O’Kane: Aspen Q4 2017 losses below acceptable

08-02-2018

Aspen has reported a net loss after tax of $184.9 million and an operating loss after tax of $178.1 million for the fourth quarter of 2017.

"Aspen's fourth quarter 2017 results were well below acceptable levels," said Chris O’Kane, chief executive officer.  "While some of the losses we reported arose from abnormally high natural catastrophe activity, we recognise 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 realising the benefits to our expense ratio from the successful implementation of our operational effectiveness and efficiency program."

The company reported gross written premiums of $688.3 million in the fourth quarter of 2017, an increase of 13.6 percent compared with $606.1 million in the fourth quarter of 2016.

Gross written insurance premiums came to $472.2 million, an increase of 15.5 percent compared with $409.0 million in the fourth quarter of 2016, due to growth in all sub-segments.

Gross written reinsurance premiums totalled $216.1 million, an increase of 9.6 percent 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 were $340.2 million in the fourth quarter of 2017, a decrease of 21.0 percent 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 percent compared with 71.1 percent in the fourth quarter of 2016.

Net written insurance premiums were $187.5 million, a decrease of 19.3 percent 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 percent compared with 56.8 percent in the fourth quarter of 2016.

Net written reinsurance premiums came to $152.7 million, a decrease of 23.0 percent 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.

The company also reported 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, totalled $54.6 million in the fourth quarter of 2016.

Aspen’s insurance segment reported pre-tax catastrophe losses of $2.4 million, 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 favourable development related primarily to other weather-related events in the US. Pre-tax catastrophe losses, net of reinsurance recoveries, totalled $17.0 million, in the fourth quarter of 2016.

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. In comparison pre-tax catastrophe losses, net of reinsurance recoveries, totalled $37.6 million in the fourth quarter of 2016.

Aspen, insurance, reinsurance, Q4, 2017, losses, wildfires, catastrophes, premiums

Bermuda Re