HAMILTON, Bermuda--(BUSINESS WIRE)--
Aspen Insurance Holdings Limited (“Aspen”) (NYSE:AHL) issued today an
investor presentation detailing the strong progress the Company has made
on its growth strategy and path for delivering further growth in
operating return on equity and shareholder value.
Chris O’Kane, Chief Executive Officer, said: “Aspen is executing on a
clear strategy for delivering superior performance, as evidenced by
strong results across all parts of our business in the first quarter,
with a resulting annualized operating ROE of 14.8%. Aspen is at an
inflection point where the significant investments we have made over the
past several years are now paying off. As a result, we are well
positioned to achieve our 10% operating ROE objective in 2014 and to
deliver on our expectation that 2015 operating ROE will increase in the
order of 100 basis points from 2014.”1
Key points in the presentation include the following:
- Aspen is a leading, diversified specialty insurer and reinsurer, with
$2.7 billion gross written premiums for the twelve months ended March
31, 2014, strong balance sheet and ratings, and keen focus on
shareholder value.
-
The Company has a long-term track record of shareholder value
creation. Aspen has generated over $3 billion in capital over the last
10 years while developing an increasingly diverse mix of business.
- Aspen is successfully executing on its strategic plan to build
shareholder value through optimization of its business portfolio,
capital efficiency, and enhancing investment return.
-
The restructuring of Aspen’s ceded reinsurance and retrocessional
programs is expected to deliver an estimated $25 million benefit to
net income in 2014 and a further $20 million in 2015.2
- Aspen is benefitting from its prior investment in building a U.S.
Specialty insurance platform. After $150 million of investment since
2009, the platform build-out is largely complete and the U.S. business
achieved an underwriting profit in each of the last five quarters. The
Company expects to reach $550 million of net earned premiums in 2015,
resulting in a forecasted G&A ratio of approximately 16% in the U.S.
business, down from 20.6% in 2013.2
-
The Company will continue to benefit from a well-established Lloyds
platform with offerings across a diverse range of risks and
geographies, and a reinsurance business that is an established leader
and positioned for continued profitable growth.
- Aspen has a strong record of proactive capital management, including
the repurchase of $341 million of ordinary shares from January 1, 2013
through March 31, 2014, and the Company expects to continue to
opportunistically repurchase ordinary shares.
-
In its investment portfolio, the Company is constantly evaluating ways
to increase returns within its risk tolerance, including investing a
further $200 million in equities in 2013 and $40 million in 1Q 2014.
The full investor presentation is available on the investor relations
tab of Company’s website at: http://www.aspen.co/Investors-Media/Investor-Relations/Presentations/.
1 As at April 23, 2014. In 2014, ROE guidance assumes a
pre-tax catastrophe load of $185 million, normal loss experience and
given the current interest rate and insurance pricing environment. In
2015, ROE guidance assumes a pretax catastrophe load of $200 million,
normal loss experience, Aspen’s expectations for rising interest rates,
and a less favorable insurance pricing environment. See Safe Harbor
disclosure at end of press release.
2 As at April 23, 2014. See Safe Harbor disclosure at end of
press release.
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 Bermuda, France, Germany, Ireland, Singapore, Switzerland,
the United Kingdom and the United States. For the year ended December
31, 2013, Aspen reported $10.2 billion in total assets, $4.7 billion in
gross reserves, $3.3 billion in shareholders’ equity and $2.6 billion in
gross written premiums. Its operating subsidiaries have been assigned a
rating of “A” (“Strong”) by Standard & Poor’s, an “A” (“Excellent”) by
A.M. Best and an “A2” (“Good”) by Moody’s.
Application of the Safe Harbor of the Private Securities Litigation
Reform Act of 1995
This press release contains written or 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," "estimate," "may,"
"continue," "guidance," “outlook,” “trends,” “future,” “could,”
“target,” 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. Forward-looking statements do not
reflect the potential impact of any future collaboration, acquisition,
merger, disposition, joint venture or investments that Aspen may enter
into or make, and the risks, uncertainties and other factors relating to
such statements might also relate to the counterparty in any such
transaction if entered into or made by Aspen. 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. Aspen believes these factors include, but are not limited
to: 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; 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 and
cyclical changes in the highly competitive insurance and reinsurance
industry; increased competition from existing insurers and reinsurers
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; 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; evolving issues with respect to interpretation of
coverage after major loss events; our ability to adequately model and
price the effect of climate cycles and climate change; any intervening
legislative or governmental action and changing judicial interpretation
and judgements on insurers’ liability to various risks; the
effectiveness of our risk management loss limitation methods, including
our reinsurance purchasing; changes in the total industry losses, or our
share of total industry losses, resulting from past events 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
natural catastrophes or by an unexpected accumulation of attritional
losses; 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; changes in the
availability, cost or quality of reinsurance or retrocessional coverage;
the continuing and uncertain impact of the current depressed lower
growth economic environment in many of the countries in which we
operate; 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 ability to
execute our business plan to enter new markets, introduce new products
and develop new distribution channels, including their integration into
our existing operations; 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 debt crisis; changes in our ability to exercise capital
management initiatives (including our share repurchase program) or to
arrange banking facilities as a result of prevailing market changes or
changes in our financial position; 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; Aspen or Aspen Bermuda Limited
becoming subject to income taxes in the United States or the United
Kingdom; loss of one or more of our senior underwriters or key
personnel; our reliance on information and technology and third party
service providers for our operations and systems; and increased
counterparty risk due to the credit impairment of financial
institutions. 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 as filed with the U.S. Securities and Exchange
Commission on February 20, 2014. 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.
The guidance in this press release relating to 10% Operating ROE in 2014
and with a further 100 basis point increase over 2014 in 2015 is made as
at April 23, 2014. Such guidance assumes for 2014 a pre-tax catastrophe
load of $185 million per annum, normal loss experience and given the
current interest rate and insurance pricing environment and for 2015 a
pre-tax catastrophe load of $200 million, normal loss experience, our
expectations for rising interest rates, and a less favorable insurance
pricing environment. Aspen has identified and described in the
presentation filed today actions and additional underlying assumptions
in each of its three operating return on equity levers – optimization of
the business portfolio, capital efficiency and enhancing investment
returns – to seek to achieve the targeted operating ROE in 2014 and
2015. These forward looking statements are subject to the assumptions,
risks and uncertainties, as discussed above and in the following slides,
which could cause actual results to differ materially from 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 management's best estimate
represents a distribution from our internal capital model for reserving
risk based on our then 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 the
losses and the preliminary nature of the information used to prepare
these estimates, there can be no assurance that Aspen’s ultimate losses
will remain within the stated amounts.
Please visit www.aspen.co
or
Investors
Aspen
Kerry
Calaiaro, Senior Vice President, Investor Relations
+1 (646) 502
1076
Kerry.Calaiaro@aspen.co
or
Aspen
Kathleen
de Guzman, Vice President, Investor Relations
+1 (646) 289 4912
kathleen.deguzman@aspen.co
or
Media
Aspen
Steve
Colton, Head of Communications
+44 20 7184 8337
Steve.Colton@aspen.co
or
North
America – Sard Verbinnen & Co
Paul Scarpetta or Jamie Tully
+1
(212) 687 8080
or
International – Citigate Dewe Rogerson
Patrick
Donovan or Caroline Merrell
+44 20 7638 9571
patrick.donovan@citigatedr.co.uk
caroline.merrell@citigatedr.co.uk
Source: Aspen Insurance Holdings Limited