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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Fiscal Year Ended December 31, 2009 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Bermuda | Not Applicable | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
Maxwell Roberts Building 1 Church Street Hamilton, Bermuda (Address of principal executive offices) | HM 11 (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Ordinary Shares, 0.15144558¢ par value | New York Stock Exchange, Inc. | |
5.625% Perpetual Preferred Income Equity Replacement Securities | New York Stock Exchange, Inc. | |
7.401% Perpetual Non-Cumulative Preference Shares | New York Stock Exchange, Inc. |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
INDEX TOFORM 10-K
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• | the possibility of greater frequency or severity of claims and loss activity, including as a result of natural or man-made (including economic and political risks) catastrophic or material loss events, than our underwriting, reserving, reinsurance purchasing or investment practices have anticipated; | |
• | the reliability of, and changes in assumptions to, natural and man-made catastrophe pricing, accumulation and estimated loss models; | |
• | evolving issues with respect to interpretation of coverage after major loss events; | |
• | the effectiveness of our loss limitation methods; | |
• | changes in the total industry losses, or our share of total industry losses, resulting from past events such as Hurricanes Ike and Gustav and, with respect to such events, our reliance on loss reports received from cedants and loss adjustors, our reliance on industry loss estimates and those generated by modeling techniques, changes in rulings on flood damage or other exclusions as a result of prevailing lawsuits and case law; |
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• | the impact of acts of terrorism and related legislation and acts of war; | |
• | decreased demand for our insurance or reinsurance products and cyclical changes in the insurance and reinsurance sectors; | |
• | any changes in our reinsurers’ credit quality and the amount and timing of reinsurance recoverables; | |
• | changes in the availability, cost or quality of reinsurance or retrocessional coverage; | |
• | the continuing and uncertain impact of the current depressed economic environment in many of the countries in which we operate; | |
• | the level of inflation in repair costs due to limited availability of labor and materials after catastrophes; | |
• | changes in insurance and reinsurance market conditions; | |
• | increased competition on the basis of pricing, capacity, coverage terms or other factors and the related demand and supply dynamics as contracts come up for renewal; | |
• | a decline in our operating subsidiaries’ ratings with Standard & Poor’s (“S&P”), A.M. Best or Moody’s Investor Service (“Moody’s”); | |
• | our ability to execute our business plan to enter new markets, introduce new products and develop new distribution channels, including their integration into our existing operations; | |
• | changes in general economic conditions, including inflation, foreign currency exchange rates, interest rates and other factors that could affect our investment portfolio; | |
• | the risk of a material decline in the value or liquidity of all or parts of our investment portfolio; | |
• | changes in our ability to exercise capital management initiatives or to arrange banking facilities as a result of prevailing market changes or changes in our financial position; | |
• | changes in government regulations or tax laws in jurisdictions where we conduct business; | |
• | Aspen Holdings or Aspen Bermuda becoming subject to income taxes in the United States or the United Kingdom; | |
• | loss of key personnel; and | |
• | increased counterparty risk due to the credit impairment of financial institutions. |
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Item 1. | Business |
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Business Segment | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Property Reinsurance | $ | 648.7 | 31.4 | % | $ | 589.0 | 29.4 | % | $ | 601.5 | 33.0 | % | ||||||||||||
Casualty Reinsurance | 408.1 | 19.7 | % | 416.3 | 20.8 | % | 431.5 | 23.7 | % | |||||||||||||||
International Insurance | 847.7 | 41.0 | % | 867.8 | 43.4 | % | 663.0 | 36.5 | % | |||||||||||||||
U.S. Insurance | 162.6 | 7.9 | % | 128.6 | 6.4 | % | 122.5 | 6.8 | % | |||||||||||||||
Total | $ | 2,067.1 | 100.0 | % | $ | 2,001.7 | 100.0 | % | $ | 1,818.5 | 100.0 | % | ||||||||||||
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Property Reinsurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Australia/Asia | $ | 52.1 | 8.0 | % | $ | 40.4 | 6.9 | % | $ | 12.2 | 2.0 | % | ||||||||||||
Caribbean | 0.2 | — | 0.4 | 0.1 | % | 1.7 | 0.2 | % | ||||||||||||||||
Europe | 49.6 | 7.6 | % | 68.6 | 11.6 | % | 9.7 | 1.6 | % | |||||||||||||||
United Kingdom | 16.5 | 2.6 | % | 26.5 | 4.5 | % | 38.9 | 6.5 | % | |||||||||||||||
United States & Canada (1) | 377.1 | 58.1 | % | 347.2 | 58.9 | % | 363.6 | 60.5 | % | |||||||||||||||
Worldwide excluding United States (2) | 42.5 | 6.6 | % | 37.5 | 6.4 | % | 59.4 | 9.9 | % | |||||||||||||||
Worldwide including United States (3) | 100.5 | 15.5 | % | 52.1 | 8.8 | % | 80.5 | 13.4 | % | |||||||||||||||
Others | 10.2 | 1.6 | % | 16.3 | 2.8 | % | 35.5 | 5.9 | % | |||||||||||||||
Total | $ | 648.7 | 100.0 | % | $ | 589.0 | 100.0 | % | $ | 601.5 | 100.0 | % | ||||||||||||
(1) | “United States and Canada” comprises individual policies that insure risks specifically in the United States and/or Canada, but not elsewhere. | |
(2) | “Worldwide excluding the United States” comprises individual policies that insure risks wherever they may be across the world but specifically excludes the United States. | |
(3) | “Worldwide including the United States” comprises individual policies that insure risks wherever they may be across the world but specifically includes the United States. |
Gross Written Premiums | ||||||||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Property Reinsurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Treaty Catastrophe | $ | 261.2 | 40.3 | % | $ | 253.0 | 43.0 | % | $ | 284.5 | 47.3 | % | ||||||||||||
Treaty Risk Excess | 104.5 | 16.1 | % | 112.0 | 19.0 | % | 134.3 | 22.3 | % | |||||||||||||||
Treaty Pro Rata | 181.4 | 28.0 | % | 174.7 | 29.6 | % | 145.2 | 24.1 | % | |||||||||||||||
Property Facultative | 52.8 | 8.1 | % | 49.3 | 8.4 | % | 37.5 | 6.3 | % | |||||||||||||||
Credit and Surety | 48.8 | 7.5 | % | — | — | — | — | |||||||||||||||||
Total | $ | 648.7 | 100.0 | % | $ | 589.0 | 100.0 | % | $ | 601.5 | 100.0 | % | ||||||||||||
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Casualty Reinsurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Australia/Asia | $ | 19.1 | 4.7 | % | $ | 17.3 | 4.2 | % | $ | 2.5 | 0.6 | % | ||||||||||||
Caribbean | 1.7 | 0.4 | % | 1.8 | 0.4 | % | 0.2 | — | ||||||||||||||||
Europe | 12.3 | 3.0 | % | 5.3 | 1.3 | % | 61.1 | 14.2 | % | |||||||||||||||
United Kingdom | 10.3 | 2.5 | % | 14.0 | 3.4 | % | 14.7 | 3.4 | % | |||||||||||||||
United States & Canada (1) | 275.1 | 67.4 | % | 294.4 | 70.7 | % | 290.9 | 67.4 | % | |||||||||||||||
Worldwide excluding United States (2) | 24.8 | 6.1 | % | 32.6 | 7.8 | % | 11.8 | 2.7 | % | |||||||||||||||
Worldwide including United States (3) | 64.3 | 15.8 | % | 50.3 | 12.1 | % | 42.0 | 9.8 | % | |||||||||||||||
Others | 0.5 | 0.1 | % | 0.6 | 0.1 | % | 8.3 | 1.9 | % | |||||||||||||||
Total | $ | 408.1 | 100.0 | % | $ | 416.3 | 100.0 | % | $ | 431.5 | 100.0 | % | ||||||||||||
(1) | “United States and Canada” comprises individual policies that insure risks specifically in the United States and/or Canada, but not elsewhere. | |
(2) | “Worldwide excluding the United States” comprises individual policies that insure risks wherever they may be across the world but specifically excludes the United States. | |
(3) | “Worldwide including the United States” comprises individual policies that insure risks wherever they may be across the world but specifically includes the United States. |
