Group chief executive describes 2019’s financial results as ‘disappointing’

Aspen Insurance Holdings has wound down its UK regional property and casualty (P&C) product for not meeting long-term performance criteria.

Confirmed in the (re)insurer’s 2019 year-end results, published yesterday, Aspen said the move was in order to refocus its underwriting portfolio on the firm’s core products.

Other lines that have been wound down include international marine and energy liability, accident and health, credit and surety reinsurance and international excess casualty.

Aspen further announced that it has streamlined its global footprint by closing its Aspen Risk Management Limited (ARML) branches in the UK – branch closures have also been confirmed in Dubai, Miami and Dublin.

Mark Cloutier, group executive chairman and chief executive at Aspen, said: “2019 was both a challenging and transitional year for our group.

“Since completion of the merger transaction early in the year we have undertaken a number of initiatives targeted at protecting the financial strength of the company, while also driving change geared at improving performance over the medium and longer term - all with a focus on long-term total value creation.

“These actions include refocusing the products we underwrite, strengthening our balance sheet, enhancing our management team and simplifying our global footprint and operating structure.”

Across Aspen’s underwriting portfolio “around $700m of business did not meet our profitability requirements or risk appetite”, the report stated.

Net losses

Aspen additionally reported a net loss after tax of $241.7m in its 2019 year-end results, driven by the firm’s acquisition by investment firm Apollo Global Management earlier this year.

The losses, which include a $48.4m operating loss after tax, spring from restructuring costs, reserve strengthening, unrealised investment losses and exchange rate impact.

Despite this financial knock-back, Cloutier said: “While our financial results for 2019 are disappointing, given the impact of deal related costs, restructuring charges and specific actions taken to improve underwriting performance and strengthen reserves, it is rewarding to see that underlying trends in our forward trading businesses are showing significant improvement.

“I am confident that the decisive actions we have taken are the right ones and will see us realise our objective of becoming a top quartile specialty (re)insurer in the near term.”

Financial results

Gross written premium (GWP) at Aspen in 2019 remained at a level with its 2018 results - $3,442.4m last year compared to $3,446.9m in 2018.

The firm’s combined ratio, excluding non-operating expenses, was 108.5%, impacted by 5.8 percentage points from legacy and US agriculture business. Its insurance combined ratio, excluding legacy business, was 97.4% compared to a reinsurance combined ratio of 101.5%, excluding legacy and US agriculture business.

Aspen stated that overall underwriting was impacted by reserve strengthening in specific casualty lines.

Cloutier added: “During 2019, we saw sustained improvement to wider insurance market conditions, including reduced capacity and limits in a number of our core product lines, which has contributed to improving rates, terms, and conditions.

“Within reinsurance, we also saw pockets of corrections over 2018, which extended to improvements in rate across the majority of classes and regions throughout 2019. We have seen these trends continue into 2020.

“These trends are indeed positive, but we continue to take a cautious and selective approach to growth as evidenced in our year-over-year gross written premium numbers.”