Table of Contents
Aspen Insurance Holdings Limited
Financial Supplement
As of June 30, 2009
This financial supplement is for information purposes only. It should be read in
conjunction with other documents filed or to be filed by Aspen Insurance
Holdings Limited with the United States Securities and Exchange Commission.
conjunction with other documents filed or to be filed by Aspen Insurance
Holdings Limited with the United States Securities and Exchange Commission.
AHL: NYSE
www.aspen.bm
Investor Contact:
Aspen Insurance Holdings Limited
Noah Fields, Head of Investor Relations
T: +1441-297-9382
email: noah.fields@aspen-re.com
Aspen Insurance Holdings Limited
Table Of Contents
| Page | ||||
| 1-2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 9-10 | ||||
| 11-14 | ||||
| 15 | ||||
| 16-17 | ||||
| 18 | ||||
| 19 | ||||
| 20 | ||||
| 21 | ||||
| 22 | ||||
| 23 | ||||
| 24 | ||||
| 25 | ||||
| 26 | ||||
| 27 | ||||
| 28 | ||||
| 29 | ||||
| 30 | ||||
| 31 | ||||
Table of Contents
Aspen Insurance Holdings Limited
Definitions and presentation: All financial information contained herein is unaudited except for information for the fiscal year ended December 31, 2008. Unless otherwise noted, all data is in U.S. dollars millions, except for per share, percentage and ratio information.
In presenting Aspen’s results, management has included and discussed certain “non-GAAP financial measures”, as such term is defined in Regulation G. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain Aspen’s results of operations in a manner that allows for a more complete understanding of the underlying trends in Aspen’s business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP. The reconciliation of such non-GAAP financial measures to their respective most directly comparable GAAP financial measures in accordance with Regulation G is included in this financial supplement.
Operating income(a non-GAAP financial measure): Operating income is an internal performance measure used by Aspen in the management of its operations and represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses.
Aspen excludes after-tax net realized capital gains or losses and after-tax net foreign exchange gains or losses from its calculation of operating income because the amount of these gains or losses is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. Aspen believes these amounts are largely independent of its business and underwriting process and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with GAAP, Aspen believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Aspen’s results of operations in a manner similar to how management analyzes Aspen’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. Please see page 29 for a reconciliation of operating income to net income.
Net income excluding net income or losses from investments accounted for by the equity method(a non-GAAP financial measure): This is an internal performance measure used by Aspen in the management of its operations and represents net income adjusted for preference share dividends excluding after-tax net income or losses from investments accounted for using the equity method.
Aspen excludes net income or loss from investments accounted for using the equity method from its calculation of net income because the amount of these gains or losses are largely independent of its business and underwriting process and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with GAAP, Aspen believes that showing net income excluding net income or losses for other investments accounted for by the equity method enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Aspen’s results of operations in a manner similar to how management analyzes Aspen’s underlying business performance. Net income excluding net income or losses for investments accounted for by the equity method should not be viewed as a substitute for GAAP net income. Please see page 30 for a reconciliation of net income excluding net income or losses for other investments accounted for by the equity method income to net income.
Adjusted Operating income(a non-GAAP financial measure): Adjusted operating income is an internal performance measure used by Aspen in the management of its operations and represents after-tax operational results excluding, as applicable, after-tax net realized capital gains or losses, after-tax net foreign exchange gains or losses and after-tax gains or losses from our investments in funds of hedge funds.
Aspen excludes after-tax net realized capital gains or losses, after-tax net foreign exchange gains or losses and after-tax gains or losses from our investments in funds of hedge funds from its calculation of adjusted operating income because the amount of these gains or losses is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. Aspen believes these amounts are largely independent of its business and underwriting process and including them distorts the analysis of trends in its operations. In addition to presenting net income determined in accordance with GAAP, Aspen believes that showing adjusted operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze Aspen’s results of operations in a manner similar to how management analyzes Aspen’s underlying business performance. Adjusted operating income should not be viewed as a substitute for GAAP net income. Please see page 31 for a reconciliation of adjusted operating income to net income.
Annualized Operating Return on Average Equity (“Operating ROE”)(a non-GAAP financial measure): Annualized Operating Return on Average Equity 1) is calculated using operating income, as defined above and 2) excludes from average equity, the average after-tax unrealized appreciation or depreciation on investments and the average after-tax unrealized foreign exchange gains or losses and the aggregate value of the liquidation preferences of our preference shares. Unrealized appreciation (depreciation) on investments is primarily the result of interest rate movements and the resultant impact on fixed income securities, and unrealized appreciation (depreciation) on foreign exchange is the result of exchange rate movements between the U.S. dollar and the British pound. Such appreciation (depreciation) is not related to management actions or operational performance (nor is it likely to be realized). Therefore, Aspen believes that excluding these unrealized appreciations (depreciations) provides a more consistent and useful measurement of operating performance, which supplements GAAP information. Average equity is calculated as the arithmetic average on a monthly basis for the stated periods.
Aspen presents Operating ROE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. See page 29 for a reconciliation of operating income to net income and page 8 for a reconciliation of average equity to closing shareholders’ equity.
1
Table of Contents
Aspen Insurance Holdings Limited
Basis of Presentation
Annualized Operating Return on Average Equity excluding gains or losses from funds of hedge funds (“Adjusted Operating ROE”)(a non-GAAP financial measure): Annualized Operating Return on Average Equity excluding gains or losses from funds of hedge funds 1) is calculated using operating income, as defined below and 2) excludes from average equity, the average after-tax unrealized appreciation or depreciation on investments and the average after-tax unrealized foreign exchange gains or losses and the aggregate value of the liquidation preferences of our preference shares. Unrealized appreciation (depreciation) on investments is primarily the result of interest rate movements and the resultant impact on fixed income securities, and unrealized appreciation (depreciation) on foreign exchange is the result of exchange rate movements between the U.S. dollar and the British pound. Such appreciation (depreciation) is not related to management actions or operational performance (nor is it likely to be realized). Therefore, Aspen believes that excluding these unrealized appreciations (depreciations) provides a more consistent and useful measurement of operating performance, which supplements GAAP information. Average equity is calculated as the arithmetic average on a monthly basis for the stated periods.
See page 31 for a reconciliation of adjusted operating income to net income and page 8 for a reconciliation of average equity.
Diluted book value per ordinary share(a non-GAAP financial measure): Aspen has included diluted book value per ordinary share because it takes into account the effect of dilutive securities; therefore, Aspen believes it is a better measure of calculating shareholder returns than book value per share. Please see page 27 for a reconciliation of diluted book value per share to basic book value per share.
Underwriting ratios(GAAP financial measures): Aspen, along with others in the industry, uses underwriting ratios as measures of performance. The loss ratio is the ratio of net claims and claims adjustment expenses to net premiums earned. The acquisition expense ratio is the ratio of underwriting expenses (commissions; premium taxes, licenses and fees; as well as other underwriting expenses) to net premiums earned. The general and administrative expense ratio is the ratio of general and administrative expenses to net premiums earned. The combined ratio is the sum of the loss ratio, the acquisition expense ratio and the general and administrative expense ratio. These ratios are relative measurements that describe for every $100 of net premiums earned or written, the cost of losses and expenses, respectively. The combined ratio presents the total cost per $100 of earned premium. A combined ratio below 100% demonstrates underwriting profit; a combined ratio above 100% demonstrates underwriting loss.
GAAP combined ratios differ from U.S. statutory combined ratios primarily due to the deferral of certain third party acquisition expenses for GAAP reporting purposes and the use of net premiums earned rather than net premiums written in the denominator when calculating the acquisition expense and the general and administrative expense ratios.
Accident Year Loss Ratios(a non-GAAP financial measure): In addition to the underwriting ratios described above, management also uses accident year loss ratios to evaluate current underwriting performance. The accident year loss ratio excludes the effect of prior years’ premium adjustments and reserve developments. This ratio focuses on the relationship between current premiums earned and losses incurred related to the current year. Please see pages 16 and 17 for a reconciliation of accident year loss ratios to underwriting ratios calculated in accordance with U.S. GAAP.
2
Table of Contents
Aspen Insurance Holdings Limited
Financial Highlights
Financial Highlights
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
| (in US$ millions except for percentages, share and per share amounts) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||||||||||
| Gross written premium | $ | 534.3 | $ | 528.8 | 1.0 | % | $ | 1,171.1 | $ | 1,125.0 | 4.1 | % | ||||||||||||||||||
| Net written premium | $ | 484.7 | $ | 506.0 | (4.2 | % | ) | $ | 991.3 | $ | 1,025.6 | (3.3 | % | ) | ||||||||||||||||
| Net earned premium | $ | 428.6 | $ | 397.3 | 7.9 | % | $ | 875.9 | $ | 788.9 | 11.0 | % | ||||||||||||||||||
| Net income after tax | $ | 110.4 | $ | 126.9 | (13.0 | % | ) | $ | 201.8 | $ | 208.1 | (3.0 | % | ) | ||||||||||||||||
| Operating income after tax | $ | 103.8 | $ | 131.2 | (20.9 | % | ) | $ | 209.5 | $ | 207.2 | 1.1 | % | |||||||||||||||||
| Investment income | $ | 72.2 | $ | 70.5 | 2.4 | % | $ | 131.4 | $ | 109.6 | 19.9 | % | ||||||||||||||||||
| Underwriting income | $ | 53.2 | $ | 86.9 | (38.8 | % | ) | $ | 122.6 | $ | 144.1 | (14.9 | % | ) | ||||||||||||||||
Earnings Per Share and Book Value Per Share | ||||||||||||||||||||||||||||||
| Basic earnings per ordinary share | ||||||||||||||||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $ | 1.26 | $ | 1.44 | (12.5 | % | ) | $ | 2.68 | $ | 2.31 | 16.0 | % | |||||||||||||||||
| Operating income adjusted for preference share dividend | $ | 1.18 | $ | 1.49 | (20.8 | % | ) | $ | 2.39 | $ | 2.30 | 3.9 | % | |||||||||||||||||
| Diluted earnings per ordinary share | ||||||||||||||||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $ | 1.22 | $ | 1.39 | (12.2 | % | ) | $ | 2.61 | $ | 2.24 | 16.5 | % | |||||||||||||||||
| Operating income adjusted for preference share dividend | $ | 1.14 | $ | 1.44 | (20.8 | % | ) | $ | 2.32 | $ | 2.23 | 4.0 | % | |||||||||||||||||
| Book value per ordinary share | $ | 31.45 | $ | 29.84 | 5.4 | % | $ | 31.45 | $ | 29.84 | 5.4 | % | ||||||||||||||||||
| Diluted book value per ordinary share (treasury stock method) | $ | 30.36 | $ | 28.99 | 4.7 | % | $ | 30.36 | $ | 28.99 | 4.7 | % | ||||||||||||||||||
| Weighted average number of ordinary shares outstanding (in millions of shares) | 82.940 | 83.513 | (0.7 | % | ) | 82.241 | 84.512 | (2.7 | % | ) | ||||||||||||||||||||
| Diluted weighted average number of ordinary shares outstanding (in millions of shares) | 85.645 | 86.010 | (0.4 | % | ) | 84.612 | 86.980 | (2.7 | % | ) | ||||||||||||||||||||
Underwriting Ratios | ||||||||||||||||||||||||||||||
| Loss ratio | 54.8 | % | 47.4 | % | 55.4 | % | 50.1 | % | ||||||||||||||||||||||
| Policy acquisition cost ratio | 18.9 | % | 16.4 | % | 18.2 | % | 17.9 | % | ||||||||||||||||||||||
| General and administrative expense ratio | 14.0 | % | 14.4 | % | 12.4 | % | 13.7 | % | ||||||||||||||||||||||
| Expense ratio | 32.9 | % | 30.8 | % | 30.6 | % | 31.6 | % | ||||||||||||||||||||||
| Combined ratio | 87.7 | % | 78.2 | % | 86.0 | % | 81.7 | % | ||||||||||||||||||||||
Return On Equity | ||||||||||||||||||||||||||||||
Average equity (1) | $ | 2,390.6 | $ | 2,356.1 | $ | 2,321.1 | $ | 2,335.2 | ||||||||||||||||||||||
| Return on average equity | ||||||||||||||||||||||||||||||
| Net income adjusted for preference share dividend | 4.4 | % | 5.1 | % | 8.1 | % | 8.3 | % | ||||||||||||||||||||||
| Operating income adjusted for preference share dividend | 4.1 | % | 5.3 | % | 8.5 | % | 8.3 | % | ||||||||||||||||||||||
| Annualized return on average equity | ||||||||||||||||||||||||||||||
| Net income | 17.6 | % | 20.4 | % | 16.2 | % | 16.6 | % | ||||||||||||||||||||||
| Operating income | 16.4 | % | 21.2 | % | 17.0 | % | 16.6 | % | ||||||||||||||||||||||
See pages 8, 27, 29, 30 and 31 for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures.