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Gross Written Premiums | ||||||||||||||||||||||||
Casualty Reinsurance | Twelve Months Ended December 31, 2009 | Twelve Months Ended December 31, 2008 | Twelve Months Ended December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
U.S. Treaty | $ | 277.1 | 67.9 | % | $ | 276.8 | 66.5 | % | $ | 277.3 | 58.7 | % | ||||||||||||
International Treaty | 114.1 | 28.0 | % | 123.8 | 29.7 | % | 142.7 | 33.1 | % | |||||||||||||||
Casualty Facultative | 16.9 | 4.1 | % | 15.7 | 3.8 | % | 11.5 | 8.2 | % | |||||||||||||||
Total | $ | 408.1 | 100.0 | % | $ | 416.3 | 100.0 | % | $ | 431.5 | 100.0 | % | ||||||||||||
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
International Insurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Australia/Asia | $ | 13.2 | 1.6 | % | $ | 12.7 | 1.5 | % | $ | 8.2 | 1.2 | % | ||||||||||||
Caribbean | 0.6 | 0.1 | % | 0.8 | 0.1 | % | 1.0 | 0.2 | % | |||||||||||||||
Europe | 16.9 | 2.0 | % | 28.9 | 3.3 | % | 8.6 | 1.3 | % | |||||||||||||||
United Kingdom | 104.8 | 12.3 | % | 147.6 | 17.0 | % | 145.2 | 21.9 | % | |||||||||||||||
United States & Canada (1) | 109.7 | 12.9 | % | 156.5 | 18.0 | % | 78.0 | 11.8 | % | |||||||||||||||
Worldwide excluding United States (2) | 83.3 | 9.8 | % | 42.8 | 4.9 | % | 48.1 | 7.3 | % | |||||||||||||||
Worldwide including United States (3) | 495.0 | 58.4 | % | 451.0 | 52.0 | % | 360.3 | 54.3 | % | |||||||||||||||
Others | 24.2 | 2.9 | % | 27.5 | 3.2 | % | 13.6 | 2.0 | % | |||||||||||||||
Total | $ | 847.7 | 100.0 | % | $ | 867.8 | 100.0 | % | $ | 663.0 | 100.0 | % | ||||||||||||
(1) | “United States and Canada” comprises individual policies that insure risks specifically in the United States and/or Canada, but not elsewhere. | |
(2) | “Worldwide excluding the United States” comprises individual policies that insure risks wherever they may be across the world but specifically excludes the United States. | |
(3) | “Worldwide including the United States” comprises individual policies that insure risks wherever they may be across the world but specifically includes the United States. |
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Gross Written Premiums | ||||||||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
International Insurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Marine, energy and construction liability | $ | 177.4 | 20.9 | % | $ | 161.3 | 18.6 | % | $ | 138.3 | 20.9 | % | ||||||||||||
Energy property insurance | 83.5 | 9.8 | % | 94.9 | 10.9 | % | 102.7 | 15.5 | % | |||||||||||||||
Marine hull | 63.2 | 7.5 | % | 65.9 | 7.6 | % | 59.9 | 9.0 | % | |||||||||||||||
Aviation insurance | 112.8 | 13.3 | % | 101.8 | 11.7 | % | 103.3 | 15.6 | % | |||||||||||||||
U.K. commercial property & construction | 56.7 | 6.7 | % | 63.7 | 7.3 | % | 50.1 | 7.6 | % | |||||||||||||||
U.K. commercial liability | 45.4 | 5.4 | % | 75.1 | 8.7 | % | 92.2 | 13.9 | % | |||||||||||||||
Professional liability | 45.9 | 5.4 | % | 44.0 | 5.1 | % | 5.0 | 0.7 | % | |||||||||||||||
Global excess casualty | 73.6 | 8.7 | % | 70.6 | 8.2 | % | 7.1 | 1.0 | % | |||||||||||||||
Financial institutions | 25.9 | 3.1 | % | 39.0 | 4.5 | % | — | — | ||||||||||||||||
Financial and political risk | 32.5 | 3.8 | % | 39.1 | 4.5 | % | — | — | ||||||||||||||||
Management and technology liability | 8.1 | 0.9 | % | 3.5 | 0.4 | % | — | — | ||||||||||||||||
Specie | 6.5 | 0.8 | % | — | — | — | — | |||||||||||||||||
Specialty reinsurance | 116.2 | 13.7 | % | 108.9 | 12.5 | % | 104.4 | 15.8 | % | |||||||||||||||
Total | $ | 847.7 | 100.0 | % | $ | 867.8 | 100.0 | % | $ | 663.0 | 100.0 | % | ||||||||||||
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
U.S. Insurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
United States & Canada (1) | $ | 162.6 | 100.0 | % | $ | 128.6 | 100.0 | % | $ | 122.5 | 100.0 | % | ||||||||||||
(1) | “United States and Canada” comprises individual policies that insure risks specifically in the United States and/or Canada, but not elsewhere. |
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Gross Written Premiums | ||||||||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
U.S. Insurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Property Insurance | $ | 82.5 | 50.7 | % | $ | 53.2 | 41.4 | % | $ | 41.0 | 33.5 | % | ||||||||||||
Casualty Insurance | 77.1 | 47.4 | % | 75.4 | 58.6 | % | 81.5 | 66.5 | % | |||||||||||||||
U.S. Risk Solutions | 3.0 | 1.9 | % | — | — | — | — | |||||||||||||||||
Total | $ | 162.6 | 100.0 | % | $ | 128.6 | 100.0 | % | $ | 122.5 | 100.0 | % | ||||||||||||
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• | operate within agreed boundaries as defined by the Aspen Underwriting Principles (“AUP”) for the relevant line of business; | |
• | operate within prescribed maximum underwriting authority limits, which we delegate in accordance with an understanding of each individual’s capabilities, tailored to the lines of business written by the particular underwriter; | |
• | price each submission based on our experience in the line of business, and as appropriate, by deploying one or more actuarial models either developed internally or licensed from third-party providers; | |
• | where appropriate, make use of peer review to ensure high standards of underwriting discipline and consistency; risks underwritten are subject to peer review by at least one qualified peer reviewer (for reinsurance risks, peer review occurs mostly prior to risk acceptance; for complex insurance risks, peer review may occur before or after risk acceptance and for simpler insurance risks, peer review is replaced by standardized underwriting systems and controls over adherence); | |
• | more complex risks may involve peer review by several underwriters and input from catastrophe risk management specialists, our team of actuaries and senior management; | |
• | evaluate the underlying data provided by clients and adjust such data where we believe it does not adequately reflect the underlying exposure; | |
• | in respect of catastrophe perils and certain other key risks, prepare monthly aggregation reports for review by our senior management, which are reviewed quarterly by the Risk Committee; and | |
• | exceptional risks are referred to the Group Underwriting Committee for approval before we accept the risks. |
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• | the establishment of the risk management strategy of the Company and its subsidiaries; | |
• | oversight and approval of the group’s risk management framework, methodologies and policies; and | |
• | review of the group’s approach for determining and monitoring adherence to risk limits. |
• | employing the best available talent across a wide range of risk-related disciplines; | |
• | sharing responsibility between a dedicated central team, managers within risk accepting business units and designated risk officers within each of our operating platforms; | |
• | the cascading of risk limits for material risks to risk accepting business units and regulated subsidiaries; |
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• | the use, subject to an understanding of their limitations, of an Economic Capital Model (“ECM”) and of stress and scenario testing to test strategic and tactical business decisions; | |
• | high quality measurement and reporting of risk positions and trends at business unit, regulated entity and group levels; and | |
• | a proactive and forward looking outlook designed to detect and analyse the impact of material changes in the external environment and emerging risks. |
Category | Description | Tolerance | ||
Natural catastrophe accumulation risk | The maximum net loss (1) we would expect from a single windstorm or earthquake event having a probability of occurring more often than once in every 250 years. | 25% of Shareholders Equity (’SHE’)(2) | ||
The maximum net loss we would expect from a single windstorm or earthquake event having a probability of occurring more often than once in 100 years. | 17.5% of SHE |
(1) | Net loss means policyholder claims less reinsurance recoveries plus the cost of any additional reinsurance premiums payable less tax. | |
(2) | Shareholders’ equity means the total of ordinary and preference shareholders’ equity as reported in our balance sheets. |
