Bermuda-based insurer and reinsurer, Aspen Insurance Holdings, has reported an improved underwriting result across the group as it recorded an underwriting profit of $47.9 million in Q3’23, up significantly from a loss of $70 million in Q3’22, driven by its reinsurance business.
The combined ratio for the Group was 92.7% in Q3’23 compared to 110.3% in Q3’22, as both the loss and expense ratios decreased year on year.
For the Group as a whole, the re/insurer reported an increase in operating income to $79 million, as net income attributable to common shareholders improved significantly to $86 million, compared to a loss of $161 million a year earlier.
The increase in net income was driven by a strong improvement in underwriting results, improved investment income and lower net realised and unrealised investment and foreign exchange gains/losses, the company said.
Aspen reported a 27.9% decrease in gross written premiums (GWP) for its reinsurance segment in Q3’23, as net written premiums (NWP) reached $261.2 million in Q3’23, down 38.9% from $427.6 million in Q3’22.
However, while efforts to reduce exposures resulted in lower reinsurance premiums, the unit recorded an underwriting profit of $52.5 million compared to a loss of $2.7 million a year ago. The combined ratio for the reinsurance segment was 92.4% in Q3’23 compared to 111.3 in Q3’22.
Aspen notes that the repositioning of the portfolio towards higher attachment points and a significant rate increase helped to reduce the loss ratio, which fell by 18.5 percentage points compared to the prior year, while the catastrophe loss ratio improved significantly.
Turning to Aspen’s primary insurance business, GWP increased to $615.2 million in Q3’23 from $600.8 million in Q3’22, primarily due to strong new business activity in financial and professional lines, partially offset by the company’s decision to reduce the writing of certain programmes within its casualty and liability portfolio.
Insurance NWP increased by 3.1% to $367.4 million in Q3’23 compared to $356.52 million in Q3’22.
The Insurance segment recorded an underwriting loss of $4.6 million in Q3’23 compared to a loss of $67.3 million in Q3’22. The combined ratio for the Insurance segment was 91.2% in Q3’23 compared to 101.1 in Q3’22.
Group GWP was $987.2 million in Q3’23, which was lower than the same period last year.
On the asset side of the balance sheet, Aspen reported net investment income of $77.9 million in the quarter, up 63% from $47.7 million in Q3’22. This is the result of actively repositioning investments to take advantage of higher interest rates.
Mark Cloutier, Executive Chairman and Group Chief Executive Officer, commented: “Aspen’s focus on disciplined underwriting, careful portfolio management and operational efficiency has delivered an excellent result for the quarter, with the business achieving an adjusted combined ratio of 91.7% and operating income of $79 million, both significant improvements over the same period last year. Our results also benefited from higher investment income, driven by a higher interest rate environment, and increased fee income from Aspen Capital Markets, which improved the quality of our earnings.”
“It is encouraging to see our third quarter results add to the positive trends of the first half of 2023, with an adjusted combined ratio of 87.1% and an annualised operating return on average equity of 20.7% for the nine months ended 30 September 2023.”
“Looking ahead to 2024, we expect market conditions to remain favourable in most of our lines of business. Aspen’s strong capital position, balanced portfolio and healthy team culture position us well to continue to provide meaningful capacity, services and solutions to our clients and trading partners, while generating top quartile returns for our shareholders,” concluded Cloutier.