| 1. | Average equity excludes the average after-tax unrealized appreciation or depreciation on investments and average after-tax unrealized foreign exchange gains or losses. |
3
Table of Contents
Aspen Insurance Holdings Limited
| (in US$ millions except for percentages) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q2 2007 | ||||||||||||||||||
| UNDERWRITING REVENUES | ||||||||||||||||||||||||
| Gross written premiums | $534.3 | $636.8 | $435.4 | $441.3 | $528.8 | $503.5 | ||||||||||||||||||
| Premiums ceded | (49.6 | ) | (130.2 | ) | (29.3 | ) | (37.5 | ) | (22.8 | ) | (85.0 | ) | ||||||||||||
| Net written premiums | 484.7 | 506.6 | 406.1 | 403.8 | 506.0 | 418.5 | ||||||||||||||||||
| Change in unearned premiums | (56.1 | ) | (59.3 | ) | 72.5 | 30.4 | (108.7 | ) | 32.7 | |||||||||||||||
| Net earned premiums | 428.6 | 447.3 | 478.6 | 434.2 | 397.3 | 451.2 | ||||||||||||||||||
| UNDERWRITING EXPENSES | ||||||||||||||||||||||||
| Losses and loss expenses | 234.7 | 250.8 | 310.6 | 413.4 | 188.3 | 272.7 | ||||||||||||||||||
| Acquisition expenses | 80.8 | 78.6 | 87.5 | 70.4 | 65.0 | 81.7 | ||||||||||||||||||
| General and administrative expenses | 59.9 | 48.5 | 48.6 | 51.6 | 57.1 | 44.4 | ||||||||||||||||||
| Total underwriting expenses | 375.4 | 377.9 | 446.7 | 535.4 | 310.4 | 398.8 | ||||||||||||||||||
| Underwriting income (loss) | 53.2 | 69.4 | 31.9 | (101.2 | ) | 86.9 | 52.4 | |||||||||||||||||
| OTHER OPERATING REVENUE | ||||||||||||||||||||||||
| Net investment income | 72.2 | 59.2 | 10.3 | 19.3 | 70.5 | 78.8 | ||||||||||||||||||
| Interest expense | (4.0 | ) | (3.9 | ) | (3.9 | ) | (3.8 | ) | (4.0 | ) | (4.4 | ) | ||||||||||||
| Total other operating revenue | 68.2 | 55.3 | 6.4 | 15.5 | 66.5 | 74.4 | ||||||||||||||||||
| Other income (expense) | 0.7 | (2.7 | ) | (0.5 | ) | 0.6 | — | 1.9 | ||||||||||||||||
| OPERATING INCOME (LOSS) BEFORE TAX | 122.1 | 122.0 | 37.8 | (85.1 | ) | 153.4 | 128.7 | |||||||||||||||||
| OTHER | ||||||||||||||||||||||||
| Net realized and unrealized exchange gains (losses) | 3.1 | (2.3 | ) | (4.8 | ) | (2.7 | ) | (5.0 | ) | 8.0 | ||||||||||||||
| Net realized and unrealized investment gains (losses) | 4.8 | (12.2 | ) | 8.4 | (58.1 | ) | 0.8 | (5.6 | ) | |||||||||||||||
| INCOME (LOSS) BEFORE TAX | 130.0 | 107.5 | 41.4 | (145.9 | ) | 149.2 | 131.1 | |||||||||||||||||
| Income tax (expense) recovery | (19.6 | ) | (16.1 | ) | (19.6 | ) | 19.8 | (22.3 | ) | (16.4 | ) | |||||||||||||
| NET INCOME (LOSS) AFTER TAX | 110.4 | 91.4 | 21.8 | (126.1 | ) | 126.9 | 114.7 | |||||||||||||||||
| Dividends paid on ordinary shares | (12.3 | ) | (12.3 | ) | (12.3 | ) | (12.2 | ) | (12.8 | ) | (13.2 | ) | ||||||||||||
| Dividend paid on preference shares | (5.8 | ) | (6.9 | ) | (6.9 | ) | (6.9 | ) | (7.0 | ) | (7.0 | ) | ||||||||||||
| Retained income (loss) | $92.3 | $72.2 | $2.6 | $(145.2 | ) | $107.1 | $94.5 | |||||||||||||||||
| Components of net income (loss) after tax | ||||||||||||||||||||||||
| Operating income (loss) | $103.8 | $105.7 | $20.5 | $(76.2 | ) | $131.2 | $110.8 | |||||||||||||||||
| Net realized and unrealized exchange gains (losses) after tax | 3.1 | (2.3 | ) | (4.8 | ) | (2.7 | ) | (5.0 | ) | 8.0 | ||||||||||||||
| Net realized investment gains (losses) after tax | 3.5 | (12.0 | ) | 6.1 | (47.2 | ) | 0.7 | (4.1 | ) | |||||||||||||||
| NET INCOME (LOSS) AFTER TAX | $110.4 | $91.4 | $21.8 | $(126.1 | ) | $126.9 | $114.7 | |||||||||||||||||
| Loss ratio | 54.8% | 56.1% | 64.9% | 95.2% | 47.4% | 60.5% | ||||||||||||||||||
| Policy acquisition expense ratio | 18.9% | 17.6% | 18.3% | 16.2% | 16.4% | 18.1% | ||||||||||||||||||
| General and administrative expense ratio | 14.0% | 10.8% | 10.2% | 11.9% | 14.4% | 9.8% | ||||||||||||||||||
| Expense ratio | 32.9% | 28.4% | 28.5% | 28.1% | 30.8% | 27.9% | ||||||||||||||||||
| Combined ratio | 87.7% | 84.5% | 93.4% | 123.3% | 78.2% | 88.4% | ||||||||||||||||||
Basic earnings per share(1) | $1.26 | $1.42 | $0.18 | $(1.63 | ) | $1.44 | $1.22 | |||||||||||||||||
Diluted earnings per share(1) | $1.22 | $1.39 | $0.18 | $(1.63 | ) | $1.39 | $1.19 | |||||||||||||||||
| Annualized return on average equity | ||||||||||||||||||||||||
| Net income | 17.6% | 14.8% | 2.8% | (23.2% | ) | 20.4% | 20.4% | |||||||||||||||||
| Operating income | 16.4% | 17.6% | 2.4% | (14.4% | ) | 21.2% | 19.7% | |||||||||||||||||
See pages 8, 27, 29, 30 and 31 for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures.
| 1. | Adjusted for preference share dividend and cancellation of preference shares. |
4
Table of Contents
Aspen Insurance Holdings Limited
| Six Months Ended June 30, | ||||||||||||
| (in US$ millions except for percentages) | 2009 | 2008 | 2007 | |||||||||
| UNDERWRITING REVENUES | ||||||||||||
| Gross written premiums | $1,171.1 | $1,125.0 | $1,140.0 | |||||||||
| Premiums ceded | (179.8 | ) | (99.4 | ) | (166.4 | ) | ||||||
| Net written premiums | 991.3 | 1,025.6 | 973.6 | |||||||||
| Change in unearned premiums | (115.4 | ) | (236.7 | ) | (83.4 | ) | ||||||
| Net earned premiums | 875.9 | 788.9 | 890.2 | |||||||||
| UNDERWRITING EXPENSES | ||||||||||||
| Losses and loss expenses | 485.5 | 395.5 | 498.2 | |||||||||
| Acquisition expenses | 159.4 | 141.4 | 159.4 | |||||||||
| General and administrative expenses | 108.4 | 107.9 | 89.7 | |||||||||
| Total underwriting expenses | 753.3 | 644.8 | 747.3 | |||||||||
| Underwriting income | 122.6 | 144.1 | 142.9 | |||||||||
| OTHER OPERATING REVENUE | ||||||||||||
| Net investment income | 131.4 | 109.6 | 146.3 | |||||||||
| Interest expense | (7.9 | ) | (7.9 | ) | (8.6 | ) | ||||||
| Total other operating revenue | 123.5 | 101.7 | 137.7 | |||||||||
| Other (expense) income | (2.0 | ) | (2.2 | ) | (5.4 | ) | ||||||
| OPERATING INCOME BEFORE TAX | 244.1 | 243.6 | 275.2 | |||||||||
| OTHER | ||||||||||||
| Net realized and unrealized exchange gains (losses) | 0.8 | (0.7 | ) | 13.5 | ||||||||
| Net realized and unrealized investment (losses) gains | (7.4 | ) | 1.8 | (10.4 | ) | |||||||
| INCOME BEFORE TAX | 237.5 | 244.7 | 278.3 | |||||||||
| Income tax (expense) recovery | (35.7 | ) | (36.6 | ) | (41.7 | ) | ||||||
| NET INCOME AFTER TAX | 201.8 | 208.1 | 236.6 | |||||||||
| Dividends paid on ordinary shares | (24.6 | ) | (25.7 | ) | (26.4 | ) | ||||||
| Dividends paid on preference shares | (12.7 | ) | (13.9 | ) | (13.9 | ) | ||||||
| Retained income | $164.5 | $168.5 | $196.3 | |||||||||
| Components of net income after tax | ||||||||||||
| Operating income | $209.5 | $207.2 | $231.4 | |||||||||
| Net realized and unrealized exchange gains (losses) after tax | 0.8 | (0.7 | ) | 13.5 | ||||||||
| Net realized investment (losses) gains after tax | (8.5 | ) | 1.6 | (8.3 | ) | |||||||
| NET INCOME AFTER TAX | $201.8 | $208.1 | $236.6 | |||||||||
| Loss ratio | 55.4% | 50.1% | 55.9% | |||||||||
| Policy acquisition expense ratio | 18.2% | 17.9% | 17.9% | |||||||||
| General and administrative expense ratio | 12.4% | 13.7% | 10.1% | |||||||||
| Expense ratio | 30.6% | 31.6% | 28.0% | |||||||||
| Combined ratio | 86.0% | 81.7% | 83.9% | |||||||||
See pages 8, 27, 29, 30 and 31 for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures.