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• | understand our total capital requirements and the volatility of our business plans and to aid in the construction of a risk efficient portfolio; and | |
• | understand the risk adjusted returns of our underwriting and the value inherent in committing capital to different lines of business. |
• | retained catastrophe losses; | |
• | retained non-catastrophe underwriting losses; |
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• | reserving deficiency/improvement; | |
• | total investment gain/loss (including unrealized gains and losses and default on investment counterparties); | |
• | credit-related losses from reinsurers or other debtor default; and | |
• | operational and other losses. |
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Property Reinsurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Aon Corporation (1) | $ | 225.5 | 34.8 | % | $ | 122.5 | 20.8 | % | $ | 123.8 | 20.6 | % | ||||||||||||
Marsh & McLennan Companies, Inc. | 120.4 | 18.6 | % | 161.9 | 27.5 | % | 178.5 | 29.7 | % | |||||||||||||||
Benfield Group Limited (1) | — | — | 93.2 | 15.8 | % | 88.0 | 14.6 | % | ||||||||||||||||
Willis Group Holdings, Ltd. | 145.7 | 22.4 | % | 116.4 | 19.8 | % | 96.9 | 16.1 | % | |||||||||||||||
Ballantyne, McKean & Sullivan Ltd. | 8.6 | 1.3 | % | 3.7 | 0.6 | % | 20.5 | 3.4 | % | |||||||||||||||
Others | 148.5 | 22.9 | % | 91.3 | 15.5 | % | 93.8 | 15.6 | % | |||||||||||||||
Total | $ | 648.7 | 100.0 | % | $ | 589.0 | 100.0 | % | $ | 601.5 | 100.0 | % | ||||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Casualty Reinsurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Aon Corporation (1) | $ | 130.7 | 32.0 | % | $ | 85.7 | 20.6 | % | $ | 76.9 | 17.8 | % | ||||||||||||
Marsh & McLennan Companies, Inc. | 54.7 | 13.4 | % | 68.2 | 16.4 | % | 63.6 | 14.7 | % | |||||||||||||||
Benfield Group Limited (1) | — | — | 42.8 | 10.3 | % | 53.3 | 12.4 | % | ||||||||||||||||
Willis Group Holdings, Ltd | 54.5 | 13.4 | % | 45.0 | 10.8 | % | 47.4 | 11.0 | % | |||||||||||||||
Ballantyne, McKean & Sullivan Ltd | 0.3 | 0.1 | % | 20.8 | 5.0 | % | 31.0 | 7.2 | % | |||||||||||||||
Others | 167.9 | 41.1 | % | 153.8 | 36.9 | % | 159.3 | 36.9 | % | |||||||||||||||
Total | $ | 408.1 | 100.0 | % | $ | 416.3 | 100.0 | % | $ | 431.5 | 100.0 | % | ||||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
International Insurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Aon Corporation (1) | $ | 121.4 | 14.3 | % | $ | 112.1 | 12.9 | % | $ | 110.7 | 16.4 | % | ||||||||||||
Marsh & McLennan Companies, Inc. | 127.5 | 15.1 | % | 130.8 | 15.1 | % | 91.9 | 13.7 | % | |||||||||||||||
Benfield Group Limited (1) | — | — | 12.4 | 1.4 | % | 89.8 | 13.5 | % | ||||||||||||||||
Willis Group Holdings, Ltd. | 93.2 | 11.0 | % | 128.4 | 14.8 | % | 51.7 | 7.6 | % | |||||||||||||||
Ballantyne, McKean & Sullivan Ltd. | 0.6 | 0.1 | % | 4.9 | 0.6 | % | 45.3 | 6.9 | % | |||||||||||||||
United Insurance Brokers Limited | 26.5 | 3.1 | % | — | — | — | — | |||||||||||||||||
Price Forbes & Partners Limited | 25.3 | 3.0 | % | — | — | — | — | |||||||||||||||||
Jardine Lloyd Thompson Ltd. | 24.0 | 2.8 | % | — | — | — | — | |||||||||||||||||
Miller Insurance Services Limited | 24.0 | 2.8 | % | — | — | — | — | |||||||||||||||||
Others | 405.2 | 47.8 | % | 479.2 | 55.2 | % | 273.7 | 41.9 | % | |||||||||||||||
Total | $ | 847.7 | 100.0 | % | $ | 867.8 | 100.0 | % | $ | 663.0 | 100.0 | % | ||||||||||||
(1) | Benfield Group Limited was an independent company prior to its acquisition by Aon Corporation on November 28, 2008 and is therefore shown separately for 2007 and 2008 in the above tables. |
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
U.S. Insurance | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Written | Written | Written | ||||||||||||||||||||||
Premiums | % of Total | Premiums | % of Total | Premiums | % of Total | |||||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||||||
Swett & Crawford | $ | 19.7 | 12.1 | % | $ | 14.0 | 10.9 | % | $ | 10.9 | 8.9 | % | ||||||||||||
AmWins | 22.4 | 13.8 | % | 14.1 | 11.0 | % | 10.3 | 8.4 | % | |||||||||||||||
Programs Brokerage Corp | — | — | — | — | 9.3 | 7.6 | % | |||||||||||||||||
Colemont Insurance Brokers | 9.0 | 5.5 | % | 8.7 | 6.8 | % | 7.9 | 6.4 | % | |||||||||||||||
Risk Placement Services | 7.7 | 4.8 | % | 6.0 | 4.7 | % | — | — | ||||||||||||||||
Hull & Company | — | — | — | — | 7.2 | 5.9 | % | |||||||||||||||||
Crump Insurance | 6.9 | 4.2 | % | — | — | — | — | |||||||||||||||||
Partners Specialty Group | 5.5 | 3.4 | % | 5.3 | 4.1 | % | — | — | ||||||||||||||||
Others | 91.4 | 56.2 | % | 80.5 | 62.5 | % | 76.9 | 62.8 | % | |||||||||||||||
Total | $ | 162.6 | 100.0 | % | $ | 128.6 | 100.0 | % | $ | 122.5 | 100.0 | % | ||||||||||||
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• | process, manage and resolve reported insurance and reinsurance claims efficiently and accurately, using workflow management systems, ensure the proper application of intended coverage, reserving in a timely fashion for the probable ultimate cost of both indemnity and expense and make timely payments in the appropriate amount on those claims for which we are legally obligated to pay; | |
• | contribute to the underwriting process by collaborating with both underwriting teams and senior management in terms of the evolution of policy language and endorsements and providing claim-specific feedback and education regarding legal activity; | |
• | contribute to the analysis and reporting of financial data and forecasts by collaborating with the finance and actuarial functions relating to the drivers of actual claim reserve developments and potential for financial exposures on known claims; and | |
• | support our marketing efforts through the quality of our claims service. |
• | case reserves to cover the cost of claims that were reported to us but not yet paid; | |
• | incurred but not reported (“IBNR”) reserves to cover the anticipated cost of claims incurred but not reported; and |
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• | a reserve for the expense associated with settling claims, including legal and other fees and the general expenses of administering the claims adjustment process, known as Loss Adjustment Expenses (“LAE”). |
• | Initial expected loss ratio (“IELR”) method: This method calculates an estimate of ultimate losses by applying an estimated loss ratio to an estimate of ultimate earned premium for each accident year. The estimated loss ratio is based on pricing information and industry data and is independent of the current claims experience to date. | |
• | Bornhuetter-Ferguson (“BF”) method: The BF method uses as a starting point an assumed IELR and blends in the loss ratio implied by the claims experience to date by using benchmark loss development patterns on paid claims data (“Paid BF”) or reported claims data (“Reported BF”). Although the method tends to provide less volatile indications at early stages of development and reflects changes in the external environment, this method can be slow to react to emerging loss development and if IELR proves to be inaccurate can produce loss estimates which take longer to converge with the final settlement value of loss. | |
• | Loss development (“Chain Ladder”): This method uses actual loss data and the historical development profiles on older accident years to project more recent, less developed years to their ultimate position. | |
• | Exposure-based method: This method is used for specific large typically catastrophic events such as a major Hurricane. All exposure is identified and we work with known market information and information from our cedants to determine a percentage of the exposure to be taken as the ultimate loss. |
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27
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As at December 31, | ||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||
Estimated liability for unpaid losses and loss expenses, net of reinsurance recoverables | 81.4 | 482.2 | 1,080.2 | 1,848.9 | 2,351.7 | 2,641.3 | 2,787.0 | 3,009.6 | ||||||||||||||||||||||||
