Aspen Insurance Holdings Ltd. reported fourth-quarter net income of $67.2 million, down 25.3% from the same period last year on higher expenses related to incentive compensation and severance payments.

Net written premiums increased 1.1% to $554.0 million in the fourth quarter, while net investment income fell 1.1% to 46.7 million, the Hamilton, Bermuda-based insurer and reinsurer said Thursday in a statement.

Aspen’s overall combined ratio deteriorated in the fourth quarter to 94.1% from 91.9% in the same period in 2013, while the reinsurance segment’s combined ratio climbed to 82.7% from 58.6%. More midsize losses than usual, incentive compensation and severance payments had a negative effect on the combined ratio, a spokesman said Friday in an email.

The company said in a statement that it excludes nonrecurring items, such as the “costs associated with defending the unsolicited approach from Endurance Specialty Holdings Ltd.,” when calculating operating income, as such items “are not reflective of underlying performance.” Aspen successfully thwarted Endurance’s $3.2 billion hostile takeover bid last year.

For all of 2014, net income increased 8.0% to $355.8 million. Yearly net written premiums increased 9.4% to $2.52 billion, while net investment income increased 2.1% to $190.3 million. The combined ratio for 2014 improved to 91.7% from 92.6% last year.

“For the full year, we grew premiums slightly while achieving an accident year ex-(catastrophe) loss ratio of 50.9%,” Stephen Postlewhite, Aspen’s CEO of reinsurance, said in the statement. “As a result of our client relationships and access to risk, we were able to withdraw capital from areas where rates and terms and conditions did not meet our requirements and deploy it in areas where the business was better rated.”

During a conference call announcing the results, Aspen CEO Chris O’Kane said the company doesn’t view U.S. reinsurance as a growth area. Rather, he said, growth is coming from smaller economies across continental Europe, Asia and Latin America.

Scott Kirk, chief financial officer for Aspen, said during the call that the company had about $30 million in noncorrelated midsize losses last year, including a fire in Spain that cost them $11 million.

Mr. O’Kane said in the statement that Aspen maintained a “disciplined underwriting approach during the January reinsurance renewal season as we reduced our book where rates and terms did not meet our return requirements while achieving meaningful growth in areas where overall return remain attractive.”