Exhibit 99.1
Aspen reports results for the quarter and full year ended December 31, 2011
Hamilton, Bermuda, February 6, 2012 — Aspen Insurance Holdings Limited (“Aspen” or the
“Company”) (NYSE: AHL) today reported net income after tax of $13.5 million, or $0.11 per
diluted share, for the fourth quarter of 2011. For the full year 2011, net loss after tax was
$105.8 million, or $1.82 per diluted share. Performance in Aspen’s insurance segment was
strong, a result of significant growth in certain niche areas and
improvement across a number of lines. Reinsurance results were materially impacted
by a high frequency and severity of natural catastrophes in 2011, which were partially offset
by a good performance in casualty and specialty reinsurance lines.
Operating highlights for the quarter ended December 31, 2011
| • | Strong performance in the insurance segment with an improvement in the loss ratio to 58.0% in the fourth quarter of 2011 from 77.4% in the fourth quarter of 2010 |
| • | Net earnings per diluted share of $0.11 for the quarter ended December 31, 2011 compared with $1.12 in the fourth quarter of 2010 |
| • | Operating earnings per diluted share of $0.01 for the quarter ended December 31, 2011 compared with operating earnings per diluted share of $1.02 in the fourth quarter of 2010 |
| • | Diluted book value per share of $38.43, down 1.2% from the fourth quarter of 2010 and up 0.4% from September 30, 2011 |
| • | Annualized net income return on average equity of 1.2% for the fourth quarter of 2011 and annualized operating return on average equity of nil |
| • | Gross written premiums of $458.7 million for the fourth quarter of 2011, compared with $412.8 million for the fourth quarter of 2010 |
| • | Combined ratio of 114.1%, or 89.2% excluding catastrophe losses for the quarter ended December 31, 2011 compared with a combined ratio of 95.3% or 88.3% excluding catastrophe losses for the fourth quarter of 2010 |
| • | Prior year net reserve releases of $22.0 million for the quarter ended December 31, 2011 compared with $12.6 million of net reserve releases in the fourth quarter of 2010 |
Financial highlights, quarter ended December 31, 2011 (unaudited)
$ in millions, except per share amounts and percentages
| Q4 2011 | Q4 2010 | Change | ||||||||||
Gross written premiums |
$ | 458.7 | $ | 412.8 | 11.1 | % | ||||||
Net earned premiums |
$ | 489.4 | $ | 499.7 | (2.1 | )% | ||||||
Net investment income |
$ | 54.2 | $ | 57.0 | (4.9 | )% | ||||||
Operating income after tax |
$ | 6.1 | $ | 75.8 | (92.0 | )% | ||||||
Net income after tax |
$ | 13.5 | $ | 92.7 | (85.4 | )% | ||||||
Diluted net income per share |
$ | 0.11 | $ | 1.12 | (90.2 | )% | ||||||
Diluted operating earnings per share |
$ | 0.01 | $ | 1.02 | (99.0 | )% | ||||||
Annualized net income return on equity |
1.2 | % | 13.2 | % | ||||||||
Annualized operating return on equity |
— | % | 10.8 | % | ||||||||
Combined ratio |
114.1 | % | 95.3 | % | ||||||||
Book value per ordinary share |
$ | 39.89 | $ | 40.96 | (2.6 | )% | ||||||
Diluted book value per ordinary share |
$ | 38.43 | $ | 38.90 | (1.2 | )% | ||||||
Financial highlights, full year ended December 31, 2011 (unaudited)
$ in millions, except per share amounts and percentages
| 2011 | 2010 | Change | ||||||||||
Gross written premiums |
$ | 2,207.8 | $ | 2,076.8 | 6.3 | % | ||||||
Net earned premiums |
$ | 1,888.5 | $ | 1,898.9 | (0.5 | )% | ||||||
Net investment income |
$ | 225.6 | $ | 232.0 | (2.8 | )% | ||||||
Operating income/(loss) after tax |
$ | (66.1 | ) | $ | 258.9 | (125.5 | )% | |||||
Net income/(loss) after tax |
$ | (105.8 | ) | $ | 312.7 | (133.8 | )% | |||||
Diluted net income/(loss) per share |
$ | (1.82 | ) | $ | 3.62 | (150.3 | )% | |||||
Diluted operating earnings/(loss) per share |
$ | (1.26 | ) | $ | 2.94 | (142.9 | )% | |||||
Annualized net income/(loss) return on equity |
(5.3 | )% | 11.2 | % | ||||||||
Annualized operating return/(loss) on equity |
(3.7 | )% | 9.1 | % | ||||||||
Combined ratio |
115.6 | % | 96.7 | % | ||||||||
2
Chris O’Kane, Chief Executive Officer commented, “A combination of natural catastrophes and
global economic uncertainty made 2011 a very difficult year for our industry. Aspen reported an
operating loss of $1.26 per share and a book value of $38.43 per share for 2011, down 1.2% from
year end 2010.