5
Table of Contents
Aspen Insurance Holdings Limited
Consolidated Balance Sheets
Consolidated Balance Sheets
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in US$ millions, except for per share amounts) | 2009 | 2009 | 2008 | 2008 | 2008 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Investments | ||||||||||||||||||||
| Fixed maturities | $4,943.9 | $4,566.6 | $4,433.1 | $4,410.7 | $4,612.7 | |||||||||||||||
| Other investments | 24.7 | 290.9 | 286.9 | 513.1 | 555.3 | |||||||||||||||
| Short-term investments | 315.7 | 291.8 | 224.9 | 226.3 | 193.6 | |||||||||||||||
| Total investments | 5,284.3 | 5,149.3 | 4,944.9 | 5,150.1 | 5,361.6 | |||||||||||||||
| Cash and cash equivalents | 718.3 | 913.2 | 809.1 | 741.6 | 620.8 | |||||||||||||||
| Reinsurance recoverables | ||||||||||||||||||||
| Unpaid losses | 326.3 | 297.9 | 283.3 | 241.5 | 231.7 | |||||||||||||||
| Ceded unearned premiums | 135.7 | 138.8 | 46.3 | 77.5 | 98.9 | |||||||||||||||
| Receivables | ||||||||||||||||||||
| Underwriting premiums | 850.0 | 793.6 | 677.5 | 675.4 | 792.0 | |||||||||||||||
| Other | 47.0 | 44.3 | 46.5 | 102.6 | 79.0 | |||||||||||||||
| Funds withheld | 87.5 | 71.9 | 85.0 | 77.4 | 76.9 | |||||||||||||||
| Deferred policy acquisition costs | 186.0 | 166.6 | 149.7 | 166.7 | 167.4 | |||||||||||||||
| Derivatives at fair value | 5.4 | 7.2 | 11.8 | 10.9 | 11.3 | |||||||||||||||
| Receivable for securities sold | 324.3 | 5.1 | 177.2 | — | — | |||||||||||||||
| Office properties and equipment | 29.6 | 27.0 | 33.8 | 32.4 | 30.4 | |||||||||||||||
| Other assets | 15.4 | 16.7 | 15.5 | 19.8 | 20.9 | |||||||||||||||
| Intangible assets | 8.2 | 8.2 | 8.2 | 8.2 | 8.2 | |||||||||||||||
| Total assets | $8,018.0 | $7,639.8 | $7,288.8 | $7,304.1 | $7,499.1 | |||||||||||||||
| LIABILITIES | ||||||||||||||||||||
| Insurance reserves | ||||||||||||||||||||
| Losses and loss adjustment expenses | $3,265.1 | $3,096.2 | $3,070.3 | $3,081.9 | $2,944.4 | |||||||||||||||
| Unearned premiums | 1,039.6 | 963.8 | 810.7 | 940.8 | 1,018.9 | |||||||||||||||
| Total insurance reserves | 4,304.7 | 4,060.0 | 3,881.0 | 4,022.7 | 3,963.3 | |||||||||||||||
| Payables | ||||||||||||||||||||
| Reinsurance premiums | 169.5 | 197.1 | 103.0 | 98.0 | 115.6 | |||||||||||||||
| Taxation | 97.8 | 84.6 | 72.6 | 33.4 | 82.6 | |||||||||||||||
| Accrued expenses and other payables | 216.2 | 206.7 | 192.5 | 246.2 | 219.7 | |||||||||||||||
| Liabilities under derivative contracts | 7.7 | 9.4 | 11.1 | 16.7 | 14.5 | |||||||||||||||
| Total payables | 491.2 | 497.8 | 379.2 | 394.3 | 432.4 | |||||||||||||||
| Long-term debt | 249.6 | 249.6 | 249.5 | 249.5 | 249.5 | |||||||||||||||
| Total liabilities | 5,045.5 | 4,807.4 | 4,509.7 | 4,666.5 | 4,645.2 | |||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Ordinary shares | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | |||||||||||||||
| Preference shares | — | — | — | — | — | |||||||||||||||
| Additional paid-in capital | 1,754.1 | 1,749.9 | 1,754.8 | 1,754.1 | 1,753.3 | |||||||||||||||
| Retained earnings | 1,049.2 | 956.9 | 884.7 | 882.1 | 1,027.3 | |||||||||||||||
| Accumulated other comprehensive income, net of taxes | 169.1 | 125.5 | 139.5 | 1.3 | 73.2 | |||||||||||||||
| Total shareholders’ equity | 2,972.5 | 2,832.4 | 2,779.1 | 2,637.6 | 2,853.9 | |||||||||||||||
| Total liabilities and shareholders’ equity | $8,018.0 | $7,639.8 | $7,288.8 | $7,304.1 | $7,499.1 | |||||||||||||||
| Book value per ordinary share | $31.45 | $29.85 | $28.85 | $27.14 | $29.84 | |||||||||||||||
See pages 8, 27, 29, 30 and 31 for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures.
6
Table of Contents
Aspen Insurance Holdings Limited
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| (in US$ except for number of shares) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Basic earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $1.26 | $1.44 | $2.68 | $2.31 | ||||||||||||
| Operating income adjusted for preference share dividend | $1.18 | $1.49 | $2.39 | $2.30 | ||||||||||||
| Diluted earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $1.22 | $1.39 | $2.61 | $2.24 | ||||||||||||
| Operating income adjusted for preference share dividend | $1.14 | $1.44 | $2.32 | $2.23 | ||||||||||||
| Weighted average number of ordinary shares outstanding (in millions) | 82.940 | 83.513 | 82.241 | 84.512 | ||||||||||||
| Weighted average number of ordinary shares outstanding and dilutive potential ordinary shares (in millions) | 85.645 | 86.010 | 84.612 | 86.980 | ||||||||||||
| Book value per ordinary share | $31.45 | $29.84 | $31.45 | $29.84 | ||||||||||||
| Diluted book value per ordinary share (treasury stock method) | $30.36 | $28.99 | $30.36 | $28.99 | ||||||||||||
| Ordinary shares outstanding at end of the period (in millions) | 83.022 | 81.321 | 83.022 | 81.321 | ||||||||||||
| Ordinary shares outstanding and dilutive potential ordinary shares at end of the period (treasury stock method) (in millions) | 85.985 | 83.691 | 85.985 | 83.691 | ||||||||||||
See pages 8, 27, 29, 30 and 31 for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures.
7
Table of Contents
Aspen Insurance Holdings Limited
Return On Average Equity
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in US$ millions except for percentages) | June 30, 2009 | June 30, 2008 | June 30, 2009 | June 30, 2008 | ||||||||||||
| Closing shareholders’ equity | $ | 2,972.5 | $2,853.9 | $2,972.5 | $2,853.9 | |||||||||||
| Average adjustment | (581.9 | ) | (497.8 | ) | (651.4 | ) | (518.7 | ) | ||||||||
Average equity (1) | $ | 2,390.6 | $2,356.1 | $2,321.1 | $2,335.2 | |||||||||||
| Return on average equity: | ||||||||||||||||
| Net income adjusted for preference share dividend | 4.4% | 5.1% | 8.1% | 8.3% | ||||||||||||
| Operating income adjusted for preference share dividend | 4.1% | 5.3% | 8.5% | 8.3% | ||||||||||||
| Annualized return on average equity: | ||||||||||||||||
| Net income | 17.6% | 20.4% | 16.2% | 16.6% | ||||||||||||
| Operating income | 16.4% | 21.2% | 17.0% | 16.6% | ||||||||||||
| Components of return on average equity: | ||||||||||||||||
Return on average equity from underwriting activity (2) | 2.2% | 3.7% | 5.3% | 6.2% | ||||||||||||
Return on average equity from investment and other activity (3) | 2.6% | 2.5% | 4.7% | 3.6% | ||||||||||||
| Pre-tax operating income return on average equity | 4.8% | 6.2% | 10.0% | 9.8% | ||||||||||||
Post-tax operating income return on average equity (4) | 4.1% | 5.3% | 8.5% | 8.3% | ||||||||||||
See pages 8, 27, 29, 30 and 31 for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures.
1. Average equity is calculated by taking the simple average at latest quarter end and the previous quarter end of the closing shareholders’ equity excluding (i) preference shares, (ii) after-tax unrealized appreciation or depreciation on investments and (iii) the average after-tax unrealized foreign exchange gains and losses.