Liability re-estimate as of: | ||||||||||||||||||||||||||||||||
One year later | 71.8 | 420.2 | 1,029.6 | 1,797.6 | 2,244.3 | 2,557.8 | 2,702.6 | |||||||||||||||||||||||||
Two years later | 53.1 | 398.3 | 983.5 | 1,778.8 | 2,153.1 | 2,536.0 | ||||||||||||||||||||||||||
Three years later | 52.4 | 381.2 | 952.1 | 1,726.4 | 2,114.8 | |||||||||||||||||||||||||||
Four years later | 49.5 | 369.5 | 928.4 | 1,687.2 | ||||||||||||||||||||||||||||
Five years later | 47.3 | 365.0 | 910.5 | |||||||||||||||||||||||||||||
Six years later | 45.1 | 357.1 | ||||||||||||||||||||||||||||||
Seven years later | 44.2 | |||||||||||||||||||||||||||||||
Cumulative redundancy | 37.2 | 125.1 | 169.7 | 161.7 | 236.9 | 105.3 | 84.4 | |||||||||||||||||||||||||
Cumulative paid losses, net of reinsurance recoveries, as of: | ||||||||||||||||||||||||||||||||
One year later | 9.0 | 88.0 | 399.7 | 332.4 | 585.1 | 534.2 | 677.0 | |||||||||||||||||||||||||
Two years later | 43.2 | 152.6 | 456.7 | 814.6 | 935.4 | 1,002.1 | ||||||||||||||||||||||||||
Three years later | 43.6 | 161.2 | 555.4 | 1,087.4 | 1,243.5 | |||||||||||||||||||||||||||
Four years later | 45.0 | 203.9 | 607.1 | 1,314.1 | ||||||||||||||||||||||||||||
Five years later | 61.9 | 220.8 | 661.8 | |||||||||||||||||||||||||||||
Six years later | 74.4 | 235.6 | ||||||||||||||||||||||||||||||
Seven years later | 77.8 |
As at December 31, | ||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||
Estimated liability for unpaid losses and loss expenses, gross of reinsurance recoverables | 93.9 | 525.8 | 1,277.9 | 3,041.6 | 2,820.0 | 2,946.0 | 3,070.3 | 3,331.1 | ||||||||||||||||||||||||
Liability re-estimate as of: | ||||||||||||||||||||||||||||||||
One year later | 88.4 | 455.4 | 1,260.0 | 3,048.3 | 2,739.9 | 2,883.3 | 3,041.9 | |||||||||||||||||||||||||
Two years later | 69.7 | 433.5 | 1,174.9 | 3,027.6 | 2,634.6 | 2,896.1 | ||||||||||||||||||||||||||
Three years later | 69.0 | 403.7 | 1,157.4 | 2,957.4 | 2,625.9 | |||||||||||||||||||||||||||
Four years later | 61.8 | 398.5 | 1,134.1 | 2,943.6 | ||||||||||||||||||||||||||||
Five years later | 65.2 | 393.5 | 1,118.4 | |||||||||||||||||||||||||||||
Six years later | 62.7 | 386.1 | ||||||||||||||||||||||||||||||
Seven years later | 62.2 | |||||||||||||||||||||||||||||||
Cumulative redundancy (deficiency) | 31.7 | 139.7 | 159.5 | 98.0 | 194.1 | 49.9 | 28.4 |
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Net Reserves as at December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
Aspen U.K (formerly City Fire) | 0.2 | 0.2 | 0.4 | 0.2 | 0.8 | 2.4 | ||||||||||||||||||
Aspen Specialty Runoff (Formerly Dakota Specialty) | 0.2 | 1.9 | 0.6 | 0.5 | 1.6 | 2.8 | ||||||||||||||||||
Total | 0.4 | 2.1 | 1.0 | 0.7 | 2.4 | 5.2 | ||||||||||||||||||
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As at December 31, 2009 | ||||||||||||||||
Cost or | Gross | Gross | Estimated | |||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. Government Securities | $ | 492.1 | $ | 17.4 | $ | (2.0 | ) | $ | 507.5 | |||||||
U.S. Agency Securities | 368.6 | 20.7 | (0.2 | ) | 389.1 | |||||||||||
Municipal Securities | 20.0 | — | (0.5 | ) | 19.5 | |||||||||||
Corporate Securities | 2,178.1 | 90.3 | (3.8 | ) | 2,264.6 | |||||||||||
Foreign Government Securities | 509.9 | 13.9 | (1.5 | ) | 522.3 | |||||||||||
Asset-backed Securities | 110.0 | 5.1 | — | 115.1 | ||||||||||||
Non-agency Residential Mortgage-backed Securities | 34.2 | 8.6 | (0.6 | ) | 42.2 | |||||||||||
Non-agency Commercial Mortgage-backed Securities | 178.5 | 2.5 | (1.0 | ) | 180.0 | |||||||||||
Agency Mortgaged-backed Securities | 1,172.9 | 40.2 | (3.5 | ) | 1,209.6 | |||||||||||
Total fixed income | 5,064.3 | 198.7 | (13.1 | ) | 5,249.9 | |||||||||||
Short term Investments | 368.2 | — | — | 368.2 | ||||||||||||
Total | $ | 5,432.5 | $ | 198.7 | $ | (13.1 | ) | $ | 5,618.1 | |||||||
As at December 31, 2008 | ||||||||||||||||
Cost or | Gross | Gross | Estimated | |||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. Government Securities | $ | 601.3 | $ | 49.9 | $ | (0.5 | ) | $ | 650.7 | |||||||
U.S. Agency Securities | 356.6 | 36.7 | (0.2 | ) | 393.1 | |||||||||||
Municipal Securities | 7.7 | 0.3 | — | 8.0 | ||||||||||||
Corporate Securities | 1,426.0 | 29.0 | (30.5 | ) | 1,424.5 | |||||||||||
Foreign Government Securities | 363.6 | 20.9 | — | 384.5 | ||||||||||||
Asset-backed Securities | 218.1 | — | (12.6 | ) | 205.5 | |||||||||||
Non-agency Residential Mortgage-backed Securities | 80.0 | — | (24.1 | ) | 56.3 | |||||||||||
Non-agency Commercial Mortgage-backed Securities | 253.9 | — | (34.7 | ) | 219.2 | |||||||||||
Agency Mortgage-backed Securities | 1,058.5 | 33.2 | (0.4 | ) | 1,091.3 | |||||||||||
Total fixed Income | $ | 4,365.7 | $ | 170.4 | $ | (103.0 | ) | $ | 4,433.1 | |||||||
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As at December 31, 2009 | ||||||||||
Amortized | Average | |||||||||
Cost or | Fair | Ratings by | ||||||||
Cost | Value | Maturity | ||||||||
($ in millions) | ||||||||||
Due one year or less | $ | 296.4 | $ | 301.4 | AA | |||||
Due after one year through five years | 2,057.1 | 2,133.2 | AA+ | |||||||
Due after five years through ten years | 1,094.2 | 1,143.5 | AA− | |||||||
Due after ten years | 121.0 | 124.9 | AA | |||||||
Subtotal | 3,568.7 | 3,703.0 | ||||||||
Non-agency Residential mortgage-backed securities | 34.2 | 42.2 | BBB− | |||||||
Non-agency Commercial mortgage-backed securities | 178.5 | 180.0 | AAA | |||||||
Agency mortgage-backed securities | 1,172.9 | 1,209.6 | AAA | |||||||
Other asset-backed securities | 110.0 | 115.1 | AAA | |||||||
Total | $ | 5,064.3 | $ | 5,249.9 | ||||||
As at December 31, 2008 | ||||||||||
Amortized | Average | |||||||||
Cost or | Fair | Ratings by | ||||||||
Cost | Value | Maturity | ||||||||
($ in millions) | ||||||||||
Due one year or less | $ | 324.0 | $ | 328.9 | AA+ | |||||
Due after one year through five years | 1,373.2 | 1,426.0 | AA+ | |||||||
Due after five years through ten years | 905.4 | 940.9 | AA | |||||||
Due after ten years | 152.6 | 165.0 | AA+ | |||||||
Subtotal | 2,755.2 | 2,860.8 | ||||||||
Non-agency Residential mortgage-backed securities | 80.0 | 56.3 | AAA | |||||||
Non-agency Commercial mortgage-backed securities | 253.9 | 219.2 | AAA | |||||||
Agency mortgage-backed securities | 1,058.5 | 1,091.3 | AAA | |||||||
Other asset-backed securities | 218.1 | 205.5 | AAA | |||||||
Total | $ | 4,365.7 | $ | 4,433.1 | ||||||
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Twelve Months | Twelve Months | Twelve Months | ||||||||||
Ended | Ended | Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Pre-tax realized investment gains and losses | ||||||||||||
Short-term investments, fixed maturities and other investments | ||||||||||||
Gross realized gains | $ | 22.4 | $ | 12.1 | $ | 5.4 | ||||||
Gross realized losses | (11.0 | ) | (60.0 | ) | (18.5 | ) | ||||||
Total pre-tax realized investment losses | 11.4 | (47.9 | ) | (13.1 | ) | |||||||
Change in unrealized gains and losses | ||||||||||||
Fixed maturities | 118.2 | 25.7 | 90.2 | |||||||||
Short-term investments | — | (0.5 | ) | 0.9 | ||||||||
Total change in pre-tax unrealized gains | 118.2 | 25.2 | 91.1 | |||||||||
Change in taxes | (16.4 | ) | (5.9 | ) | (16.8 | ) | ||||||
Total change in unrealized gains, net of tax | $ | 101.8 | $ | 19.3 | $ | 74.3 | ||||||
As at December 31, 2009 | ||||||||||||||||
Cost or | Gross | Gross | Estimated | |||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. Government Securities | $ | 7.3 | $ | — | $ | (0.8 | ) | $ | 6.5 | |||||||
U.S. Agency Securities | 0.4 | — | — | 0.4 | ||||||||||||
Municipal Securities | 1.8 | — | — | 1.8 | ||||||||||||
Corporate Securities | 313.2 | 16.6 | (0.4 | ) | 329.4 | |||||||||||
Foreign Government Securities | 4.9 | 0.2 | — | 5.1 | ||||||||||||
Asset-backed Securities | 5.0 | — | — | 5.0 | ||||||||||||
Total Fixed Income | $ | 332.6 | $ | 16.8 | $ | (1.2 | ) | $ | 348.2 | |||||||
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As at December 31, 2009 | ||||||||||||||||||||||||
0-12 months | Over 12 months | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
U.S. Government Securities | $ | 121.2 | $ | (2.0 | ) | $ | — | $ | — | $ | 121.2 | $ | (2.0 | ) | ||||||||||