Whilst the performance of our catastrophe exposed reinsurance lines has been impacted by the
near record year for natural catastrophes, both our casualty and specialty reinsurance units
generated good results in a challenging environment. In our Insurance segment our loss
ratios were good to excellent in most classes. The recent January renewals saw attractive rate
increases in certain property catastrophe reinsurance lines and encouraging signs in many
commercial insurance lines. Our strong capital base and diversified model leave us well
positioned to benefit from the improving pricing trend and the investment we have made in our
franchise.”
Consolidated highlights
Net income for the fourth quarter included $101.5 million, or $1.39 per diluted share, of net
losses after tax resulting from the natural catastrophes occurring during the fourth quarter of
2011 and increases to previous 2011 catastrophe estimates.
Net earned premiums were $489.4 million in the fourth quarter of 2011, down 2.1% compared with
the fourth quarter of 2010. Aspen reported an underwriting loss of $68.8 million for the fourth
quarter of 2011, with the insurance segment profitable, compared with $23.2 million of
underwriting profit for the fourth quarter of 2010.
For the year ended December 31, 2011, gross written premiums were $2,207.8 million, up
6.3% from 2010, principally in the insurance segment.
The underwriting loss for 2011 was $294.7 million compared with an underwriting profit of $63.1
million in 2010. The combined ratio for 2011 was 115.6%, including $534.3 million (or 28.5
percentage points of net losses, net of reinstatements) from the significant natural
catastrophe losses occurring in 2011 compared with 96.7% for 2010,
which included 9.0 percentage
points of net losses from catastrophes.
Prior year net reserve releases were $92.3 million in 2011, compared with $21.4 million of net
reserve releases in 2010. The accident year loss ratio, excluding the impact of catastrophe
losses, was 58.3% for 2011 compared with 57.7% for 2010.
Segment highlights
Reinsurance
Operating highlights for Aspen’s reinsurance segment for the quarter ended December 31, 2011
include:
| • | Net written premiums of $182.3 million, an increase of 22.8% from the fourth quarter of 2010 |
| • | Combined ratio of 124.0% including 42.7 percentage points of catastrophe losses compared with an 81.6% combined ratio for the fourth quarter of 2010, including 12.1 percentage points of catastrophe losses |
| • | Favorable prior year loss reserve development of $14.6 million compared to $36.1 million in the fourth quarter of 2010 |
3
Operating highlights for Aspen’s reinsurance segment for the year ended December 31, 2011 include:
| • | Net written premiums of $1,098.1 million, a decrease of 1.8% from 2010 due to higher reinsurance purchases |
| • | Combined ratio of 125.4% including 47.5 percentage points of catastrophe losses compared with 88.2% combined ratio for the prior year, including 15.0 percentage points of catastrophe losses |
| • | Favorable prior year loss reserve development of $72.3 million compared to $65.6 million for the year ended December 31, 2010 |
Gross written premiums in the reinsurance segment were $186.3 million in the fourth quarter of
2011, up 21.9% compared with $152.8 million from the 2010 comparable period. This increase was
primarily driven by growth in property lines which reflects a more positive pricing environment
in catastrophe exposed property. Specialty reinsurance including credit and surety lines also
contributed to the growth.
The combined ratio for the quarter of 124.0% included pre-tax losses, net of reinsurance
recoveries and reinstatement premiums, of $121.7 million or 42.7 percentage points from the
Thai flooding that occurred in the fourth quarter of 2011 and changes in estimates for other
2011 events.