2. Calculated by using underwriting income.
3. Calculated by using total other operating revenue and other income/expense adjusted for preference share dividend.
4. Calculated by using operating income after-tax adjusted for preference share dividend.
8
Table of Contents
Aspen Insurance Holdings Limited
Consolidated Underwriting Results by Operating Segment
| Three Months Ended June 30, 2009 | Three Months Ended June 30, 2008 | |||||||||||||||||||||||||||||||||||||||
| Property | Casualty | International | U.S. | Property | Casualty | International | U.S. | |||||||||||||||||||||||||||||||||
| (in US$ millions except for percentages) | Reinsurance | Reinsurance | Insurance | Insurance | Total | Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||||||||||||||||
| Gross written premiums | $180.0 | $59.0 | $238.7 | $56.6 | $534.3 | $170.5 | $56.8 | $258.9 | $42.6 | $528.8 | ||||||||||||||||||||||||||||||
| Net written premiums | 178.4 | 59.0 | 200.1 | 47.2 | 484.7 | 165.5 | 54.5 | 251.6 | 34.4 | 506.0 | ||||||||||||||||||||||||||||||
| Gross earned premiums | 145.2 | 101.3 | 209.3 | 35.5 | 491.3 | 144.5 | 87.7 | 178.6 | 29.6 | 440.4 | ||||||||||||||||||||||||||||||
| Net earned premiums | 132.0 | 101.2 | 170.2 | 25.2 | 428.6 | 123.6 | 85.8 | 162.9 | 25.0 | 397.3 | ||||||||||||||||||||||||||||||
| Losses and loss expenses | 20.6 | 69.0 | 117.2 | 27.9 | 234.7 | 38.3 | 54.3 | 83.6 | 12.1 | 188.3 | ||||||||||||||||||||||||||||||
| Policy acquisition expenses | 27.9 | 20.0 | 29.9 | 3.0 | 80.8 | 23.6 | 11.7 | 26.0 | 3.7 | 65.0 | ||||||||||||||||||||||||||||||
| Operating and administrative expenses | 15.1 | 11.1 | 22.8 | 10.9 | 59.9 | 18.4 | 12.5 | 19.2 | 7.0 | 57.1 | ||||||||||||||||||||||||||||||
| Underwriting income (loss) | $68.4 | $1.1 | $0.3 | $(16.6 | ) | $53.2 | $43.3 | $7.3 | $34.1 | $2.2 | $86.9 | |||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||||||||||
| Loss ratio | 15.6% | 68.2% | 68.9% | 110.7% | 54.8% | 31.0% | 63.3% | 51.3% | 48.4% | 47.4% | ||||||||||||||||||||||||||||||
| Policy acquisition expense ratio | 21.1% | 19.8% | 17.6% | 11.9% | 18.9% | 19.1% | 13.6% | 16.1% | 14.7% | 16.4% | ||||||||||||||||||||||||||||||
| Operating and administrative expense ratio | 11.4% | 11.0% | 13.4% | 43.3% | 14.0% | 14.9% | 14.6% | 11.8% | 27.9% | 14.4% | ||||||||||||||||||||||||||||||
| Expense ratio | 32.5% | 30.8% | 31.0% | 55.2% | 32.9% | 34.0% | 28.2% | 27.9% | 42.6% | 30.8% | ||||||||||||||||||||||||||||||
| Combined ratio | 48.1% | 99.0% | 99.9% | 165.9% | 87.7% | 65.0% | 91.5% | 79.2% | 91.0% | 78.2% | ||||||||||||||||||||||||||||||
9
Table of Contents
Aspen Insurance Holdings Limited
Consolidated Underwriting Results by Operating Segment
| Six Months Ended June 30, 2009 | Six Months Ended June 30, 2008 | |||||||||||||||||||||||||||||||||||||||
| Property | Casualty | International | U.S. | Property | Casualty | International | U.S. | |||||||||||||||||||||||||||||||||
| (in US$ millions except for percentages) | Reinsurance | Reinsurance | Insurance | Insurance | Total | Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||||||||||||||||
| Gross written premiums | $400.5 | $245.8 | $433.4 | $91.4 | $1,171.1 | $354.7 | $238.9 | $458.2 | $73.2 | $1,125.0 | ||||||||||||||||||||||||||||||
| Net written premiums | 360.5 | 244.8 | 324.9 | 61.1 | 991.3 | 340.9 | 234.5 | 393.6 | 56.6 | 1,025.6 | ||||||||||||||||||||||||||||||
| Gross earned premiums | 296.1 | 211.3 | 408.1 | 69.0 | 984.5 | 284.8 | 183.4 | 343.9 | 55.6 | 867.7 | ||||||||||||||||||||||||||||||
| Net earned premiums | 271.1 | 210.7 | 345.2 | 48.9 | 875.9 | 250.6 | 180.5 | 313.1 | 44.7 | 788.9 | ||||||||||||||||||||||||||||||
| Losses and loss expenses | 60.8 | 141.2 | 244.2 | 39.3 | 485.5 | 76.3 | 115.8 | 181.3 | 22.1 | 395.5 | ||||||||||||||||||||||||||||||
| Policy acquisition expenses | 52.7 | 41.9 | 57.9 | 6.9 | 159.4 | 49.5 | 29.4 | 54.0 | 8.5 | 141.4 | ||||||||||||||||||||||||||||||
| Operating and administrative expenses | 30.3 | 20.1 | 41.4 | 16.6 | 108.4 | 35.0 | 23.2 | 37.1 | 12.6 | 107.9 | ||||||||||||||||||||||||||||||
| Underwriting income (loss) | $127.3 | $7.5 | $1.7 | $(13.9 | ) | $122.6 | $89.8 | $12.1 | $40.7 | $1.5 | $144.1 | |||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||||||||||
| Loss ratio | 22.4% | 67.0% | 70.7% | 80.4% | 55.4% | 30.4% | 64.2% | 57.9% | 49.4% | 50.1% | ||||||||||||||||||||||||||||||
| Policy acquisition expense ratio | 19.4% | 19.9% | 16.8% | 14.1% | 18.2% | 19.8% | 16.3% | 17.3% | 19.0% | 17.9% | ||||||||||||||||||||||||||||||
| Operating and administrative expense ratio | 11.2% | 9.5% | 12.0% | 33.9% | 12.4% | 14.0% | 12.9% | 11.9% | 28.2% | 13.7% | ||||||||||||||||||||||||||||||
| Expense ratio | 30.6% | 29.4% | 28.8% | 48.0% | 30.6% | 33.8% | 29.2% | 29.2% | 47.2% | 31.6% | ||||||||||||||||||||||||||||||
| Combined ratio | 53.0% | 96.4% | 99.5% | 128.4% | 86.0% | 64.2% | 93.4% | 87.1% | 96.6% | 81.7% | ||||||||||||||||||||||||||||||
10
Table of Contents
Aspen Insurance Holdings Limited
Property Reinsurance Segment — Quarterly Results
| (in US$ millions except for percentages) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | Q2 2007 | |||||||||||||||||||||
| Gross written premiums | $180.0 | $220.5 | $81.5 | $152.8 | $170.5 | $184.2 | $190.3 | |||||||||||||||||||||
| Net written premiums | 178.4 | 182.1 | 83.0 | 140.2 | 165.5 | 175.4 | 115.6 | |||||||||||||||||||||
| Gross earned premiums | 145.2 | 150.9 | 155.3 | 152.3 | 144.5 | 140.3 | 151.3 | |||||||||||||||||||||
| Net earned premiums | 132.0 | 139.1 | 143.0 | 138.8 | 123.6 | 127.0 | 144.3 | |||||||||||||||||||||
| Net losses and loss expenses | 20.6 | 40.2 | 73.8 | 164.6 | 38.3 | 38.0 | 63.7 | |||||||||||||||||||||
| Policy acquisition expenses | 27.9 | 24.8 | 32.1 | 23.4 | 23.6 | 25.9 | 31.1 | |||||||||||||||||||||
| Operating and administrative expenses | 15.1 | 15.2 | 16.0 | 14.7 | 18.4 | 16.6 | 16.8 | |||||||||||||||||||||
| Underwriting income (loss) | $68.4 | $58.9 | $21.1 | $(63.9 | ) | $43.3 | $46.5 | $32.7 | ||||||||||||||||||||
RATIOS | ||||||||||||||||||||||||||||
| Loss ratio | 15.6% | 28.9% | 51.6% | 118.6% | 31.0% | 29.9% | 44.1% | |||||||||||||||||||||
| Policy acquisition expense ratio | 21.1% | 17.8% | 22.4% | 16.8% | 19.1% | 20.4% | 21.6% | |||||||||||||||||||||
| Operating and administrative expense ratio | 11.4% | 10.9% | 11.2% | 10.6% | 14.9% | 13.1% | 11.6% | |||||||||||||||||||||
| Expense ratio | 32.5% | 28.7% | 33.6% | 27.4% | 34.0% | 33.5% | 33.2% | |||||||||||||||||||||
| Combined ratio | 48.1% | 57.6% | 85.2% | 146.0% | 65.0% | 63.4% | 77.3% | |||||||||||||||||||||
11
Table of Contents
Aspen Insurance Holdings Limited
Casualty Reinsurance Segment — Quarterly Results
| (in US$ millions except for percentages) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | Q2 2007 | |||||||||||||||||||||
| Gross written premiums | $59.0 | $186.8 | $97.7 | $79.7 | $56.8 | $182.1 | $79.4 | |||||||||||||||||||||
| Net written premiums | 59.0 | 185.8 | 98.7 | 79.8 | 54.5 | 180.0 | 78.1 | |||||||||||||||||||||
| Gross earned premiums | 101.3 | 110.0 | 121.3 | 113.7 | 87.7 | 95.7 | 127.8 | |||||||||||||||||||||
| Net earned premiums | 101.2 | 109.5 | 120.1 | 112.9 | 85.8 | 94.7 | 125.7 | |||||||||||||||||||||
| Losses and loss expenses | 69.0 | 72.2 | 80.5 | 75.9 | 54.3 | 61.5 | 91.6 | |||||||||||||||||||||
| Policy acquisition expenses | 20.0 | 21.9 | 19.4 | 16.6 | 11.7 | 17.7 | 17.2 | |||||||||||||||||||||
| Operating and administrative expenses | 11.1 | 9.0 | 10.4 | 9.6 | 12.5 | 10.7 | 10.2 | |||||||||||||||||||||
| Underwriting income | $1.1 | $6.4 | $9.8 | $10.8 | $7.3 | $4.8 | $6.7 | |||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||
| Loss ratio | 68.2% | 65.9% | 67.1% | 67.2% | 63.3% | 64.9% | 72.9% | |||||||||||||||||||||
| Policy acquisition expense ratio | 19.8% | 20.0% | 16.2% | 14.7% | 13.6% | 18.7% | 13.7% | |||||||||||||||||||||
| Operating and administrative expense ratio | 11.0% | 8.2% | 8.7% | 8.5% | 14.6% | 11.3% | 8.1% | |||||||||||||||||||||
| Expense ratio | 30.8% | 28.2% | 24.9% | 23.2% | 28.2% | 30.0% | 21.8% | |||||||||||||||||||||
| Combined ratio | 99.0% | 94.1% | 92.0% | 90.4% | 91.5% | 94.9% | 94.7% | |||||||||||||||||||||
12
Table of Contents
Aspen Insurance Holdings Limited
International Insurance Segment — Quarterly Results
| (in US$ millions except for percentages) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | Q2 2007 | |||||||||||||||||||||