U.S. Agency Securities | 9.9 | (0.2 | ) | — | — | 9.9 | (0.2 | ) | ||||||||||||||||
Municipal Securities | 15.1 | (0.5 | ) | — | — | 15.1 | (0.5 | ) | ||||||||||||||||
Foreign Government Securities | 113.2 | (1.5 | ) | — | — | 113.2 | (1.5 | ) | ||||||||||||||||
Corporate Securities | 319.5 | (3.6 | ) | 20.0 | (0.2 | ) | 339.5 | (3.8 | ) | |||||||||||||||
Asset-backed Securities | 0.5 | — | — | — | 0.5 | — | ||||||||||||||||||
Agency Mortgage-backed Securities | 307.5 | (3.5 | ) | 1.2 | — | 308.7 | (3.5 | ) | ||||||||||||||||
Non-agency Residential Mortgage-backed Securities | — | — | 6.5 | (0.6 | ) | 6.5 | (0.6 | ) | ||||||||||||||||
Non-agency Commercial Mortgage-backed Securities | 14.6 | (0.1 | ) | 43.8 | (0.9 | ) | 58.4 | (1.0 | ) | |||||||||||||||
Total | $ | 901.5 | $ | (11.4 | ) | $ | 71.5 | $ | (1.7 | ) | $ | 973.0 | $ | (13.1 | ) | |||||||||
As at December 31, 2008 | ||||||||||||||||||||||||
0-12 months | Over 12 months | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
U.S. Government Securities | $ | 7.4 | $ | (0.4 | ) | $ | 1.0 | $ | (0.1 | ) | $ | 8.4 | $ | (0.5 | ) | |||||||||
U.S. Agency Securities | 11.4 | (0.2 | ) | — | — | 11.4 | (0.2 | ) | ||||||||||||||||
Corporate Securities | 326.8 | (19.0 | ) | 192.0 | (11.5 | ) | 518.8 | (30.5 | ) | |||||||||||||||
Asset-backed Securities | 190.4 | (11.1 | ) | 15.0 | (1.5 | ) | 205.4 | (12.6 | ) | |||||||||||||||
Non-agency Residential Mortgage-backed Securities | 55.9 | (24.0 | ) | 0.4 | (0.1 | ) | 56.3 | (24.1 | ) | |||||||||||||||
Non-agency Commercial Mortgage-backed Securities | 114.2 | (7.2 | ) | 105.0 | (27.5 | ) | 219.2 | (34.7 | ) | |||||||||||||||
Agency Mortgage-backed Securities | 42.3 | (0.4 | ) | — | — | 42.3 | (0.4 | ) | ||||||||||||||||
Total | $ | 748.4 | $ | (62.3 | ) | $ | 313.4 | $ | (40.7 | ) | $ | 1,061.8 | $ | (103.0 | ) | |||||||||
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December 31, 2009 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Fixed income maturities available for sale, at fair value | $ | 1,029.8 | $ | 4,205.2 | $ | 14.9 | ||||||
Short-term investments available for sale, at fair value | 293.1 | 75.1 | — | |||||||||
Fixed income maturities, trading at fair value | 11.6 | 336.5 | — | |||||||||
Short-term investments, trading at fair value | — | 3.5 | — | |||||||||
Derivatives at fair value | — | — | 6.7 | |||||||||
Total | $ | 1,334.5 | $ | 4,620.3 | $ | 21.6 | ||||||
December 31, 2008 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Fixed income maturities, at fair value | $ | 1,035.2 | $ | 3,395.1 | $ | 2.8 | ||||||
Short-term investments, at fair value | $ | 141.2 | $ | 83.7 | — | |||||||
Derivatives at fair value | — | — | 11.8 | |||||||||
Total | $ | 1,176.4 | $ | 3,478.8 | $ | 14.6 | ||||||
Twelve Months Ended December 31, 2009 | ||||||||||||
Fixed Maturity | Derivatives at | |||||||||||
Investments | Fair Value | Total | ||||||||||
($ in millions) | ||||||||||||
Level 3 assets as of January 1, 2009 | $ | 2.8 | $ | 11.8 | $ | 14.6 | ||||||
Securities transferred in/(out) of Level 3 | 14.0 | — | 14.0 | |||||||||
Total unrealized gains or (losses): | ||||||||||||
Included in earnings | — | (7.4 | ) | (7.4 | ) | |||||||
Included in comprehensive income | 3.8 | — | 3.8 | |||||||||
Settlements | — | (2.7 | ) | (2.7 | ) | |||||||
Other | — | 5.0 | 5.0 | |||||||||
Sales | (5.7 | ) | — | (5.7 | ) | |||||||
Level 3 assets as of December 31, 2009 | $ | 14.9 | $ | 6.7 | $ | 21.6 | ||||||
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Twelve Months Ended December 31, 2008 | ||||||||||||
Fixed Maturity | Derivatives at | |||||||||||
Investments | Fair Value | Total | ||||||||||
($ in millions) | ||||||||||||
Level 3 assets as of January 1, 2008 | $ | — | $ | 17.3 | $ | 17.3 | ||||||
Securities transferred in/(out) of Level 3 | 3.9 | — | 3.9 | |||||||||
Total unrealized gains or (losses): | ||||||||||||
Included in earnings | (0.1 | ) | (5.5 | ) | (5.6 | ) | ||||||
Included in comprehensive income | (1.0 | ) | — | (1.0 | ) | |||||||
Settlements | — | — | — | |||||||||
Sales | — | — | — | |||||||||
Level 3 assets as of December 31, 2008 | $ | 2.8 | $ | 11.8 | $ | 14.6 | ||||||
December 31, 2009 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Liabilities under derivative contracts: | ||||||||||||
Credit insurance contract | $ | — | $ | — | $ | 9.2 | ||||||
December 31, 2008 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Liabilities under derivative contracts: | ||||||||||||
Credit insurance contract | $ | — | $ | — | $ | 11.1 | ||||||
Twelve Months | Twelve Months | |||||||
Ended | Ended | |||||||
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
($ in millions) | ($ in millions) | |||||||
Beginning Balance | $ | 11.1 | $ | 19.0 | ||||
Fair value changes included in earnings | (0.7 | ) | (4.1 | ) | ||||
Settlements | (6.2 | ) | (3.8 | ) | ||||
Purchases/Premiums | 5.0 | 5.0 | ||||||
Ending Balance | $ | 9.2 | $ | 11.1 | ||||
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December 31, 2009 | December 31, 2008 | |||||||||||||||
Cost | Carrying Value | Cost | Carrying Value | |||||||||||||
($ in millions) | ||||||||||||||||
Investment funds | $ | — | $ | — | $ | 311.3 | $ | 286.9 | ||||||||
Cartesian Iris 2009A L.P. | 25.0 | 27.3 | — | — | ||||||||||||
Total other investments | $ | 25.0 | $ | 27.3 | $ | 311.3 | $ | 286.9 | ||||||||
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• | the experience of the management in the line of insurance or reinsurance to be written; | |
• | financial ratings assigned by independent rating agencies and actual and perceived financial strength; | |
• | responsiveness to clients, including speed of claims payment; | |
• | services provided, products offered and scope of business (both by size and geographic location); | |
• | relationships with brokers; | |
• | premiums charged and other terms and conditions offered; and | |
• | reputation. |
Aspen U.K. | ||
S&P | A (Strong) (seventh highest of twenty-two levels) | |
A.M. Best | A (Excellent) (third highest of fifteen levels) | |
Moody’s | A2 (Good) (eighth highest of twenty-three levels) | |
Aspen Bermuda | ||
S&P | A (Strong) (seventh highest of twenty-two levels) | |
A.M. Best | A (Excellent) (third highest of fifteen levels) | |
Moody’s | A2 (Good) (eighth highest of twenty-three levels) | |
Aspen Specialty | ||
A.M. Best | A (Excellent) (third highest of fifteen levels) |
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As at | As at | |||||||
December 31, | December 31, | |||||||
Country | 2009 | 2008 | ||||||
United Kingdom | 357 | 321 | ||||||
United States | 171 | 149 | ||||||
Bermuda | 53 | 55 | ||||||
France | 5 | 4 | ||||||
Switzerland | 16 | 11 | ||||||
Singapore | 6 | 4 | ||||||
Ireland | 6 | 6 | ||||||
Total | 614 | 550 | ||||||
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(a) | $100,000,000; |
(b) | 50% of net premiums written (being gross premiums written less any premiums ceded by the insurer, but the insurer may not deduct more than 25% of gross premiums when computing net premiums written); or |
(c) | 15% of net losses and loss expense reserves. |
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Item 1A. | Risk Factors |
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• | integrating financial and operational reporting systems; | |
• | establishing satisfactory budgetary and other financial controls; | |
• | funding increased capital needs and overhead expenses; | |
• | the value of assets acquired may be lower than expected or may diminish due to credit defaults or changes in interest rates and liabilities assumed may be greater than expected; and | |
• | financial exposures in the event that the sellers of the entities we acquire are unable or unwilling to meet their indemnification, reinsurance and other obligations to us. |
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• | the introduction of a group-wide supervision for insurance groups and insurance subgroups that form part of a financial group or mixed conglomerate; | |
• | the introduction of a three-tried capital system designed to assess the quality of an insurer’s capital resources eligible to satisfy an insurer’s regulatory capital requirement level. It is intended that this regime be introduced effective December 31, 2010; | |