The segment underwriting loss for 2011 was $282.5 million compared with an underwriting profit
of $133.6 million for 2010. The combined ratio for 2011 was 125.4%, and included $520.1
million or 47.5 percentage points of pre-tax losses, net of reinsurance and reinstatement
premiums, from the significant natural catastrophe losses in 2011, compared with 88.2% for
2010, which included 15.0 percentage points of catastrophe losses. The accident year combined
ratio, excluding the impact of catastrophe events, was 86.0% compared with 79.4% for 2010. The
increase in the accident year ratio is attributable primarily to the increase in reinsurance
purchases when compared to the prior year.
Insurance
Operating highlights for Aspen’s insurance segment for the quarter ended December 31, 2011
include:
| • | Net written premiums of $248.9 million, an increase of 0.9% from the fourth quarter of 2010 |
| • | Combined ratio of 93.4% compared with 108.8% for the fourth quarter of 2010 |
| • | Favorable prior year loss reserve development of $7.4 million compared to strengthening of $23.5 million in the fourth quarter of 2010 |
Operating highlights for Aspen’s insurance segment for the year ended December 31, 2011
include:
| • | Net written premiums of $831.0 million, an increase of 7.6% from 2010 |
| • | Combined ratio of 95.8% compared with 103.1% for the prior year |
| • | Favorable prior year loss reserve development of $20.0 million compared to strengthening of $44.2 million for the prior year |
Gross written premiums were $272.4 million in the fourth quarter of 2011, up 4.8% compared with
$260.0 million in 2010, with the increase primarily attributable to the property insurance
line.
The underwriting profit for the fourth quarter of 2011 of $13.2 million was a significant improvement
compared to an underwriting loss of $18.3 million for the same period in 2010. This improvement was primarily
attributable to the marine, aviation and transportation line, as well as U.S. property insurance.
4
Gross written premiums were $1,020.3 million for 2011, up 11.6% compared with $914.6 million in
2010.
The underwriting profit for 2011 was $32.5 million compared with an underwriting loss of $23.6
million in 2010. The combined ratio for 2011 was 95.8% compared with 103.1% for 2010. The
accident year loss ratio of 63.6% for the twelve months improved from 69.0% for the prior year.
Investment performance
Net investment income in the fourth quarter of 2011 was $54.2 million compared with $57.0
million in the fourth quarter of 2010. Net realized and unrealized investment gains included in
net income for the quarter were $6.0 million which includes $2.9 million of losses from the
Company’s interest rate swaps. This compares with $19.7 million of net realized and unrealized
gains in the fourth quarter of 2010 which included $9.2 million of gains from the Company’s
interest rate swaps.
Unrealized
gains in the available-for-sale investment portfolio, including
equity securities, at the end of 2011 were $335.8 million. These
gains are primarily due to the prolonged low interest rate
environment associated with expectations of a slower economic
recovery particularly in the U.S. From the end of the third quarter of
2011, these gains increased by $6.1 million, pre-tax.
Book yield on the fixed income portfolio of 3.37% was down 17 basis points when compared to the
third quarter of 2011 and down from 3.70% at the end of the fourth quarter of 2010. The average
credit quality of the portfolio is AA with an average duration of 2.22 years, including the
impact of interest rate swaps.
Tax
In the fourth quarter of 2011, the Company recorded a tax credit of $23.9 million compared with
a tax expense of $3.2 million in the fourth quarter of 2010. This is primarily due to the
geographic distribution of catastrophe losses, adjustments to prior year positions and changes
in U.K. corporation tax rates.
For the full year 2011, the Company recorded a tax credit of $37.2 million compared with a tax
expense of $27.6 million for the full year 2010.
Subsequent Events
The Costa Concordia
cruise liner incident which took place off the
coast of Italy on January 13, 2012 is a complex loss
and there are various factors and uncertainties which will have an impact on the quantum of loss. Aspen has exposure in both its insurance
and reinsurance segments, mainly arising from its marine hull and
marine liability insurance accounts. Aspen expects that its loss from the insurance
business will be contained within its outwards reinsurance program
and that its retained loss will be less than $30 million before reinstatement
premiums. In the reinsurance segment, Aspen’s exposure arises from its specialty
reinsurance account, and losses are expected to be less than 1% of the market loss.
Outlook for 2012
Given current market conditions, the Company anticipates gross written premiums for 2012 to be
$2.3 billion +/- 5%, premiums ceded to be between 10% and 12% of gross earned premiums and the
combined ratio to be in the range of 93% to 98% including a catastrophe load of $190 million
assuming normal loss experience in the year. The Company expects the effective tax rate in
2012 to be in the range of 8% to 12%.
