Aspen: ‘We Made Good Progress’
Bermuda domiciled Aspen Insurance Holdings Limited yesterday [Feb. 8] reported net income after tax for the fourth quarter of 2010 of $92.7 million and operating earnings of $1.02 per diluted ordinary share.
Book value per share on a diluted basis of $38.90 increased by 13.9% when compared to December 31, 2009 and by 1.8% since September 30, 2010.
Diluted book value per share of $38.90, up 13.9% over the end of the fourth quarter of 2009 and up 1.8% from third quarter of 2010.
Operating out of the Maxwell Roberts Building on Church Street, Aspen provides reinsurance and insurance coverage to clients in various domestic and global markets through wholly-owned subsidiaries and offices in Bermuda, France, Ireland, Singapore, the United States, the United Kingdom, Switzerland and Germany.
Fourth quarter net income after tax of $92.7 million, down from $126.3 million in the same quarter last year.
Annualized net income return on equity of 13.2% for the fourth quarter and 11.2% for the twelve-month period.
Annualized operating return on equity of 12.0% for the quarter and 9.4% for the twelve-month period.
Diluted operating earnings per share of $1.02 for the quarter, down from $1.44 for the fourth quarter of 2009.
Chris O’Kane, Aspen CEO, said: “I am very pleased to report that we grew BVPS by 13.9% in 2010 and 1.8% in Q4 against a backdrop of continued low interest rates and a challenging underwriting environment. The performance of our Reinsurance business was particularly strong and, in a year which saw a significant impact from natural catastrophes, the combined ratio of 88.2% reflects the benefits of our diversified approach.
“We made good progress in furthering our key strategic objectives in 2010 such as developing our Insurance franchise in the US and parts of Europe and will continue selectively to seek out opportunities to further our aims in 2011 as market conditions allow.”
Overview of Operations for the Fourth Quarter and Full Year 2010
• Gross written premiums of $412.8 million in the quarter, up 1.8% on last year,
with the increase coming mainly from the insurance segment.
• Underwriting income for the quarter of $35.4 million included $32.8 million of
further losses from the New Zealand earthquake, as previously announced on
December 16, 2010, against underwriting income of $93.3 million in the previous
year, which had no recorded catastrophic losses.
• Prior year reserve releases of $12.6 million in the quarter compared with $13.4
million of reserve releases in the equivalent period in 2009. For the twelve
months ended December 31, 2010, reserve releases were $21.4 million
compared with $84.4 million in 2009.
• Cash flows from operating activities were $122.3 million for the quarter and
$624.6 million for the twelve months ended December 31, 2010 compared with
$157.5 million and $646.6 million, respectively in 2009.
• The effective tax rate for the fourth quarter of 3.3% is a product of lowering the
estimated annual effective tax rate from 10.0% at the end of the third quarter of
2010 to an actual rate of 8.1% at the end of the year. This compares with an
effective tax rate of 11.4% for the full year in 2009.
Capital Position
As previously announced, in November 2010, the Company entered into an accelerated share repurchase program to repurchase $184.0 million of its ordinary shares. An initialn amount of 5.7 million ordinary shares was retired in the quarter.
The company may be entitled to receive additional ordinary shares based on the average of the daily market price of its ordinary shares during the term of the agreement. The program is expected to be completed within seven months from the date of the agreement.
During the quarter, the company also repurchased 0.5 million ordinary shares in the open market at an average price of $28.87 per share, for a total cost of $15.9 million. As of December 31, 2010, the Company had approximately $192 million of remaining authorization for ordinary share repurchases through March 2012.
On December 7, 2010, Aspen issued $250 million, 6% coupon 10-year senior notes with the proceeds used for general corporate purposes.
Outlook for 2011
Given current market conditions, the Company anticipates gross written premium for 2011 to be $2.1 billion +/- 5%, premium ceded to be between 8% and 12% of gross earned premium and the combined ratio to be in the range of 93%-98% including a cat load of $170 million assuming normal loss experience in the year. The company expects the effective tax rate in 2011 to be in the range of 8% to 12%.
For the twelve months ended December 31, 2010, Aspen reported gross written premiums of $2,076.8 million, net income of $312.7 million and total assets of $8.8 billion. 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 Investors Service.