• | the issuance of an Insurance Code of Conduct which establishes duties, requirements and standards to be complied with by insurers including the procedures and sound principles to be observed by such insurers; | |
• | enhancements to the disclosure and transparency regime by introducing a number of additional qualitative and quantitative public and regulatory disclosure requirements; and | |
• | the introduction of own risk and solvency assessment which will require insurers to demonstrate the link between capital adequacy, risk governance process and strategic decision making. |
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• | the material facts as to the interested director’s relationship or interests were disclosed or were known to the Board of Directors and the Board of Directors in good faith authorized the transaction by the affirmative vote of a majority of the disinterested directors; | |
• | the material facts were disclosed or were known to the shareholders entitled to vote on such transaction and the transaction was specifically approved in good faith by vote of the majority of shares entitled to vote thereon; or | |
• | the transaction was fair as to the corporation at the time it was authorized, approved or ratified. |
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• | election of directors is staggered, meaning that members of only one of three classes of directors are elected each year; | |
• | directors serve for a term of three years (unless 70 years or older); | |
• | our directors may decline to approve or register any transfer of shares to the extent they determine, in their sole discretion, that any non-de minimis adverse tax, regulatory or legal consequences to Aspen Holdings, any of its subsidiaries, shareholders or affiliates would result from such transfer; | |
• | if our directors determine that share ownership by any person may result in material adverse tax consequences to Aspen Holdings, any of its subsidiaries, shareholders or affiliates, we have the option, but not the obligation, to purchase or assign to a third party the right to purchase the minimum number of shares held by such person solely to the extent that it is necessary to eliminate such material risk; | |
• | shareholders have limited ability to remove directors; and |
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• | if the ordinary shares of any U.S. Person constitute 9.5% or more of the votes conferred by the issued shares of Aspen Holdings, the voting rights with respect to the controlled shares of such U.S. Person shall be limited, in the aggregate, to a voting power of less than 9.5%. |
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Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Item 3. | Legal Proceedings |
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Item 4. | Submission of Matters to a Vote of Security Holders |
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Item 5. | Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Price Range of | ||||||||||||
Ordinary Shares | Dividends Paid Per | |||||||||||
High | Low | Ordinary Share | ||||||||||
Period | ||||||||||||
2009 | ||||||||||||
First Quarter | $ | 25.43 | $ | 18.46 | $ | 0.15 | ||||||
Second Quarter | $ | 24.99 | $ | 20.44 | $ | 0.15 | ||||||
Third Quarter | $ | 27.50 | $ | 22.45 | $ | 0.15 | ||||||
Fourth Quarter | $ | 28.44 | $ | 25.20 | $ | 0.15 | ||||||
2008 | ||||||||||||
First Quarter | $ | 29.90 | $ | 25.67 | $ | 0.15 | ||||||
Second Quarter | $ | 27.37 | $ | 23.67 | $ | 0.15 | ||||||
Third Quarter | $ | 28.07 | $ | 22.58 | $ | 0.15 | ||||||
Fourth Quarter | $ | 27.20 | $ | 14.33 | $ | 0.15 |
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Number of | ||||
Date Issued | Shares Issued | |||
October 15, 2009 | 483 | |||
December 15, 2009 | 758 |
• | exercise respective voting rights as shareholders to approve the change of control; and | |
• | tender its respective shares for sale in relation to the change of control on terms no less favorable than those on which the investors sell their shares. |
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Item 6. | Selected Consolidated Financial Data |
Twelve Months Ended December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
($ in millions, except per share amounts and percentages) | ||||||||||||||||||||
Summary Income Statement Data | ||||||||||||||||||||
Gross written premiums | $ | 2,067.1 | $ | 2,001.7 | $ | 1,818.5 | $ | 1,945.5 | $ | 2,092.5 | ||||||||||
Net premiums written | 1,836.8 | 1,835.5 | 1,601.4 | 1,663.6 | 1,651.5 | |||||||||||||||
Net premiums earned | 1,823.0 | 1,701.7 | 1,733.6 | 1,676.2 | 1,508.4 | |||||||||||||||
Loss and loss adjustment expenses | (948.1 | ) | (1,119.5 | ) | (919.8 | ) | (889.9 | ) | (1,358.5 | ) | ||||||||||
Policy acquisition and general and administrative expenses | (586.6 | ) | (507.4 | ) | (518.7 | ) | (490.7 | ) | (409.1 | ) | ||||||||||
Net investment income | 248.5 | 139.2 | 299.0 | 204.4 | 121.3 | |||||||||||||||
Net income/(loss) | 473.9 | 103.8 | 489.0 | 378.1 | (177.8 | ) | ||||||||||||||
Basic earnings per share | 5.82 | 0.92 | 5.25 | 3.82 | (2.40 | ) | ||||||||||||||
Fully diluted earnings per share | 5.64 | 0.89 | 5.11 | 3.75 | (2.40 | ) | ||||||||||||||
Basic weighted average shares outstanding (millions) | 82.7 | 83.0 | 87.8 | 94.8 | 74.0 | |||||||||||||||
Diluted weighted average shares outstanding (millions) | 85.3 | 85.5 | 90.4 | 96.7 | 74.0 | |||||||||||||||
Selected Ratios (based on U.S. GAAP income statement data): | ||||||||||||||||||||
Loss ratio (on net premiums earned) (1) | 52% | 66% | 53% | 53% | 90% | |||||||||||||||
Expense ratio (on net premiums earned) (2) | 32% | 30% | 30% | 29% | 27% | |||||||||||||||
Combined ratio (3) | 84% | 96% | 83% | 82% | 117% | |||||||||||||||
Summary Balance Sheet Data | ||||||||||||||||||||
Total cash and investments (4) | $ | 6,811.9 | $ | 5,974.9 | $ | 5,930.5 | $ | 5,218.1 | $ | 4,468.5 | ||||||||||
Premiums receivable (5) | 793.4 | 762.5 | 680.1 | 688.1 | 541.4 | |||||||||||||||
Total assets | 8,257.2 | 7,288.8 | 7,201.3 | 6,640.1 | 6,537.8 | |||||||||||||||
Loss and loss adjustment expense reserves | 3,331.1 | 3,070.3 | 2,946.0 | 2,820.0 | 3,041.6 | |||||||||||||||
Reserves for unearned premiums | 907.6 | 810.7 | 757.6 | 841.3 | 868.0 | |||||||||||||||
Bank debt | — | — | — | — | — | |||||||||||||||
Long term debt | 249.6 | 249.5 | 249.5 | 249.4 | 249.3 | |||||||||||||||
Total shareholders’ equity | 3,305.4 | 2,779.1 | 2,817.6 | 2,389.3 | 2,039.8 |
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Twelve Months Ended December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
($ in millions, except per share amounts and percentages) | ||||||||||||||||||||
Per Share Data (Based on U.S. GAAP Balance Sheet Data): | ||||||||||||||||||||
Book value per ordinary share (6) | $ | 35.42 | $ | 28.95 | $ | 28.05 | $ | 22.44 | $ | 19.39 | ||||||||||
Diluted book value per share (treasury stock method) (7) | $ | 34.14 | $ | 28.19 | $ | 27.17 | $ | 21.92 | $ | 18.81 | ||||||||||
Cash dividend declared per ordinary share | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 |
(1) | The loss ratio is calculated by dividing losses and loss adjustment expenses by net premiums earned. | |
(2) | The expense ratio is calculated by dividing policy acquisition expenses and general and administrative expenses by net premiums earned. | |
(3) | The combined ratio is the sum of the loss ratio and the expense ratio. | |
(4) | Total cash and investments include cash, cash equivalents, fixed maturities, other investments, short-term investments, accrued interest and receivables for investments sold. | |
(5) | Premiums receivable including funds withheld. | |
(6) | Book value per ordinary share is based on total shareholders’ equity excluding the aggregate value of the liquidation preferences of our preference shares, divided by the number of shares outstanding of 95,209,008, 87,788,375, 85,510,673, 81,506,503 and 83,327,594 at December 31, 2005, 2006, 2007, 2008 and 2009, respectively. In calculating the number of shares outstanding as at December 31, 2007 for this purpose, we have deducted shares delivered to us and canceled on January 22, 2008 pursuant to our accelerated share repurchase agreement. | |
