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Aspen profit limited by higher expenses, catastrophe losses

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Aspen Insurance Holdings Ltd. on Friday reported that its first-quarter net income fell 10.6% to $114.4 million as the Hamilton, Bermuda-based insurer and reinsurer continued to re-examine its business.

Aspen said its pretax catastrophe losses net of reinsurance jumped 38.5% to $18.7 million. It also said growth in its financial and professional business as well as its property/casualty underwriting was offset by a decline in its marine, aviation and energy business.

In addition, Aspen reported higher expenses associated with its January acquisition of Overland Park, Kansas-based crop insurer and adviser AG Logic Holdings L.L.C., which does business as AgriLogic.

Despite the higher costs that factored into its first-quarter combined ratio deteriorating to 91.6% from 88.9% from a year earlier, Aspen boosted its net written premiums 4.8% to $779.7 million from the first quarter of last year.

“Aspen has started the year well,” Aspen CEO Chris O'Kane said during a conference call with analysts. “Our results from the first quarter again demonstrate the benefits of our diversified platforms as both the insurance and the reinsurance businesses deliver solid underwriting performances.”

He also told analysts that he did not expect any serious impact from the recent earthquakes in Japan and Ecuador or the flooding in Texas.

“I'm not expecting anything in material market loss from the Japanese market from this,” Mr. O'Kane said. “In Ecuador, we really don't have that much business in that part of the world. The floods in Texas are primarily for the big writers in Texas. My general sense is that we shouldn't be too troubled by what's been a busy period for cat losses.”

In a statement, Aspen CEO Mario Vitale said gains during the quarter were “largely driven from businesses in which we have selectively chosen to expand, including global accident and health, management liability and European property coverage.

“At the same time, we continued to pull back from areas where we do not feel returns are adequate or are historically more volatile,” Mr. O'Kane said in the statement.