Aspen net income drops in third quarter

Aspen Insurance’s third quarter net income dropped by 52% to $56.7 million as the company was hit by a drop in underwriting income and a rise in interest expense. 

The Bermuda-based re/insurer said its net income for the first nine months of the year also dropped by 22% to $237.5 million. 

Gross written premiums for the third quarter were $1.11 billion compared to $983 million, while underwriting income dropped to $33 million compared to $47.9 million. The combined ratio rose to 95.2% from 92.7%. 

For the first nine months of the year, GWP rose to gross written premiums rose 15.8% to $3.6 billion while underwriting income was $202.8 million, down from $256.3 million in 2023. The combined ratio worsened to 90.2% from 86.8%. 

Aspen CEO Mark Cloutier said the company had performed well in a year “challenged by a number of industry-wide major loss events”. 

He added: “For the nine months ended September 30, we saw gross written premium grow by 15.8% to $3.6 billion (2023: $3.1 billion), demonstrating the attractiveness of our platform and the relevance of our business to clients and trading partners for both insurance and reinsurance.

“Aspen Capital Markets generated fee income of $112 million, an increase of 22%, while net investment income grew 15.2% to $239 million. The resulting operating income of $288 million represents an increase of 6.5% over the prior year.”

He said: “In a year challenged by a number of industry-wide major loss events, these results are driven by Aspen’s expert and disciplined underwriting, consistent investment performance and a growing contribution from Aspen Capital Markets, resulting in an annualised return on average equity of 17.6% and an adjusted combined operating ratio of 88.2%.” 

Cloutier said the company was positioned to achieve sustainable growth and consistent returns. 

“Looking forward, we believe we have the earnings engines , culture, market standing, and risk management that positions us very well to continue to deliver much needed solutions to our customers and trading partners, while also achieving sustainable growth and consistent returns for our shareholders across a broad spectrum of industry loss event sets and cycles,” he said. 

“In the aftermath of Hurricanes Helene and Milton, our thoughts are with the communities affected, and we remain committed to playing our part in the recovery and rebuild. 

As a result of our careful and balanced approach to managing our risk portfolio, Aspen’s exposure to Hurricanes Helene and Milton are limited and fall within expectations. Hurricane Milton, net of reinsurance and reinstatement premiums, is expected to generate claims in the range of $40-$60 million, based on our modelled loss projections and exposure analysis, at an industry loss estimate of $30 billion, and will be included in the Company’s fourth quarter results.”

Net investment income edged up to $79.6 million from $77.9 million in the third quarter and from $207 million to $238.9 million for the first nine months of the year. 

The company recorded a net realised and unrealised profit of $6.1 million compared to a loss of $1.8 billion in 2023. 

The company’s reinsurance segment recorded an underwriting loss of $200,000 compared to a profit of $52.5 million in 2023, as gross written premiums rose to $416.2 million from $367.5 million. Net earned premiums  edged up to $293.5 million from $291.8 million but losses rose to $208.6 million from $154.7 million.  

The segment’s combined ratio increased to 100.1% from 82%. 

The insurance segment turned a $33.2 million profit compared to a loss of $4.6 million in 2023, as gross written premiums rose to $700 million from $615 million and losses dropped from $276 million to $266 million. The combined ratio improved from 101.2% to 91.8%. 

For the nine-month period, the reinsurance underwriting profit was $100.1 million compared to $163.2 million while the combined ratio rose from 81.1% to 89.2%. The insurance underwriting profit improved from $93.1 million to $102.7 million while the combined ratio improved to 91% from 91.4%. 

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