital on behalf of investors; a failure in our operational systems or infrastructure or those of third parties, including those caused by security breaches or cyber attacks; evolving issues with respect to interpretation of coverage after major loss events; our ability to adequately model and price the effects of climate cycles and climate change; any intervening legislative or governmental action and changing judicial interpretation and judgments on insurers’ liability to various risks; the risks related to litigation; the effectiveness of our risk management loss limitation methods, including our reinsurance purchasing; changes in the availability, cost or quality of reinsurance or retrocessional coverage; changes in the total industry losses or our share of total industry losses resulting from events, such as catastrophes, that have occurred in prior years or may occur and, with respect to such events, our reliance on loss reports received from cedants and loss adjustors, our reliance on industry loss estimates and those generated by modeling techniques, changes in rulings on flood damage or other exclusions as a result of prevailing lawsuits and case law; the impact of one or more large losses from events other than catastrophes or by an unexpected accumulation of attritional losses and deterioration in loss estimates; the impact of acts of terrorism, acts of war and related legislation; any changes in our reinsurers’ credit quality and the amount and timing of reinsurance recoverables; the continuing and uncertain impact of the current depressed lower growth economic environment in many of the countries in which we operate; our reliance on information and technology and third-party service providers for our operations and systems; the level of inflation in repair costs due to limited availability of labor and materials after catastrophes; a decline in our operating subsidiaries’ ratings with S&P, A.M. Best or Moody’s; the failure of our reinsurers, policyholders, brokers or other intermediaries to honor their payment obligations; our reliance on the assessment and pricing of individual risks by third parties; our dependence on a few brokers for a large portion of our revenues; the persistence of heightened financial risks, including excess sovereign debt, the banking system and the Eurozone crisis; changes in the U.S. federal income tax laws or regulations applicable to insurance companies and the manner in which such laws and regulations are interpreted; the impact of U.S. tax reform on Aspen’s business, investments, results and assets, including (i) changes to the valuation of deferred tax assets and liabilities, (ii) the impact on intra-group reinsurance transactions, (iii) that the costs associated with U.S. tax reform may be greater than initially expected, and (iv) the risk that technical corrections, regulations and supplemental legislation and future interpretations or applications thereof or other changes may be issued in the future, including the rules affecting the valuation of deferred tax assets; changes in government regulations or tax laws in jurisdictions where we conduct business; changes in accounting principles or policies or in the application of such accounting principles or policies; increased counterparty risk due to the credit impairment of financial institutions; and Aspen or Aspen Bermuda Limited becoming subject to income taxes in the United States or the United Kingdom. For a more detailed description of these uncertainties and other factors, please see the “Risk Factors” section in Aspen’s Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 as filed with the U.S. Securities and Exchange Commission (the “SEC”). Aspen undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

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 management’s 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 Aspen’s ultimate losses will remain within the stated amounts.

Furthermore, seismic events, such as the Mexico earthquakes, generally have longer development periods than windstorm events, which may be amplified in this instance by dynamics such as the risk of geological liquefaction and the potential for uncertainty in claims adjudication. In respect of Hurricane Maria, recovery efforts are ongoing, with power outages, infrastructure damage, communications disruptions and other issues complicating loss mitigation and estimation. Accordingly, our actual net negative impact from all events noted above, both individually and in the aggregate, will vary from these estimates, perhaps materially.

Non-GAAP Financial Measures

In presenting Aspen’s results, management has included and discussed certain “non-GAAP financial measures.” Management believes these non-GAAP financial measures, which may be defined differently by other companies, better explain Aspen’s results of operations in a manner that allows for a more complete understanding of the underlying trends in Aspen’s 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. Aspen’s financial supplement, which was filed with the SEC on Form 8-K on February 7, 2018, can be obtained from the Investor Relations section of Aspen’s website at www.aspen.co.

Annualized Operating Return on Average Equity (“Operating ROE”) 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 shareholders’ 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. Aspen presents Operating ROE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. Please see page 22 of Aspen’s financial supplement for a reconciliation of net income to operating income and page 7 for a reconciliation of average shareholders’ equity to average ordinary shareholders’ equity.

Operating Income is a non-GAAP financial measure. Operating income is an internal performance measure used by Aspen in the management of its operations and represents after-tax operational results excluding, as applicable, after-tax net realized and unrealized gains or losses, including net realized and unrealized gains and losses on interest rate swaps, after-tax net foreign exchange gains or losses, including net realized and unrealized gains and losses from foreign exchange contracts, net realized gains or losses on investments, amortization of intangible assets and certain non-recurring income and expenses, including expenses associated with the Company's operational effectiveness and efficiency program. Operating income in the year ended December 31, 2017 excluded the issue costs associated with the redemption of Aspen’s 7.401% Perpetual Non-Cumulative Preference Shares and 7.250% Perpetual Non-Cumulative Preference Shares.

Aspen excludes the items above from its calculation of operating income because they are either not expected to recur and therefore are not reflective of underlying performance or the amount of these gains or losses is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. Aspen believes these amounts are largely independent of its business and underwriting process and including them would distort the analysis of trends in its operations. In addition to presenting net income determined in accordance with GAAP, Aspen believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Aspen’s results of operations in a manner similar to how management analyzes Aspen’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. Please see page 22 of Aspen’s financial supplement for a reconciliation of net income to operating income.

Diluted Book Value per Ordinary Share is not a non-GAAP financial measure. Aspen has included diluted book value per ordinary share as it illustrates the effect on basic book value per share of dilutive securities thereby providing a better benchmark for comparison with other companies. Diluted book value per share is calculated using the treasury stock method, defined on page 21 of Aspen’s financial supplement.

Diluted Operating Earnings per Share and Basic Operating Earnings per Share are non-GAAP financial measures. Aspen believes that the presentation of diluted operating earnings per share and basic operating earnings per share supports meaningful comparison from period to period and the analysis of normal business operations. Diluted operating earnings per share and basic operating earnings per share are calculated by dividing operating income by the diluted or basic weighted average number of shares outstanding for the period. Please see page 22 of Aspen’s financial supplement for a reconciliation of basic earnings per share to diluted and basic operating earnings per share.

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 full year of 2017 as losses associated with Hurricanes Harvey, Irma and Maria, the earthquakes in Mexico, a tornado in Mississippi, Cyclone Debbie in Australia, wildfires in California and other U.S. weather-related events. Catastrophe losses in the full year of 2016 were defined as losses associated with wildfires in North America, Hurricane Matthew and other weather-related events in the U.S., a hailstorm in the Netherlands and several earthquakes. Please see pages 12 and 13 of this release for a reconciliation of loss ratios to accident year loss ratios excluding catastrophes.

Retention Ratio is a non-GAAP financial measure. It is calculated by dividing net written premium by gross written premium.

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Aspen

Investors

Mark Jones, +1-646-289 4945

Senior Vice President, Investor Relations

[email protected]

or

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Steve Colton, +44 20 7184 8337

Group Head of Communications

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Source: Aspen Insurance Holdings Limited