(7) | Diluted book value per share is calculated based on total shareholders’ equity excluding the aggregate value of the liquidation preferences of our preference shares, at December 31, 2005, 2006, 2007, 2008 and 2009, divided by the number of dilutive equivalent shares outstanding of 98,126,046, 89,876,459, 88,268,968, 83,705,984 and 86,465,357 at December 31, 2005, 2006, 2007, 2008 and 2009, respectively. At December 31, 2005, 2006, 2007, 2008 and 2009, there were 2,917,038, 2,088,084, 2,758,295, 2,199,481 and 3,137,763 of dilutive equivalent shares, respectively. Potentially dilutive shares outstanding are calculated using the treasury method and all relate to employee, director and investor options. In calculating the number of shares outstanding as at December 31, 2007 for this purpose, we have deducted shares delivered to us and canceled on January 22, 2008 pursuant to our accelerated share repurchase agreement. |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Gross Written Premiums | ||||||||||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||||||||||
Business Segment | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||||||||||
($ in millions) | % increase/ | ($ in millions) | % increase/ | ($ in millions) | ||||||||||||||||
(decrease) | (decrease) | |||||||||||||||||||
Property Reinsurance | $ | 648.7 | 10.1 | % | $ | 589.0 | (2.1 | )% | $ | 601.5 | ||||||||||
Casualty Reinsurance | 408.1 | (2.0 | )% | 416.3 | (3.5 | )% | 431.5 | |||||||||||||
International Insurance | 847.7 | (2.3 | )% | 867.8 | 30.9 | % | 663.0 | |||||||||||||
U.S. Insurance | 162.6 | 26.4 | % | 128.6 | 5.0 | % | 122.5 | |||||||||||||
Total | $ | 2,067.1 | 3.3 | % | $ | 2,001.7 | 10.1 | % | $ | 1,818.5 | ||||||||||
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Loss Ratios | ||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||
Business Segment | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||
Property Reinsurance | 21.7 | % | 59.1 | % | 39.7 | % | ||||||
Casualty Reinsurance | 67.3 | % | 65.8 | % | 69.9 | % | ||||||
International Insurance | 61.1 | % | 71.5 | % | 51.7 | % | ||||||
U.S. Insurance | 88.3 | % | 62.9 | % | 55.1 | % | ||||||
Total | 52.0 | % | 65.8 | % | 53.1 | % | ||||||
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For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||
Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | ||||||||||
($ in millions, except for percentages) | ||||||||||||
Reserve Releases | $ | 84.4 | $ | 83.5 | $ | 107.4 | ||||||
% of net premiums earned | 4.6 | % | 4.9 | % | 6.2 | % |
Expense Ratios | ||||||||||||
For the | For the | For the | ||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
Policy Acquisition Expenses | 18.3 | % | 17.6 | % | 18.1 | % | ||||||
Operating and Administrative Expenses | 13.8 | % | 12.2 | % | 11.8 | % | ||||||
Expense Ratio | 32.1 | % | 29.8 | % | 29.9 | % | ||||||
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• | net income after tax for the year of $473.9 million; | |
• | an increase in net of tax unrealized gains on investments of $101.8 million, accounted for in other comprehensive income; and | |
• | dividend payments to ordinary and preference shareholders totaling $73.6 million in 2009. |
As at | As at | |||||||
December 31, 2009 | December 31, 2008 | |||||||
($ in millions, except for share amounts) | ||||||||
Total shareholders’ equity | $ | 3,305.4 | $ | 2,779.1 | ||||
Intangible assets | (8.2 | ) | (8.2 | ) | ||||
Preference shares less issue expenses | (353.6 | ) | (419.2 | ) | ||||
$ | 2,943.6 | $ | 2,351.7 | |||||
Ordinary shares | 83,327,594 | 81,506,503 | ||||||
Diluted ordinary shares | 86,465,357 | 83,705,984 |
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• | changes in the renewal rate or rate of new business acceptances by the cedant insurance companies leading to lower or greater volumes of ceded premiums than our estimate, which could result from changes in the relevant primary market that could affect more than one of our cedants or could be a consequence of changes in marketing strategy or risk appetite by a particular cedant; | |
• | changes in the rates being charged by cedants; and | |
• | differences between the pattern of inception dates assumed in our estimate and the actual pattern of inception dates. |
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• | case reserves to cover the cost of claims that were reported to us but not yet paid; | |
• | reserves for incurred but not reported (“IBNR”) claims to cover the anticipated cost of claims incurred but not reported; and | |
• | a reserve for the expense associated with settling claims, including legal and other fees and the general expenses of administering the claims adjustment process, known as Loss Adjustment Expenses (“LAE”). |
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• | Initial expected loss ratio method: This method calculates an estimate of ultimate losses by applying an estimated loss ratio to an estimate of ultimate earned premium for each accident year. The estimated loss ratio is based on one or more of (a) an analysis of our own claims experience to date, (b) pricing information (c) industry data and (d) an analysis of a portfolio of similar business written by Syndicate 2020, as available, adjusted by an index reflecting how insurance rates, term and conditions have changed | |
• | Bornhuetter-Ferguson method: The BF method uses as a starting point an assumed IELR and blends in the loss ratio, which is implied by the claims experience to date using benchmark loss development patterns on paid claims data (“Paid BF”) or reported claims data (“Reported BF”). Although the method tends to provide less volatile indications at early stages of development and reflects changes in the external environment, it can be slow to react to emerging loss development and can, if the IELR proves to be inaccurate, produce loss estimates which take longer to converge with the final settlement value of loss. | |
• | Loss development (“Chain Ladder”) method: This method uses actual loss data and the historical development profiles on older accident years to project more recent, less developed years to their ultimate position. | |
• | Exposure-based method: This method is used for specific large typically catastrophic events such as a major hurricane. All exposure is identified and we work with known market information and information from our cedants to determine a percentage of the exposure to be taken as the ultimate loss. |
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• | changes in our processes which might accelerate or slow down the developmentand/or recording of paid or incurred claims; | |
• | changes in the legal environment (including challenges to tort reform); | |
• | the effects of inflation; | |
• | changes in the mix of business; | |
• | the impact of large losses; and | |
• | changes in our cedants’ reserving methodologies. |
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As at December 31, 2009 | ||||||||||||||||||||||||||||
Management’s | ||||||||||||||||||||||||||||
Selected | ||||||||||||||||||||||||||||
Gross Reserves | Reserve | Percentile | 10th | 25th | Mean | 75th | 90th | |||||||||||||||||||||
($ in million, except for percentages) | ||||||||||||||||||||||||||||
Property Reinsurance | $ | 390.6 | 68 | % | $ | 289.4 | $ | 328.2 | $ | 366.7 | $ | 404.3 | $ | 450.9 | ||||||||||||||
Casualty Reinsurance | 1,518.9 | 75 | % | 1,127.1 | 1,238.5 | 1,383.4 | 1,514.9 | 1,655.3 | ||||||||||||||||||||
International Insurance | 1,220.1 | 71 | % | 954.1 | 1,033.4 | 1,143.9 | 1,243.2 | 1,358.9 | ||||||||||||||||||||
U.S. Insurance | 201.5 | 67 | % | 150.2 | 167.2 | 189.4 | 209.3 | 230.9 | ||||||||||||||||||||
Diversification | — | — | 295.8 | 162.6 | — | (147.8 | ) | (300.5 | ) | |||||||||||||||||||
Total Gross Losses and Loss Expense Reserves | $ | 3,331.1 | 86 | % | $ | 2,568.6 | $ | 2,682.9 | $ | 3,083.4 | $ | 3,224.1 | $ | 3,395.5 | ||||||||||||||
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Twelve Months Ended | ||||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions, except for percentages) | ||||||||||||