| Gross written premiums | $238.7 | $194.7 | $228.8 | $180.8 | $258.9 | $199.3 | $198.9 | |||||||||||||||||||||
| Net written premiums | 200.1 | 124.8 | 202.0 | 162.2 | 251.6 | 142.0 | 196.9 | |||||||||||||||||||||
| Gross earned premiums | 209.3 | 198.8 | 228.9 | 185.4 | 178.6 | 165.3 | 169.7 | |||||||||||||||||||||
| Net earned premiums | 170.2 | 175.0 | 190.1 | 158.6 | 162.9 | 150.2 | 156.0 | |||||||||||||||||||||
| Losses and loss expenses | 117.2 | 127.0 | 150.4 | 141.8 | 83.6 | 97.7 | 95.7 | |||||||||||||||||||||
| Policy acquisition expenses | 29.9 | 28.0 | 32.9 | 26.5 | 26.0 | 28.0 | 28.3 | |||||||||||||||||||||
| Operating and administrative expenses | 22.8 | 18.6 | 16.2 | 21.1 | 19.2 | 17.9 | 13.3 | |||||||||||||||||||||
| Underwriting (loss) income | $0.3 | $1.4 | $(9.4 | ) | $(30.8 | ) | $34.1 | $6.6 | $18.7 | |||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||
| Loss ratio | 68.9% | 72.6% | 79.1% | 89.4% | 51.3% | 65.0% | 61.3% | |||||||||||||||||||||
| Policy acquisition expense ratio | 17.6% | 16.0% | 17.3% | 16.7% | 16.1% | 18.6% | 18.2% | |||||||||||||||||||||
| Operating and administrative expense ratio | 13.4% | 10.6% | 8.5% | 13.3% | 11.8% | 11.9% | 8.5% | |||||||||||||||||||||
| Expense ratio | 31.0% | 26.6% | 25.8% | 30.0% | 27.9% | 30.5% | 26.7% | |||||||||||||||||||||
| Combined ratio | 99.9% | 99.2% | 104.9% | 119.4% | 79.2% | 95.5% | 88.0% | |||||||||||||||||||||
13
Table of Contents
Aspen Insurance Holdings Limited
U.S. Insurance Segment — Quarterly Results
| (in US$ millions except for percentages) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | Q2 2007 | |||||||||||||||||||||
| Gross written premiums | $56.6 | $34.8 | $27.4 | $28.0 | $42.6 | $30.6 | $34.9 | |||||||||||||||||||||
| Net written premiums | 47.2 | 13.9 | 22.5 | 21.6 | 34.4 | 22.2 | 27.9 | |||||||||||||||||||||
| Gross earned premiums | 35.5 | 33.5 | 33.0 | 31.5 | 29.6 | 26.0 | 33.3 | |||||||||||||||||||||
| Net earned premiums | 25.2 | 23.7 | 25.4 | 23.9 | 25.0 | 19.7 | 25.2 | |||||||||||||||||||||
| Losses and loss expenses | 27.9 | 11.4 | 5.9 | 31.1 | 12.1 | 10.0 | 21.7 | |||||||||||||||||||||
| Policy acquisition expenses | 3.0 | 3.9 | 3.1 | 3.9 | 3.7 | 4.8 | 5.1 | |||||||||||||||||||||
| Operating and administrative expenses | 10.9 | 5.7 | 6.0 | 6.2 | 7.0 | 5.6 | 4.1 | |||||||||||||||||||||
| Underwriting (loss) income | $(16.6 | ) | $2.7 | $10.4 | $(17.3 | ) | $2.2 | $(0.7 | ) | $(5.7 | ) | |||||||||||||||||
Ratios | ||||||||||||||||||||||||||||
| Loss ratio | 110.7% | 48.1% | 23.2% | 130.1% | 48.4% | 50.8% | 86.1% | |||||||||||||||||||||
| Policy acquisition expense ratio | 11.9% | 16.5% | 12.3% | 16.3% | 14.7% | 24.4% | 20.2% | |||||||||||||||||||||
| Operating and administrative expense ratio | 43.3% | 24.1% | 23.5% | 25.7% | 27.9% | 28.4% | 16.3% | |||||||||||||||||||||
| Expense ratio | 55.2% | 40.6% | 35.8% | 42.0% | 42.6% | 52.8% | 36.5% | |||||||||||||||||||||
| Combined ratio | 165.9% | 88.7% | 59.0% | 172.1% | 91.0% | 103.6% | 122.6% | |||||||||||||||||||||
14
Table of Contents
Aspen Insurance Holdings Limited
Gross Written Premiums By Segment And Line Of Business
| (in US$ millions) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | Q2 2007 | |||||||||||||||||||||
Property Reinsurance | ||||||||||||||||||||||||||||
| Treaty Catastrophe | $78.4 | $116.7 | $(2.8 | ) | $65.0 | $79.2 | $111.6 | $85.2 | ||||||||||||||||||||
| Treaty Risk Excess | 37.2 | 31.3 | 5.9 | 36.3 | 40.0 | 29.9 | 66.6 | |||||||||||||||||||||
| Treaty Pro Rata | 44.5 | 48.2 | 68.9 | 36.5 | 36.5 | 32.7 | 29.2 | |||||||||||||||||||||
| Property Facultative | 11.6 | 17.0 | 9.5 | 15.0 | 14.8 | 10.0 | 9.3 | |||||||||||||||||||||
| Credit and Surety | 8.3 | 7.3 | — | — | — | — | — | |||||||||||||||||||||
| $180.0 | $220.5 | $81.5 | $152.8 | $170.5 | $184.2 | $190.3 | ||||||||||||||||||||||
Casualty Reinsurance | ||||||||||||||||||||||||||||
| U.S. Treaty | $43.7 | $106.3 | $80.2 | $60.1 | $46.9 | $89.6 | $55.3 | |||||||||||||||||||||
| International Treaty | 12.5 | 77.0 | 13.3 | 15.3 | 5.7 | 89.5 | 22.2 | |||||||||||||||||||||
| Casualty Facultative | 2.8 | 3.5 | 4.2 | 4.3 | 4.2 | 3.0 | 1.9 | |||||||||||||||||||||
| $59.0 | $186.8 | $97.7 | $79.7 | $56.8 | $182.1 | $79.4 | ||||||||||||||||||||||
International Insurance | ||||||||||||||||||||||||||||
| Marine and Specialty Liability | $70.2 | $50.8 | $45.0 | $14.1 | $47.4 | $54.8 | $40.1 | |||||||||||||||||||||
| Energy Property | 41.0 | 16.4 | 7.5 | 22.3 | 41.7 | 23.4 | 45.0 | |||||||||||||||||||||
| Marine Hull | 14.8 | 16.5 | 19.1 | 10.7 | 17.5 | 18.6 | 18.2 | |||||||||||||||||||||
| Aviation | 21.6 | 10.4 | 48.2 | 19.3 | 23.1 | 11.2 | 26.6 | |||||||||||||||||||||
| U.K. Commercial Property | 16.2 | 7.4 | 5.7 | 14.1 | 22.7 | 9.4 | 19.1 | |||||||||||||||||||||
| U.K. Commercial Liability | 11.8 | 9.1 | 14.6 | 23.3 | 17.1 | 20.1 | 24.6 | |||||||||||||||||||||
| Non-Marine and Transportation Liability | 12.4 | 7.9 | 10.9 | 8.7 | 14.3 | 7.1 | — | |||||||||||||||||||||
| Professional Liability | 9.7 | 7.7 | 15.7 | 13.3 | 7.4 | 7.6 | — | |||||||||||||||||||||
| Excess Casualty | 6.8 | 4.8 | 12.4 | 8.9 | 6.3 | 2.0 | — | |||||||||||||||||||||
| Financial Institutions | 3.7 | 3.7 | 11.1 | 15.8 | 9.2 | 2.9 | — | |||||||||||||||||||||
| Financial and Political Risks | 3.6 | 9.2 | 7.8 | 5.5 | 21.3 | 4.5 | — | |||||||||||||||||||||
| U.K. Commercial Property — Construction | 4.0 | 3.5 | 2.9 | 4.4 | 4.5 | — | — | |||||||||||||||||||||
| Management and Technology Liability | 2.7 | 1.8 | 3.5 | — | — | — | — | |||||||||||||||||||||
| Specie | 1.8 | — | — | — | — | — | — | |||||||||||||||||||||
| Specialty Reinsurance | 18.4 | 45.5 | 24.4 | 20.4 | 26.4 | 37.7 | 25.3 | |||||||||||||||||||||
| $238.7 | $194.7 | $228.8 | $180.8 | $258.9 | $199.3 | $198.9 | ||||||||||||||||||||||
U.S. Insurance | ||||||||||||||||||||||||||||
| Property | $34.7 | $14.4 | $10.9 | $10.7 | $21.1 | $10.5 | $13.9 | |||||||||||||||||||||
| Casualty | 21.9 | 20.4 | 16.5 | 17.3 | 21.5 | 20.1 | 21.0 | |||||||||||||||||||||
| $56.6 | $34.8 | $27.4 | $28.0 | $42.6 | $30.6 | $34.9 | ||||||||||||||||||||||
Total Gross Written Premiums | $534.3 | $636.8 | $435.4 | $441.3 | $528.8 | $596.2 | $503.5 | |||||||||||||||||||||
15
Table of Contents
Aspen Insurance Holdings Limited
Accident Year Loss Ratios
| Three Months Ended June 30, 2009 | Three Months Ended June 30, 2008 | |||||||||||||||||||||||||||||||||||||||
| Property | Casualty | International | U.S. | Property | Casualty | International | U.S. | |||||||||||||||||||||||||||||||||
| Reinsurance | Reinsurance | Insurance | Insurance | Total | Reinsurance | Reinsurance | Insurance | Insurance | Total | |||||||||||||||||||||||||||||||
Before Accident Year Adjustment | ||||||||||||||||||||||||||||||||||||||||
| Loss ratio | 15.6% | 68.2% | 68.9% | 110.7% | 54.8% | 31.0% | 63.3% | 51.3% | 48.4% | 47.4% | ||||||||||||||||||||||||||||||
| Policy acquisition expense ratio | 21.1% | 19.8% | 17.6% | 11.9% | 18.9% | 19.1% | 13.6% | 16.1% | 14.7% | 16.4% | ||||||||||||||||||||||||||||||
| Operating and administrative expense ratio | 11.4% | 11.0% | 13.4% | 43.3% | 14.0% | 14.9% | 14.6% | 11.8% | 27.9% | 14.4% | ||||||||||||||||||||||||||||||
| Expense ratio | 32.5% | 30.8% | 31.0% | 55.2% | 32.9% | 34.0% | 28.2% | 27.9% | 42.6% | 30.8% | ||||||||||||||||||||||||||||||
| Combined ratio | 48.1% | 99.0% | 99.9% | 165.9% | 87.7% | 65.0% | 91.5% | 79.2% | 91.0% | 78.2% | ||||||||||||||||||||||||||||||
Accident Year Adjustment | ||||||||||||||||||||||||||||||||||||||||
| Loss ratio | 14.6% | (1.3% | ) | (3.0% | ) | (31.5% | ) | 1.2% | 4.4% | 11.1% | 11.1% | 8.8% | 10.0% | |||||||||||||||||||||||||||
| Policy acquisition expense ratio | (0.5% | ) | (0.3% | ) | — | 1.0% | (0.1% | ) | (1.0% | ) | 0.2% | (0.2% | ) | 0.6% | (0.4% | ) | ||||||||||||||||||||||||
| Operating and administrative expense ratio | (0.4% | ) | (1.1% | ) | (0.2% | ) | 1.0% | (0.6% | ) | 0.1% | (3.1% | ) | 0.9% | 4.4% | (0.1% | ) | ||||||||||||||||||||||||
| Expense ratio | (0.9% | ) | (1.4% | ) | (0.2% | ) | 2.0% | (0.7% | ) | (0.9% | ) | (2.9% | ) | 0.7% | 5.0% | (0.5% | ) | |||||||||||||||||||||||
| Combined ratio | 13.7% | (2.7% | ) | (3.2% | ) | (29.5% | ) | 0.5% | 3.5% | 8.2% | 11.8% | 13.8% | 9.5% | |||||||||||||||||||||||||||
Accident Year Ratios | ||||||||||||||||||||||||||||||||||||||||
| Current accident year loss ratio | 30.2% | 66.9% | 65.9% | 79.2% | 56.0% | 35.4% | 74.4% | 62.4% | 57.2% | 57.4% | ||||||||||||||||||||||||||||||