See “Forward-looking Statements Safe Harbor” below.
Earnings conference call and web cast
Aspen will host a conference call to discuss the results at 9.00 am (EST) on Tuesday, February
7, 2012.
To participate in the February 7 conference call by phone
Please call to register at least 10 minutes before the conference call begins, dialing:
+1 (888) 459 5609 (US toll free) or
5
+1 (404) 665 9920 (international)
Conference ID 41345544
Conference ID 41345544
To listen live online
Aspen will provide a live webcast at www.aspen.co
(Investors and Media > Investor Relations > Presentations)
(Investors and Media > Investor Relations > Presentations)
To download the materials
The earnings press release and a detailed financial supplement will also be published on the
web site, along with a brief slide presentation for reference during the call.
To listen later
A replay of the call will be available for 14 days via phone and internet, available two hours
after the end of the live call. To listen to the replay by phone please dial:
+1 (855) 859 2056 (US toll free) or
+1 (404) 537 3406 (international)
Replay ID 41345544
+1 (404) 537 3406 (international)
Replay ID 41345544
The recording will be also available at www.aspen.co
For further information please contact
Investors
Kerry Calaiaro, Senior Vice President, Investor Relations, Aspen
Kerry.Calaiaro@aspen.co
+1 646 502 1076
Kerry.Calaiaro@aspen.co
+1 646 502 1076
Media
Tim Dickenson, Global Head of Communications, Aspen
Tim.Dickenson@aspen.co
+44 20 7184 8034
Tim.Dickenson@aspen.co
+44 20 7184 8034
Europe and Asia — Citigate Dewe Rogerson
Justin Griffiths
Justin.Griffiths@citigatedr.co.uk
+44 20 7638 9571
Justin Griffiths
Justin.Griffiths@citigatedr.co.uk
+44 20 7638 9571
North America — Abernathy MacGregor
Allyson Morris
amv@abmac.com
+1 212 371 5999
Allyson Morris
amv@abmac.com
+1 212 371 5999
6
Aspen Insurance Holdings Limited
Summary consolidated balance sheet (unaudited)
$ in millions, except per share data
Summary consolidated balance sheet (unaudited)
$ in millions, except per share data
| As at | As at | |||||||
| December 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS |
||||||||
Total investments |
$ | 6,335.1 | $ | 6,086.3 | ||||
Cash and cash equivalents |
1,239.1 | 1,179.1 | ||||||
Reinsurance recoverables |
514.4 | 342.3 | ||||||
Premiums receivable |
894.4 | 821.7 | ||||||
Other assets |
501.9 | 402.7 | ||||||
Total assets |
$ | 9,484.9 | $ | 8,832.1 | ||||
LIABILITIES |
||||||||
Losses and loss adjustment expenses |
$ | 4,525.2 | $ | 3,820.5 | ||||
Unearned premiums |
916.1 | 859.0 | ||||||
Other payables |
372.6 | 411.9 | ||||||
Long-term debt |
499.0 | 498.8 | ||||||
Total liabilities |
6,312.9 | 5,590.2 | ||||||
SHAREHOLDERS’ EQUITY |
||||||||
Total shareholders’ equity |
3,172.0 | 3,241.9 | ||||||
Total liabilities and shareholders’ equity |
$ | 9,484.9 | $ | 8,832.1 | ||||
Book value per share |
$ | 39.89 | $ | 40.96 | ||||
Diluted book value per share (treasury stock method) |
$ | 38.43 | $ | 38.90 | ||||
7
Aspen Insurance Holdings Limited
Summary consolidated statement of income (unaudited)
$ in millions, except share, per share data and ratios
Summary consolidated statement of income (unaudited)
$ in millions, except share, per share data and ratios
| 3 months ended | 3 months ended | |||||||
| December 31, 2011 | December 31, 2010 | |||||||
UNDERWRITING REVENUES |
||||||||
Gross written premiums |
$ | 458.7 | $ | 412.8 | ||||
Premiums ceded |
