Aspen reports loss in Q4 as insurance business restructured

Aspen Insurance, the Bermuda-based insurance and reinsurance group, today reported a net loss of $71.5m and operating loss after tax of $7.4m for the fourth quarter of 2016. This compares to a net profit of $117.9m and operating income of $84m in the fourth quarter of 2015. For the full year Aspen generated $3.15bn in gross written premiums against just under $3bn in 2015, an underwriting profit of $51.9m against $199.5m, and a combined ratio of 98.1% compared with 91.9% in 2015. The net profit for 2016 was $203.4m against $323.1m in 2015. The group warned investors on 30 January to expect a poor set of results. It explained that the loss was caused by its insurance business that delivered a negative underwriting result of $41.5m in the fourth quarter of last year compared with a profit of $51.6m the year before. Aspen said that in late 2015 its insurance leadership team commenced a project to improve the loss ratio and reduce volatility in its insurance underwriting performance. As a consequence of this Aspen “significantly” reduced its appetite for programmes business and primary casualty. The group said that the review also resulted in a restructure of its ceded reinsurance arrangements. This will hopefully reduce volatility and, over time, benefit the expense ratio. The group also bought some run-off reinsurance in the fourth quarter. These actions, coupled with loss activity in lines that are being exited or re-positioned, caused the poor fourth quarter results. Chris O’Kane, chief executive officer, put on a brave face as he explained the results and said that the outlook was good for Aspen. “2016 was an important year in positioning Aspen for the future. Our reinsurance business performed strongly once again despite a much higher level of catastrophe losses. We expanded further our geographic footprint, successfully integrated our diversifying AgriLogic [US crop insurance business acquired in January of last year] for business and continued to target opportunities for profitable growth in what continues to be a challenging market environment,” said Mr O’Kane. “During the year, our insurance team took significant actions to reposition product lines where returns are not expected to meet our requirements while at the same time working to identify and invest in the best opportunities for long-term profitable growth,” he added. Mr O’Kane conceded that the repositioning of Aspen’s insurance segment had a “significant negative impact” on the fourth quarter’s results. But he added that he and his team are confident that the actions taken are the right ones and that the underlying quality of the book of business is “very strong”. “We remain intensely focused on driving growth and profitability by offering innovative solutions to meet our clients’ needs and risks, diversifying and expanding our global product offering, and enhancing capital efficiency. Our business is now firmly on course for the next stage of profitable growth,” said Mr O’Kane.

Aspen reports loss in Q4 as insurance business restructured

Want to read this article?

Read Next

Talanx ‘increasingly confident’ of beating full-year profit forecast on Q1 results

US property market stabilises but concern over casualty loss trends

AGCS’s revenue falls in Q1 as rate momentum slows

Property rates easing; insurers press for liability increases: Rims Riskworld

More European corporates buying supply chain cover: Allianz Trade

Talanx ‘increasingly confident’ of beating full-year profit forecast on Q1 results

US property market stabilises but concern over casualty loss trends

AGCS’s revenue falls in Q1 as rate momentum slows

Property rates easing; insurers press for liability increases: Rims Riskworld

More European corporates buying supply chain cover: Allianz Trade

Want to read this article?

Read Next

Talanx ‘increasingly confident’ of beating full-year profit forecast on Q1 results

US property market stabilises but concern over casualty loss trends

AGCS’s revenue falls in Q1 as rate momentum slows

Property rates easing; insurers press for liability increases: Rims Riskworld

More European corporates buying supply chain cover: Allianz Trade

Related Articles