| Policy acquisition expense ratio | 20.6% | 19.5% | 17.6% | 12.9% | 18.8% | 18.1% | 13.8% | 15.9% | 15.3% | 16.0% | ||||||||||||||||||||||||||||||
| Operating and administrative expense ratio | 11.0% | 9.9% | 13.2% | 44.3% | 13.4% | 15.0% | 11.5% | 12.7% | 32.3% | 14.3% | ||||||||||||||||||||||||||||||
| Expense ratio | 31.6% | 29.4% | 30.8% | 57.2% | 32.2% | 33.1% | 25.3% | 28.6% | 47.6% | 30.3% | ||||||||||||||||||||||||||||||
| Combined ratio | 61.8% | 96.3% | 96.7% | 136.4% | 88.2% | 68.5% | 99.7% | 91.0% | 104.8% | 87.7% | ||||||||||||||||||||||||||||||
16
Table of Contents
Aspen Insurance Holdings Limited
Accident Year Loss Ratios
| Six Months Ended June 30, 2009 | Six Months Ended June 30, 2008 | |||||||||||||||||||||||||||||||||||||||
| Property | Casualty | International | U.S. | Property | Casualty | International | U.S. | |||||||||||||||||||||||||||||||||
| Reinsurance | Reinsurance | Insurance | Insurance | Total | Reinsurance | Reinsurance | Insurance | Insurance | Total | |||||||||||||||||||||||||||||||
Before Accident Year Adjustment | ||||||||||||||||||||||||||||||||||||||||
| Loss ratio | 22.4% | 67.0% | 70.7% | 80.4% | 55.4% | 30.4% | 64.2% | 57.9% | 49.4% | 50.1% | ||||||||||||||||||||||||||||||
| Policy acquisition expense ratio | 19.4% | 19.9% | 16.8% | 14.1% | 18.2% | 19.8% | 16.3% | 17.3% | 19.0% | 17.9% | ||||||||||||||||||||||||||||||
| Operating and administrative expense ratio | 11.2% | 9.5% | 12.0% | 33.9% | 12.4% | 14.0% | 12.9% | 11.9% | 28.2% | 13.7% | ||||||||||||||||||||||||||||||
| Expense ratio | 30.6% | 29.4% | 28.8% | 48.0% | 30.6% | 33.8% | 29.2% | 29.2% | 47.2% | 31.6% | ||||||||||||||||||||||||||||||
| Combined ratio | 53.0% | 96.4% | 99.5% | 128.4% | 86.0% | 64.2% | 93.4% | 87.1% | 96.6% | 81.7% | ||||||||||||||||||||||||||||||
Accident Year Adjustment | ||||||||||||||||||||||||||||||||||||||||
| Loss ratio | 11.0% | 3.8% | 1.3% | (11.9% | ) | 4.2% | 8.1% | 9.6% | 8.5% | 16.6% | 10.0% | |||||||||||||||||||||||||||||
| Policy acquisition expense ratio | (0.5% | ) | — | (0.1% | ) | 0.5% | (0.2% | ) | (0.7% | ) | (0.4% | ) | (0.1% | ) | 0.2% | (0.3% | ) | |||||||||||||||||||||||
| Operating and administrative expense ratio | 0.2% | — | 0.1% | 0.8% | 0.1% | 0.1% | (2.0% | ) | 0.5% | 2.5% | (0.1% | ) | ||||||||||||||||||||||||||||
| Expense ratio | (0.3% | ) | — | — | 1.3% | (0.1% | ) | (0.6% | ) | (2.4% | ) | 0.4% | 2.7% | (0.4% | ) | |||||||||||||||||||||||||
| Combined ratio | 10.7% | 3.8% | 1.3% | (10.6% | ) | 4.1% | 7.5% | 7.2% | 8.9% | 19.3% | 9.6% | |||||||||||||||||||||||||||||
Accident Year Ratios | ||||||||||||||||||||||||||||||||||||||||
| Current accident year loss ratio | 33.4% | 70.8% | 72.0% | 68.5% | 59.6% | 38.5% | 73.8% | 66.4% | 66.0% | 60.1% | ||||||||||||||||||||||||||||||
| Policy acquisition expense ratio | 18.9% | 19.9% | 16.7% | 14.6% | 18.0% | 19.1% | 15.9% | 17.2% | 19.2% | 17.6% | ||||||||||||||||||||||||||||||
| Operating and administrative expense ratio | 11.4% | 9.5% | 12.1% | 34.7% | 12.5% | 14.1% | 10.9% | 12.4% | 30.7% | 13.6% | ||||||||||||||||||||||||||||||
| Expense ratio | 30.3% | 29.4% | 28.8% | 49.3% | 30.5% | 33.2% | 26.8% | 29.6% | 49.9% | 31.2% | ||||||||||||||||||||||||||||||
| Combined ratio | 63.7% | 100.2% | 100.8% | 117.8% | 90.1% | 71.7% | 100.6% | 96.0% | 115.9% | 91.3% | ||||||||||||||||||||||||||||||
17
Table of Contents
Aspen Insurance Holdings Limited
Consolidated Statements of Changes in Shareholders’ Equity
| Six Months Ended June 30, | ||||||||
| (in US$ millions) | 2009 | 2008 | ||||||
| Ordinary shares | ||||||||
| Beginning and end of period | $0.1 | $ | 0.1 | |||||
| Preference shares | ||||||||
| Beginning and end of period | — | — | ||||||
| Additional paid-in capital | ||||||||
| Beginning of period | 1,754.8 | 1,846.1 | ||||||
| New shares issued | 25.1 | — | ||||||
| Ordinary shares repurchased | — | (100.0 | ) | |||||
| Preference shares repurchased | (34.1 | ) | — | |||||
| Share-based compensation | 8.3 | 7.2 | ||||||
| End of period | 1,754.1 | 1,753.3 | ||||||
| Retained earnings | ||||||||
| Beginning of period | 884.7 | 858.8 | ||||||
| Net income for the period | 201.8 | 208.1 | ||||||
| Dividends paid on ordinary and preference shares | (37.3 | ) | (39.6 | ) | ||||
| End of period | 1,049.2 | 1,027.3 | ||||||
| Accumulated other comprehensive income: | ||||||||
| Cumulative foreign currency translation adjustments, net of taxes: | ||||||||
| Beginning of period | 87.6 | 80.2 | ||||||
| Change for the period | (9.1 | ) | 14.2 | |||||
| End of period | 78.5 | 94.4 | ||||||
| Loss on derivatives | ||||||||
| Beginning of period | (1.4 | ) | (1.6 | ) | ||||
| Reclassification to interest payable | 0.1 | 0.1 | ||||||
| End of period | (1.3 | ) | (1.5 | ) | ||||
| Unrealized appreciation (depreciation) on investments, net of taxes: | ||||||||
| Beginning of period | 53.3 | 34.0 | ||||||
| Change for the period | 38.6 | (53.7 | ) | |||||
| End of period | 91.9 | (19.7 | ) | |||||
| Total accumulated other comprehensive income | 169.1 | 73.2 | ||||||
| Total shareholders’ equity | $2,972.5 | $ | 2,853.9 | |||||
18
Table of Contents
Aspen Insurance Holdings Limited
Consolidated Statements of Comprehensive Income
Consolidated Statements of Comprehensive Income
| Six Months Ended June 30, | ||||||||
| (in US$ millions) | 2009 | 2008 | ||||||
| Net income | $201.8 | $ | 208.1 | |||||
| Other comprehensive income (loss), net of taxes: | ||||||||
| Available for sale investments: | ||||||||
| Reclassification adjustment for net realized losses included in net income | 10.4 | (3.8 | ) | |||||
| Change in net unrealized gains and losses on available for sale securities held | 28.2 | (49.9 | ) | |||||
| Loss on derivatives reclassified to interest expense | 0.1 | 0.1 | ||||||
| Change in foreign currency translation adjustment | (9.1 | ) | 14.2 | |||||
| Other comprehensive income (loss) | 29.6 | (39.4 | ) | |||||
| Comprehensive income | $231.4 | $ | 168.7 | |||||
19
Table of Contents
Aspen Insurance Holdings Limited
Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statements of Cash Flows
| Six Months Ended June 30, | ||||||||
| (in US$ millions) | 2009 | 2008 | ||||||
| Net cash from/(used in) operating activities | $302.3 | $ | 319.8 | |||||
| Net cash from/(used in) investing activities | (359.7 | ) | (193.2 | ) | ||||
| Net cash from/(used in) financing activities | (46.3 | ) | (139.6 | ) | ||||
| Effect of exchange rate movements on cash and cash equivalents | 12.9 | (17.6 | ) | |||||
| Increase in cash and cash equivalents | (90.8 | ) | (30.6 | ) | ||||
| Cash at beginning of period | 809.1 | 651.4 | ||||||
| Cash at end of period | $718.3 | $ | 620.8 | |||||
20
Table of Contents
Aspen Insurance Holdings Limited
Reserves For Losses And Loss Expenses
Reserves For Losses And Loss Expenses
| As At | As At | |||||||
| June 30, | December 31, | |||||||
| (in US$ millions) | 2009 | 2008 | ||||||
| Provision for losses and loss expenses at start of period | $3,070.3 | $ | 2,946.0 | |||||
| Less reinsurance recoverables | (283.3 | ) | (304.7 | ) | ||||
| Net loss and loss expenses at start of period | 2,787.0 | 2,641.3 | ||||||
| Net loss and loss expenses (disposed) acquired | (9.0 | ) | (27.8 | ) | ||||
| Provision for losses and loss expenses for claims incurred | ||||||||
| Current period | 512.3 | 1,203.0 | ||||||
| Prior period release | (26.8 | ) | (83.5 | ) | ||||
| Total incurred | 485.5 | 1,119.5 | ||||||
| Losses and loss expense payments for claims incurred | (397.9 | ) | (727.0 | ) | ||||
| Foreign exchange losses (gains) | 73.2 | (219.0 | ) | |||||
| Net loss and loss expense reserves at end of period | 2,938.8 | 2,787.0 | ||||||
| Plus reinsurance recoverables on unpaid losses at end of period | 326.3 | 283.3 | ||||||
| Gross loss and loss expense reserves at end of period | $3,265.1 | $ | 3,070.3 | |||||
21
Table of Contents
Aspen Insurance Holdings Limited
Reserves By Operating Segment
Reserves By Operating Segment
| As At June 30, 2009 | As At December 31, 2008 | |||||||||||||||||||||||
| Reinsurance | Reinsurance | |||||||||||||||||||||||
| (in US$ millions) | Gross | Recoverables | Net | Gross | Recoverables | Net | ||||||||||||||||||
| Property Reinsurance | $417.9 | $(43.0 | ) | $374.9 | $488.5 | $(37.9 | ) | $450.6 | ||||||||||||||||
| Casualty Reinsurance | 1,427.0 | (6.5 | ) | 1,420.5 | 1,311.1 | (5.9 | ) | 1,305.2 | ||||||||||||||||
| International Insurance | 1,225.3 | (243.4 | ) | 981.9 | 1,117.4 | (210.9 | ) | 906.5 | ||||||||||||||||