(27.5 | ) | (17.6 | ) | ||||
Net written premiums |
431.2 | 395.2 | ||||||
Change in unearned premiums |
58.2 | 104.5 | ||||||
Net earned premiums |
489.4 | 499.7 | ||||||
UNDERWRITING EXPENSES |
||||||||
Losses and loss adjustment expenses |
394.5 | 307.4 | ||||||
Policy acquisition expenses |
85.5 | 90.6 | ||||||
General, administrative and corporate expenses |
78.2 | 78.5 | ||||||
Total underwriting expenses |
558.2 | 476.5 | ||||||
Underwriting income/(loss) including corporate expenses |
(68.8 | ) | 23.2 | |||||
OTHER OPERATING REVENUE |
||||||||
Net investment income |
54.2 | 57.0 | ||||||
Interest expense |
(7.7 | ) | (4.8 | ) | ||||
Total other operating revenue |
46.5 | 52.2 | ||||||
Other income |
3.6 | 0.9 | ||||||
OPERATING INCOME/(LOSS) BEFORE TAX |
(18.7 | ) | 76.3 | |||||
OTHER |
||||||||
Net realized and unrealized exchange gains/(losses) |
2.3 | (0.1 | ) | |||||
Net realized and unrealized investment gains |
6.0 | 19.7 | ||||||
INCOME/(LOSS) BEFORE TAX |
(10.4 | ) | 95.9 | |||||
Income taxes benefit/(expense) |
23.9 | (3.2 | ) | |||||
NET INCOME AFTER TAX |
13.5 | 92.7 | ||||||
Dividends paid on ordinary shares |
(10.7 | ) | (11.5 | ) | ||||
Dividend paid on preference shares |
(5.7 | ) | (5.7 | ) | ||||
Proportion of net profit/(loss) due to non-controlling interest |
(0.1 | ) | 0.2 | |||||
Retained income/(loss) |
$ | (3.0 | ) | $ | 75.7 | |||
Components of net income (after tax) |
||||||||
Operating income |
$ | 6.1 | $ | 75.8 | ||||
Net realized and unrealized exchange gains after tax |
3.7 | 0.2 | ||||||
Net realized investment gains after tax |
3.7 | 16.7 | ||||||
NET INCOME AFTER TAX |
$ | 13.5 | $ | 92.7 | ||||
Loss ratio |
80.6 | % | 61.5 | % | ||||
Policy acquisition expense ratio |
17.5 | % | 18.1 | % | ||||
General, administrative and corporate expense ratio |
16.0 | % | 15.7 | % | ||||
Expense ratio |
33.5 | % | 33.8 | % | ||||
Combined ratio |
114.1 | % | 95.3 | % | ||||
8
Aspen Insurance Holdings Limited
Summary consolidated financial data (unaudited)
$ in millions, except share, per share data and ratios
Summary consolidated financial data (unaudited)
$ in millions, except share, per share data and ratios
| 3 months ended | 12 months ended | |||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
Basic earnings per ordinary share |
||||||||||||||||||||
Net income/(loss) adjusted for preference share dividend |
$ | 0.11 | $ | 1.18 | $ | (1.82 | ) | $ | 3.80 | |||||||||||
Operating income/(loss) adjusted for preference dividend |
$ | 0.01 | $ | 1.08 | $ | (1.26 | ) | $ | 3.09 | |||||||||||
Diluted earnings per ordinary share |
||||||||||||||||||||
Net income/(loss) adjusted for preference share dividend |
$ | 0.11 | $ | 1.12 | $ | (1.82 | ) | $ | 3.62 | |||||||||||
Operating income/(loss) adjusted for preference dividend |
$ | 0.01 | $ | 1.02 | $ | (1.26 | ) | $ | 2.94 | |||||||||||
Weighted average number of ordinary shares outstanding
(in millions) |
70.615 | 73.996 | 70.665 | 76.343 | ||||||||||||||||
Weighted average number of ordinary shares outstanding and dilutive potential ordinary
shares (in millions) |
73.258 | 77.733 | 70.665 | 80.016 | ||||||||||||||||
Book value per ordinary share |
$ | 39.89 | $ | 40.96 | ||||||||||||||||
Diluted book value (treasury stock method) |
$ | 38.43 | $ | 38.90 | ||||||||||||||||
Ordinary shares outstanding at end of the period
(in millions) |
70.656 | 70.508 | ||||||||||||||||||
Ordinary shares outstanding and dilutive potential ordinary shares at end of the period