| U.S. Insurance | 194.9 | (33.4 | ) | 161.5 | 153.3 | (28.6 | ) | 124.7 | ||||||||||||||||
| Total losses and loss expense reserves | $3,265.1 | $(326.3 | ) | $2,938.8 | $3,070.3 | $(283.3 | ) | $2,787.0 | ||||||||||||||||
22
Table of Contents
Aspen Insurance Holdings Limited
Prior Year Reserve Releases
| Six Months Ended June 30, 2009 | Six Months Ended June 30, 2008 | |||||||||||||||||||||||
| Reinsurance | Reinsurance | |||||||||||||||||||||||
| (in US$ millions) | Gross | Recoverables | Net | Gross | Recoverables | Net | ||||||||||||||||||
| Property Reinsurance | $27.5 | — | $27.5 | $7.5 | $8.7 | $16.2 | ||||||||||||||||||
| Casualty Reinsurance | 9.1 | — | 9.1 | 38.8 | (0.5 | ) | 38.3 | |||||||||||||||||
| International Insurance | (20.0 | ) | 16.3 | (3.7 | ) | 17.5 | 0.6 | 18.1 | ||||||||||||||||
| U.S. Insurance | (14.4 | ) | 8.3 | (6.1 | ) | 8.9 | (1.5 | ) | 7.4 | |||||||||||||||
| Release in reserves for prior years during the period | $2.2 | $24.6 | $26.8 | $72.7 | $7.3 | $80.0 | ||||||||||||||||||
| Three Months Ended June 30, 2009 | Three Months Ended June 30, 2008 | |||||||||||||||||||||||
| Reinsurance | Reinsurance | |||||||||||||||||||||||
| (in US$ millions) | Gross | Recoverables | Net | Gross | Recoverables | Net | ||||||||||||||||||
| Property Reinsurance | $21.5 | $(0.6 | ) | $20.9 | $3.4 | $(0.8 | ) | $2.6 | ||||||||||||||||
| Casualty Reinsurance | 6.0 | — | 6.0 | 24.6 | (0.6 | ) | 24.0 | |||||||||||||||||
| International Insurance | (11.4 | ) | 9.7 | (1.7 | ) | 12.5 | (1.3 | ) | 11.2 | |||||||||||||||
| U.S. Insurance | (15.2 | ) | 6.9 | (8.3 | ) | 2.6 | 0.1 | 2.7 | ||||||||||||||||
| Release in reserves for prior years during the period | $0.9 | $16.0 | $16.9 | $43.1 | $(2.6 | ) | $40.5 | |||||||||||||||||
23
Table of Contents
Aspen Insurance Holdings Limited
Ratings Of Reinsurers
| (in US$ millions except for percentages) | As at June 30, 2009 | As at December 31, 2008 | ||||||||||||||
S&P | ||||||||||||||||
| AAA | $16.2 | 5.0% | $15.9 | 5.6% | ||||||||||||
| AA− | 60.5 | 18.5% | 103.7 | 36.6% | ||||||||||||
| A+ | 169.5 | 51.9% | 98.8 | 34.9% | ||||||||||||
| A | 9.4 | 2.9% | 6.9 | 2.4% | ||||||||||||
| A- | 30.4 | 9.3% | 28.7 | 10.1% | ||||||||||||
| Fully collateralized | 2.5 | 0.8% | 2.5 | 0.9% | ||||||||||||
| Not rated | 37.8 | 11.6% | 26.8 | 9.5% | ||||||||||||
| $326.3 | 100.0% | $283.3 | 100.0% | |||||||||||||
A.M. Best | ||||||||||||||||
| A++ | $16.4 | 5.0% | $15.9 | 5.6% | ||||||||||||
| A+ | 31.5 | 9.7% | 69.5 | 24.5% | ||||||||||||
| A | 235.4 | 72.1% | 160.8 | 56.8% | ||||||||||||
| A− | 33.6 | 10.3% | 28.6 | 10.1% | ||||||||||||
| B | 0.6 | 0.2% | — | — | ||||||||||||
| Fully collateralized | 2.5 | 0.8% | 2.5 | 0.9% | ||||||||||||
| Not rated | 6.3 | 1.9% | 6.0 | 2.1% | ||||||||||||
| $326.3 | 100.0% | $283.3 | 100.0% | |||||||||||||
24
Table of Contents
Aspen Insurance Holdings Limited
Consolidated Investment Portfolio
Consolidated Investment Portfolio
| As At June 30, 2009 | Percentage Of Total Fair Value | |||||||||||||||||||||||||||||||
| Gross | Gross | As At | As At | As At | As At | |||||||||||||||||||||||||||
| Amortized | Unrealized | Unrealized | June 30, | March 31, | December 31, | December 31, | ||||||||||||||||||||||||||
| (in US$ millions except for percentages) | Cost | Gains | Losses | Fair Value | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||
Marketable Securities — Available For Sale | ||||||||||||||||||||||||||||||||
| U.S. government | $595.2 | $21.6 | $(1.8 | ) | $615.0 | 10.2% | 10.9% | 10.9% | 10.9% | |||||||||||||||||||||||
| U.S. government agency securities | 409.0 | 22.0 | (0.8 | ) | 430.2 | 7.1% | 6.5% | 6.6% | 5.6% | |||||||||||||||||||||||
| Municipal securities | 8.0 | — | (0.2 | ) | 7.8 | 0.1% | 0.1% | 0.1% | — | |||||||||||||||||||||||
| Corporate securities | 1,877.3 | 52.8 | (16.0 | ) | 1,914.1 | 31.7% | 25.5% | 23.8% | 25.6% | |||||||||||||||||||||||
| Foreign government | 385.1 | 15.6 | (0.5 | ) | 400.2 | 6.6% | 5.7% | 6.4% | 7.2% | |||||||||||||||||||||||
| Asset-backed securities | 153.8 | 2.9 | (0.3 | ) | 156.4 | 2.6% | 2.9% | 3.4% | 3.8% | |||||||||||||||||||||||
| Mortgage-backed securities | 1,226.1 | 39.7 | (22.6 | ) | 1,243.2 | 20.5% | 21.4% | 22.9% | 20.8% | |||||||||||||||||||||||
| Total fixed maturities | 4,654.5 | 154.6 | (42.2 | ) | 4,766.9 | 78.8% | 73.0% | 74.1% | 73.9% | |||||||||||||||||||||||
| Short-term investments | 311.3 | — | — | 311.3 | 5.1% | 4.8% | 3.8% | 4.8% | ||||||||||||||||||||||||
Total Available For Sale | $4,965.8 | $154.6 | $(42.2 | ) | $5,078.2 | 83.9% | 77.8% | 77.9% | 78.7% | |||||||||||||||||||||||
Marketable Securities — Trading | ||||||||||||||||||||||||||||||||
| Corporate securities | $164.0 | $6.8 | $(0.2 | ) | $170.6 | 2.8% | 1.8% | — | — | |||||||||||||||||||||||
| Municipal securities | 2.9 | 0.2 | — | 3.1 | 0.1% | — | — | — | ||||||||||||||||||||||||
| U.S. government | 0.5 | — | — | 0.5 | — | — | — | — | ||||||||||||||||||||||||
| Foreign government | 2.7 | 0.1 | — | 2.8 | — | — | — | — | ||||||||||||||||||||||||
| Total fixed maturities | 170.1 | 7.1 | (0.2 | ) | 177.0 | 2.9% | 1.8% | — | — | |||||||||||||||||||||||
| Short-term investments | 4.3 | 0.1 | — | 4.4 | 0.1% | 0.1% | — | — | ||||||||||||||||||||||||
Total Trading | $174.4 | $7.2 | $(0.2 | ) | $181.4 | 3.0% | 1.9% | — | — | |||||||||||||||||||||||
Other investments | $24.7 | 0.4% | 4.8% | 4.9% | 9.5% | |||||||||||||||||||||||||||
| Cash | 718.3 | 11.9% | 15.0% | 13.5% | 11.0% | |||||||||||||||||||||||||||
| Accrued interest | 48.0 | 0.8% | 0.5% | 3.7% | 0.8% | |||||||||||||||||||||||||||
Total Cash and Accrued Interest | $766.3 | 12.7% | 15.5% | 17.2% | 11.8% | |||||||||||||||||||||||||||
Total Cash and Investments | $6,050.6 | 100.0% | 100.0% | 100.0% | 100.0% | |||||||||||||||||||||||||||
25
Table of Contents
Aspen Insurance Holdings Limited
Investment Analysis
| (in US$ millions except for percentages) | Q2 2009 | Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | ||||||||||||||||||
| Net investment income from fixed income investments and cash | $56.0 | $55.2 | $59.3 | $61.5 | $59.7 | $56.0 | ||||||||||||||||||
| Net investment income (loss) from funds of hedge funds | 16.2 | 4.0 | (49.0 | ) | (42.2 | ) | 10.8 | (16.9 | ) | |||||||||||||||
| Net investment income | 72.2 | 59.2 | 10.3 | 19.3 | 70.5 | 39.1 | ||||||||||||||||||
| Net realized investment gains (losses) | 4.8 | (12.2 | ) | 8.4 | (58.1 | ) | 0.8 | 1.0 | ||||||||||||||||
| Change in unrealized gains (losses) on investments (gross of tax) | 41.7 | 3.3 | 138.3 | (46.6 | ) | (110.4 | ) | 44.4 | ||||||||||||||||
| Total return on investments | $118.7 | $50.3 | $157.0 | $(85.4 | ) | $(39.1 | ) | $84.5 | ||||||||||||||||
Portfolio Characteristics | ||||||||||||||||||||||||
| Fixed income portfolio book yield | 4.43% | 4.42% | 4.64% | 4.87% | 4.84% | 4.90% | ||||||||||||||||||
| Fixed income portfolio duration | 3.16 years | 2.90 years | 3.12 years | 3.51 years | 3.58 years | 3.35 years | ||||||||||||||||||
26
Table of Contents
Aspen Insurance Holdings Limited
Book Value Per Ordinary Share
| (in US$ millions except for number of shares) | June 30, 2009 | March 31, 2009 | December 31, 2008 | September 30, 2008 | June 30, 2008 | March 31, 2008 | ||||||||||||||||||
| Net assets | $2,972.5 | $2,832.4 | $2,779.1 | $2,637.6 | $2,853.9 | $2,922.7 | ||||||||||||||||||
| Less: Intangible assets | (8.2 | ) | (8.2 | ) | (8.2 | ) | (8.2 | ) | (8.2 | ) | (8.2 | ) | ||||||||||||
| Preference shares | (353.6 | ) | (353.6 | ) | (419.2 | ) | (419.2 | ) | (419.2 | ) | (419.2 | ) | ||||||||||||
| Total | $2,610.7 | $2,470.6 | $2,351.7 | $2,210.2 | $2,426.5 | $2,495.3 | ||||||||||||||||||
| Ordinary shares outstanding (in millions) | 83.022 | 82.763 | 81.507 | 81.450 | 81.321 | 85.395 | ||||||||||||||||||
| Ordinary shares and dilutive potential ordinary shares (in millions) | 85.985 | 84.832 | 83.706 | 84.325 | 83.691 | 87.607 | ||||||||||||||||||
| �� | ||||||||||||||||||||||||
| Book value per ordinary share | $31.45 | $29.85 | $28.85 | $27.14 | $29.84 | $29.22 | ||||||||||||||||||
| Diluted book value per ordinary share (treasury stock method) | $30.36 | $29.12 | $28.10 | $26.21 | $28.99 | $28.48 | ||||||||||||||||||
The dilutive effect of options has been calculated using the treasury stock method. The treasury stock method assumes that the proceeds received from the exercise of options will be used to purchase the Company’s ordinary shares at the average market price during the period of calculation.
27
Table of Contents
Aspen Insurance Holdings Limited
Diluted Share Analysis
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Weighted average ordinary shares outstanding (millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Basic | 82.940 | 83.513 | 82.241 | 84.512 | ||||||||||||
| Dilutive share equivalents: | ||||||||||||||||
| Employee options | 0.690 | 1.113 | 0.668 | 1.235 | ||||||||||||
| Options issued to Appleby Trust (Bermuda) Limited (Names Trust) | 0.352 | 0.104 | 0.338 | 0.156 | ||||||||||||
| Performance shares | 1.476 | 1.047 | 1.179 | 0.848 | ||||||||||||
| Restricted share units | 0.187 | 0.233 | 0.186 | 0.229 | ||||||||||||
| Weighted average diluted shares outstanding | 85.645 | 86.010 | 84.612 | 86.980 | ||||||||||||
The dilutive effect of options has been calculated using the treasury stock method. The treasury stock method assumes that the proceeds received from the exercise of options will be used to purchase the Company’s ordinary shares at the average market price during the period of calculation.
28
Table of Contents
Aspen Insurance Holdings Limited
Operating Income Reconciliation
Net income is adjusted to exclude after-tax net foreign exchange gains and losses, realized gains and losses in investments and preference share repurchase gains in the first quarter of 2009.
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in US$ millions except where stated) | June 30, 2009 | June 30, 2008 | June 30, 2009 | June 30, 2008 | ||||||||||||
| Net income as reported | $110.4 | $126.9 | $201.8 | $208.1 | ||||||||||||
| Preference share dividends | (5.8 | ) | (7.0 | ) | (12.7 | ) | (13.9 | ) | ||||||||
| Preference share repurchase gain | — | — | 31.5 | — | ||||||||||||
| Net income available to ordinary shareholders | 104.6 | 119.9 | 220.6 | 194.2 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| Net foreign exchange (gains) losses | (3.1 | ) | 5.0 | (0.8 | ) | 0.7 | ||||||||||
| Net realized (gains) losses on investments | (3.5 | ) | (0.7 | ) | 8.5 | (1.6 | ) | |||||||||
| Preference share repurchase (gain) | — | — | (31.5 | ) | — | |||||||||||
| Operating income after tax availble to ordinary shareholders | 98.0 | 124.2 | 196.8 | 193.3 | ||||||||||||
| Tax on operating income | 18.3 | 22.2 | 34.6 | 36.4 | ||||||||||||
| Operating income before tax available to ordinary shareholders | $116.3 | $146.4 | $231.4 | $229.7 | ||||||||||||
Weighted average ordinary shares outstanding(millions) | ||||||||||||||||
| Basic | 82.940 | 83.513 | 82.241 | 84.512 | ||||||||||||
| Dilutive share equivalents: | ||||||||||||||||
| Employee options | 0.690 | 1.113 | 0.668 | 1.235 | ||||||||||||
| Options issued to Appleby Trust (Bermuda) Limited (Names Trust) | 0.352 | 0.104 | 0.338 | 0.156 | ||||||||||||
| Performance shares | 1.476 | 1.047 | 1.179 | 0.848 | ||||||||||||
| Restricted share units | 0.187 | 0.233 | 0.186 | 0.229 | ||||||||||||
| Weighted average diluted shares outstanding | 85.645 | 86.010 | 84.612 | 86.980 | ||||||||||||
Basic earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and preference share repurchase gain | $1.26 | $1.44 | $2.68 | $2.31 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| Net foreign exchange (gains) losses | (0.04 | ) | 0.06 | (0.01 | ) | 0.01 | ||||||||||
| Net realized (gains) losses on investments | (0.04 | ) | (0.01 | ) | 0.11 | (0.02 | ) | |||||||||
| Preference share repurchase (gain) | — | — | (0.39 | ) | — | |||||||||||
| Operating income adjusted for preference shares dividend | $1.18 | $1.49 | $2.39 | $2.30 | ||||||||||||
Diluted earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and preference share repurchase gain | $1.22 | $1.39 | $2.61 | $2.24 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| Net foreign exchange (gains) losses | (0.04 | ) | 0.06 | (0.01 | ) | 0.01 | ||||||||||
| Net realized (gains) losses on investments | (0.04 | ) | (0.01 | ) | 0.10 | (0.02 | ) | |||||||||
| Preference share repurchase (gain) | — | — | (0.38 | ) | — | |||||||||||
| Operating income adjusted for preference shares dividend | $1.14 | $1.44 | $2.32 | $2.23 | ||||||||||||
29
Table of Contents
Aspen Insurance Holdings Limited
Net Income Reconciliation
Net income is adjusted to exclude after-tax net income or losses from investments in funds of hedge funds and preference share repurchase gains. Gains and losses on the hedge funds are recognized through the income statement in accordance with the equity method of accounting.
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in US$ millions except where stated) | June 30, 2009 | June 30, 2008 | June 30, 2009 | June 30, 2008 | ||||||||||||
| Net income available to ordinary shareholders | $104.6 | $119.9 | $220.6 | $194.2 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| (Income) loss from funds of hedge funds | (16.2 | ) | (10.8 | ) | (20.2 | ) | 6.1 | |||||||||
| Tax on income/loss from funds of hedge funds | 1.0 | 1.6 | 1.3 | (0.9 | ) | |||||||||||
| Preference share repurchase (gain) | — | — | (31.5 | ) | — | |||||||||||
| Adjusted net income | $89.4 | $110.7 | $170.2 | $199.4 | ||||||||||||
Weighted average ordinary shares outstanding(millions) | ||||||||||||||||
| Basic | 82.940 | 83.513 | 82.241 | 84.512 | ||||||||||||
| Dilutive share equivalents: | ||||||||||||||||
| Employee options | 0.690 | 1.113 | 0.668 | 1.235 | ||||||||||||
| Options issued to Appleby Trust (Bermuda) Limited (Names Trust) | 0.352 | 0.104 | 0.338 | 0.156 | ||||||||||||
| Performance shares | 1.476 | 1.047 | 1.179 | 0.848 | ||||||||||||
| Restricted share units | 0.187 | 0.233 | 0.186 | 0.229 | ||||||||||||
| Weighted average diluted shares outstanding | 85.645 | 86.010 | 84.612 | 86.980 | ||||||||||||
Basic earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $1.26 | $1.44 | $2.68 | $2.31 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| (Income) loss from funds of hedge funds | (0.20 | ) | (0.13 | ) | (0.25 | ) | 0.07 | |||||||||
| Tax on income/loss from funds of hedge funds | 0.02 | 0.02 | 0.02 | (0.01 | ) | |||||||||||
| Preference share repurchase (gain) | — | — | (0.39 | ) | — | |||||||||||
| Adjusted net income per share | $1.08 | $1.33 | $2.06 | $2.37 | ||||||||||||
Diluted earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $1.22 | $1.39 | $2.61 | $2.24 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| (Income) loss from funds of hedge funds | (0.19 | ) | (0.13 | ) | (0.24 | ) | 0.06 | |||||||||
| Tax on income/loss from funds of hedge funds | 0.01 | 0.02 | 0.01 | (0.01 | ) | |||||||||||
| Preference share repurchase (gain) | — | — | (0.38 | ) | — | |||||||||||
| Adjusted net income per share | $1.04 | $1.28 | $2.00 | $2.29 | ||||||||||||
30
Table of Contents
Aspen Insurance Holdings Limited
Adjusted Operating Income Reconciliation
Net income is adjusted to exclude after-tax net foreign exchange gains and losses, after-tax realized gains and losses on investments and after-tax net gains and losses from our investments in funds of hedge funds.
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in US$ millions except where stated) | June 30, 2009 | June 30, 2008 | June 30, 2009 | June 30, 2008 | ||||||||||||
| Net income available to ordinary shareholders | $104.6 | $119.9 | $220.6 | $194.2 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| Net foreign exchange (gains) losses | (3.1 | ) | 5.0 | (0.8 | ) | 0.7 | ||||||||||
| Net realized (gains) losses on investments | (3.5 | ) | (0.7 | ) | 8.5 | (1.6 | ) | |||||||||
| (Income) loss from investments accounted for by the equity method | (15.2 | ) | (10.8 | ) | (18.9 | ) | 6.1 | |||||||||
| Preference share repurchase (gain) | — | — | (31.5 | ) | — | |||||||||||
| Adjusted operating income adjusted for preference share dividend | $82.8 | $113.4 | $177.9 | $199.4 | ||||||||||||
Weighted average ordinary shares outstanding(millions) | ||||||||||||||||
| Basic | 82.940 | 83.513 | 82.241 | 84.512 | ||||||||||||
| Dilutive share equivalents: | ||||||||||||||||
| Employee options | 0.690 | 1.113 | 0.668 | 1.235 | ||||||||||||
| Options issued to Appleby Trust (Bermuda) Limited (Names Trust) | 0.352 | 0.104 | 0.338 | 0.156 | ||||||||||||
| Performance shares | 1.476 | 1.047 | 1.179 | 0.848 | ||||||||||||
| Restricted share units | 0.187 | 0.233 | 0.186 | 0.229 | ||||||||||||
| Weighted average diluted shares outstanding | 85.645 | 86.010 | 84.612 | 86.980 | ||||||||||||
Basic earnings per ordinary share | ||||||||||||||||
| Net income available to ordinary shareholders | $1.26 | $1.44 | $2.68 | $2.31 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| Net foreign exchange (gains) losses | (0.04 | ) | 0.06 | (0.01 | ) | 0.01 | ||||||||||
| Net realized (gains) losses on investments | (0.04 | ) | (0.01 | ) | 0.11 | (0.02 | ) | |||||||||
| (Income) loss from investments accounted for by the equity method | (0.18 | ) | (0.13 | ) | (0.23 | ) | 0.07 | |||||||||
| Preference share repurchase (gain) | — | — | (0.39 | ) | — | |||||||||||
| Adjusted operating income adjusted for preference share dividend | $1.00 | $1.36 | $2.16 | $2.37 | ||||||||||||
Diluted earnings per ordinary share | ||||||||||||||||
| Net income adjusted for preference share dividend and cancellation of preference shares | $1.22 | $1.39 | $2.61 | $2.24 | ||||||||||||
| Add (deduct) after tax income: | ||||||||||||||||
| Net foreign exchange (gains) losses | (0.04 | ) | 0.06 | (0.01 | ) | 0.01 | ||||||||||
| Net realized (gains) losses on investments | (0.04 | ) | (0.01 | ) | 0.10 | (0.02 | ) | |||||||||
| (Income) loss from investments accounted for by the equity method | (0.18 | ) | (0.13 | ) | (0.22 | ) | 0.07 | |||||||||
| Preference share repurchase (gain) | — | — | (0.38 | ) | — | |||||||||||
| Adjusted operating income adjusted for preference share dividend | $0.96 | $1.31 | $2.10 | $2.30 | ||||||||||||
31