(treasury stock method) (in millions) |
||||||||||||||||||||
| 73.339 | 74.253 | |||||||||||||||||||
| Note: | The basic and diluted number of ordinary shares for the twelve months ended December 31, 2011 is the same, as the inclusion of dilutive securities in a loss-making period would be anti-dilutive. |
9
Aspen Insurance Holdings Limited
Summary consolidated segment information (unaudited)
$ in millions, except ratios
Summary consolidated segment information (unaudited)
$ in millions, except ratios
| 3 months ended December 31, 2011 | 3 months ended December 31, 2010 | |||||||||||||||||||||||
| Reinsurance | Insurance | Total | Reinsurance | Insurance | Total | |||||||||||||||||||
Gross written premiums |
$ | 186.3 | $ | 272.4 | $ | 458.7 | $ | 152.8 | $ | 260.0 | $ | 412.8 | ||||||||||||
Net written premiums |
182.3 | 248.9 | 431.2 | 148.5 | 246.7 | 395.2 | ||||||||||||||||||
Gross earned premiums |
311.9 | 245.7 | 557.6 | 303.9 | 246.5 | 550.4 | ||||||||||||||||||
Net earned premiums |
288.7 | 200.7 | 489.4 | 292.1 | 207.6 | 499.7 | ||||||||||||||||||
Losses and loss adjustment expenses |
278.1 | 116.4 | 394.5 | 146.8 | 160.6 | 307.4 | ||||||||||||||||||
Policy acquisition expenses |
47.4 | 38.1 | 85.5 | 58.8 | 31.8 | 90.6 | ||||||||||||||||||
General and administrative expenses |
32.6 | 33.0 | 65.6 | 32.8 | 33.5 | 66.3 | ||||||||||||||||||
Underwriting income/(loss) |
$ | (69.4 | ) | $ | 13.2 | (56.2 | ) | $ | 53.7 | $ | (18.3 | ) | 35.4 | |||||||||||
Net investment income |
54.2 | 57.0 | ||||||||||||||||||||||
Net investment gains (1) |
6.0 | 19.7 | ||||||||||||||||||||||
Corporate expenses |
(12.6 | ) | (12.2 | ) | ||||||||||||||||||||
Other income |
3.6 | 0.9 | ||||||||||||||||||||||
Interest expenses |
(7.7 | ) | (4.8 | ) | ||||||||||||||||||||
Net foreign exchange gains/(losses) (2) |
2.3 | (0.1 | ) | |||||||||||||||||||||
Income/(loss) before tax |
(10.4 | ) | 95.9 | |||||||||||||||||||||
Income tax benefit/(expense) |
23.9 | (3.2 | ) | |||||||||||||||||||||
Net income |
$ | 13.5 | $ | 92.7 | ||||||||||||||||||||
Ratios |
||||||||||||||||||||||||
Loss ratio |
96.3 | % | 58.0 | % | 80.6 | % | 50.3 | % | 77.4 | % | 61.5 | % | ||||||||||||
Policy acquisition expense ratio |
16.4 | % | 19.0 | % | 17.5 | % | 20.1 | % | 15.3 | % | 18.1 | % | ||||||||||||
General and administrative expense ratio (3) |
11.3 | % | 16.4 | % | 16.0 | % | 11.2 | % | 16.1 | % | 15.7 | % | ||||||||||||
Expense ratio |
27.7 | % | 35.4 | % | 33.5 | % | 31.3 | % | 31.4 | % | 33.8 | % | ||||||||||||
Combined ratio |
124.0 | % | 93.4 | % | 114.1 | % | 81.6 | % | 108.8 | % | 95.3 | % | ||||||||||||
| (1) | Includes realized and unrealized capital gains and losses and realized and unrealized gains and losses on interest rate swaps. | |
| (2) | Includes realized and unrealized foreign exchange gains and losses and realized and unrealized gains and losses on foreign exchange contracts. | |
| (3) | The total group general and administrative expense ratio includes the impact from corporate expenses. |
10
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, 2011, Aspen reported gross written premiums of $2,207.8 million, net loss of $105.8
million and total assets of $9.5 billion. Its operating subsidiaries have been assigned a
rating of “A” (“Strong”) by Standard & Poor’s (“S&P”), an “A” (“Excellent”) by A.M. Best and an
“A2” (“Good”) by Moody’s Investors Service (“Moody’s”).
For more information about Aspen, please visit www.aspen.co.
Forward-looking Statements Safe Harbor
This press release contains, and Aspen’s earnings conference call will contain, 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,”
“estimate,” “may,” “continue,” “guidance,” and similar expressions of a future or
forward-looking nature.
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: 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 reliability of, and changes in assumptions to,
natural and man-made catastrophe pricing, accumulation and estimated loss models; evolving
issues with respect to interpretation of coverage after major loss events and any intervening
legislative or governmental action; the effectiveness of our loss limitation methods; 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 acts of terrorism and related legislation and acts of war; decreased
demand for our insurance or reinsurance products and cyclical changes in the insurance and
reinsurance sectors; 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 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; changes in
insurance and reinsurance market conditions; increased competition on the basis of pricing,
capacity, coverage terms or other factors and the related demand and supply dynamics as
contracts come up for renewal; a decline in our operating subsidiaries’ ratings with S&P, A.M.
Best or Moody’s; 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; the persistence of the global financial crisis and the Eurozone debt crisis,
changes in general economic conditions, including inflation, foreign currency exchange rates,
interest rates and other factors that could affect our investment portfolio; the risk of a
material decline in the value or liquidity of all or parts of our investment portfolio; changes
in our ability to exercise capital management initiatives 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; Aspen Holdings or Aspen
Bermuda becoming subject to income taxes in the United States or the United Kingdom; loss of
key personnel; and increased counterparty risk due to the credit impairment of financial
institutions.
11
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 25, 2011. 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. 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 amount.
Non-GAAP Financial Measures
In presenting Aspen’s results, management has included and discussed certain “non-GAAP
financial measures” as such term is defined in Regulation G. Management believes that these
non-GAAP 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 measures in
accordance with Regulation G is included in the financial supplement, which can be obtained
from the Investor Relations section of Aspen’s website at www.aspen.co.
(1) Annualized Operating Return on Average Equity (“Operating ROE”) is a non-GAAP financial
measure. Annualized Operating Return on Average Equity 1) is calculated using operating income,
as defined below and 2) excludes from average equity, the average after-tax unrealized
appreciation or depreciation on investments and the average after-tax unrealized foreign
exchange gains or losses and the aggregate value of the liquidation preferences of our
preference shares. Unrealized appreciation (depreciation) on investments is primarily the
result of interest rate movements and the resultant impact on fixed income securities, and
unrealized appreciation (depreciation) on foreign exchange is the result of exchange rate
movements between the U.S. dollar and the British pound. Such appreciation (depreciation) is
not related to management actions or operational performance (nor is it likely to be realized).
Therefore, Aspen believes that excluding these unrealized appreciations (depreciations)
provides a more consistent and useful measurement of operating performance, which supplements
GAAP information. Average equity is calculated as the arithmetic average on a monthly basis for
the stated periods.
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.
See page 27 of Aspen’s financial supplement for a reconciliation of operating income to net
income and page 7 for a reconciliation of average equity.
(2) 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 capital
gains or losses, including realized and unrealized gains or losses on interest rate swaps, and
after-tax net foreign exchange gains or losses including net realized and unrealized gains and
losses from foreign exchange contracts.
12
Aspen excludes after-tax net realized and unrealized investment gains or losses, including
realized and unrealized gains or losses on interest rate swaps, and after-tax net foreign
exchange gains or losses including net realized and unrealized gains and losses from foreign
exchange contracts from its calculation of operating income because 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 distorts 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 above and page 27 of Aspen’s financial
supplement for a reconciliation of operating income to net income. Aspen’s financial supplement
can be obtained from the Investor Relations section of Aspen’s website at www.aspen.co.
(3) Diluted book value per ordinary share is a non-GAAP financial measure. Aspen has included
diluted book value per ordinary share because it takes into account the effect of dilutive
securities; therefore, Aspen believes it is a better measure of calculating shareholder returns
than book value per share. Please see page 25 of Aspen’s financial supplement for a
reconciliation of diluted book value per share to basic book value per share. Aspen’s financial
supplement can be obtained from the Investor Relations section of Aspen’s website at
www.aspen.co.
(4) Diluted Operating Earnings Per Share and Basic Operating Earnings Per Share is a non-GAAP
financial measure. 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. See page 27 for a
reconciliation of diluted and basic operating earnings per share to basic earnings per share.
Aspen’s financial supplement can be obtained from the Investor Relations section of Aspen’s
website at www.aspen.co.
13