Gross written premiums | $ | 2,067.1 | $ | 2,001.7 | $ | 1,818.5 | ||||||
Net premiums written | 1,836.8 | 1,835.5 | 1,601.4 | |||||||||
Gross premiums earned | 2,035.4 | 1,889.1 | 1,903.3 | |||||||||
Net premiums earned | 1,823.0 | 1,701.7 | 1,733.6 | |||||||||
Net investment income | 248.5 | 139.2 | 299.0 | |||||||||
Realized investment gains/(losses) | 11.4 | (47.9 | ) | (13.1 | ) | |||||||
Change in fair value of derivatives | (8.0 | ) | (7.8 | ) | (11.4 | ) | ||||||
Total Revenues | 2,074.9 | 1,785.2 | 2,008.1 | |||||||||
Expenses | ||||||||||||
Insurance losses and loss adjustment expenses | (948.1 | ) | (1,119.5 | ) | (919.8 | ) | ||||||
Policy acquisition expenses | (334.1 | ) | (299.3 | ) | (313.9 | ) | ||||||
Operating and administrative expenses | (252.4 | ) | (208.1 | ) | (204.8 | ) | ||||||
Interest on long term debt | (15.6 | ) | (15.6 | ) | (15.7 | ) | ||||||
Realized exchange gains/(losses) | 2.0 | (8.2 | ) | 20.6 | ||||||||
Other income/(expenses) | 8.0 | 5.7 | (0.5 | ) | ||||||||
Total Expenses | (1,540.2 | ) | (1,645.0 | ) | (1,434.1 | ) | ||||||
Income from operations before income tax | 534.7 | 140.2 | 574.0 | |||||||||
Income tax expense | (60.8 | ) | (36.4 | ) | (85.0 | ) | ||||||
Net Income | $ | 473.9 | $ | 103.8 | $ | 489.0 | ||||||
Ratios | ||||||||||||
Loss ratio | 52.0 | % | 65.8 | % | 53.1 | % | ||||||
Expense ratio | 32.1 | % | 29.8 | % | 29.9 | % | ||||||
Combined ratio | 84.1 | % | 95.6 | % | 83.0 | % |
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For the Twelve Months Ended December 31, 2009 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||
Gross written premiums | $ | 648.7 | $ | 408.1 | $ | 847.7 | $ | 162.6 | $ | 2,067.1 | ||||||||||
Less: Catastrophic event-related premiums | — | — | — | — | — | |||||||||||||||
Underlying premiums | 648.7 | 408.1 | 847.7 | 162.6 | 2,067.1 | |||||||||||||||
% change in underlying premiums between 2009 and 2008 | 12.5 | % | (2.0 | )% | (2.0 | )% | �� | 26.4 | % | 3.3 | % |
For the Twelve Months Ended December 31, 2008 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||
Gross written premiums | $ | 589.0 | $ | 416.3 | $ | 867.8 | $ | 128.6 | $ | 2,001.7 | ||||||||||
Less: Catastrophic event-related premiums | (12.2 | ) | — | (3.1 | ) | — | (15.3 | ) | ||||||||||||
Underlying premiums | 576.8 | 416.3 | 864.7 | 128.6 | 1,986.4 | |||||||||||||||
% change in underlying premiums between 2008 and 2007 | (3.9 | )% | (3.5 | )% | 30.5 | % | 5.2 | % | 9.3 | % |
For the Twelve Months Ended December 31, 2007 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||||||
Gross written premiums | $ | 601.5 | $ | 431.5 | $ | 663.0 | $ | 122.5 | $ | 1,818.5 | ||||||||||
Less: Catastrophic event-related premiums | (1.1 | ) | — | (0.3 | ) | (0.3 | ) | (1.7 | ) | |||||||||||
Underlying premiums | 600.4 | 431.5 | 662.7 | 122.2 | 1,816.8 | |||||||||||||||
% change in underlying premiums between 2007 and 2006 | (1.8 | )% | (11.1 | )% | (2.0 | )% | (20.4 | )% | (5.7 | )% |
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Net Premiums Earned | ||||||||||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||||||||||
Business Segment | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||||||||||
($ in millions) | % increase | ($ in millions) | % increase | |||||||||||||||||
($ in millions) | ||||||||||||||||||||
Property Reinsurance | $ | 560.0 | 5.2 | % | $ | 532.4 | (4.2 | )% | $ | 555.6 | ||||||||||
Casualty Reinsurance | 435.7 | 5.4 | % | 413.5 | (13.0 | )% | 475.3 | |||||||||||||
International Insurance | 726.1 | 9.7 | % | 661.8 | 10.8 | % | 597.2 | |||||||||||||
U.S. Insurance | 101.2 | 7.7 | % | 94.0 | (10.9 | )% | 105.5 | |||||||||||||
Total | $ | 1,823.0 | 7.1 | % | $ | 1,701.7 | (1.8 | )% | $ | 1,733.6 | ||||||||||
Accident Year Loss | ||||||||||||
Total Loss | Prior Year | Ratio Excluding IG & | ||||||||||
For the Twelve Months Ended December 31, 2009 | Ratio | Adjustment | Prior Year Adjustments | |||||||||
Property Reinsurance | 21.7 | % | (10.4 | )% | 32.1 | % | ||||||
Casualty Reinsurance | 67.3 | % | (6.3 | )% | 73.6 | % | ||||||
International Insurance | 61.1 | % | (2.4 | )% | 63.5 | % | ||||||
U.S. Insurance | 88.3 | % | 19.1 | % | 69.2 | % | ||||||
Total | 52.0 | % | 4.6 | % | 56.6 | % | ||||||
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Accident Year Loss | ||||||||||||
Total Loss | IG & Prior Year | Ratio Excluding IG & | ||||||||||
For the Twelve Months Ended December 31, 2008 | Ratio | Adjustment | Prior Year Adjustments | |||||||||
Property Reinsurance | 59.1 | % | 24.1 | % | 35.0 | % | ||||||
Casualty Reinsurance | 65.8 | % | (16.2 | )% | 82.0 | % | ||||||
International Insurance | 71.5 | % | 7.5 | % | 64.0 | % | ||||||
U.S. Insurance | 62.9 | % | 6.3 | % | 56.6 | % | ||||||
Total | 65.8 | % | 6.9 | % | 58.9 | % | ||||||
Accident Year Loss | ||||||||||||
Total Loss | Prior Year | Ratio Excluding | ||||||||||
For the Twelve Months Ended December 31, 2007 | Ratio | Adjustment | Prior Year Adjustments | |||||||||
Property Reinsurance | 39.7 | % | 2.2 | % | 37.5 | % | ||||||
Casualty Reinsurance | 69.9 | % | (6.7 | )% | 76.6 | % | ||||||
International Insurance | 51.7 | % | (13.5 | )% | 65.2 | % | ||||||
U.S. Insurance | 55.1 | % | (6.0 | )% | 61.1 | % | ||||||
Total | 53.1 | % | (6.2 | )% | 59.3 | % | ||||||
Expense Ratios | ||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||
Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | ||||||||||
Policy acquisition expenses | 16.4 | % | 15.8 | % | 16.5 | % | ||||||
Operating and administrative expenses | 12.4 | % | 11.0 | % | 10.8 | % | ||||||
Gross expense ratio | 28.8 | % | 26.8 | % | 27.3 | % | ||||||
Effect of reinsurance | 3.3 | % | 3.0 | % | 2.6 | % | ||||||
Total net expense ratio | 32.1 | % | 29.8 | % | 29.9 | % | ||||||
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For the Twelve Months Ended December 31, 2009 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
Policy acquisition expense ratio | 18.1 | % | 19.1 | % | 14.7 | % | 11.5 | % | 16.4 | % | ||||||||||
Operating and administrative expense ratio | 12.7 | % | 9.9 | % | 11.7 | % | 22.5 | % | 12.4 | % | ||||||||||
Gross expense ratio | 30.8 | % | 29.0 | % | 26.4 | % | 34.0 | % | 28.8 | % | ||||||||||
Effect of reinsurance | 3.1 | % | (0.2 | )% | 4.0 | % | 15.6 | % | 3.3 | % | ||||||||||
Total net expense ratio | 33.9 | % | 28.8 | % | 30.4 | % | 49.6 | % | 32.1 | % | ||||||||||
For the Twelve Months Ended December 31, 2008 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
Policy acquisition expense ratio | 17.7 | % | 15.6 | % | 15.0 | % | 12.9 | % | 15.8 | % | ||||||||||
Operating and administrative expense ratio | 11.1 | % | 10.3 | % | 9.8 | % | 20.6 | % | 11.0 | % | ||||||||||
Gross expense ratio | 28.8 | % | 25.9 | % | 24.8 | % | 33.5 | % | 26.8 | % | ||||||||||
Effect of reinsurance | 3.2 | % | 0.3 | % | 3.5 | % | 9.4 | % | 3.0 | % | ||||||||||
Total net expense ratio | 32.0 | % | 26.2 | % | 28.3 | % | 42.9 | % | 29.8 | % | ||||||||||
For the Twelve Months Ended December 31, 2007 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
Policy acquisition expense ratio | 18.8 | % | 14.4 | % | 16.0 | % | 15.5 | % | 16.5 | % | ||||||||||
Operating and administrative expense ratio | 10.5 | % | 9.9 | % | 10.2 | % | 17.8 | % | 10.8 | % | ||||||||||
Gross expense ratio | 29.3 | % | 24.3 | % | 26.2 | % | 33.3 | % | 27.3 | % | ||||||||||
Effect of reinsurance | 3.6 | % | 0.4 | % | 2.7 | % | 9.9 | % | 2.6 | % | ||||||||||
Total net expense ratio | 32.9 | % | 24.7 | % | 28.9 | % | 43.2 | % | 29.9 | % | ||||||||||
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Twelve Months Ended December 31, 2009 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||
Gross written premiums | $ | 648.7 | $ | 408.1 | $ | 847.7 | $ | 162.6 | $ | 2,067.1 | ||||||||||
Net premiums written | 591.1 | 410.0 | 723.4 | 112.3 | 1,836.8 | |||||||||||||||
Gross premiums earned | 616.8 | 434.1 | 836.7 | 147.8 | 2,035.4 | |||||||||||||||
Net premiums earned | 560.0 | 435.7 | 726.1 | 101.2 | 1,823.0 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Losses and loss expenses | (121.7 | ) | (293.4 | ) | (443.6 | ) | (89.4 | ) | (948.1 | ) | ||||||||||
Policy acquisition, operating and administrative expenses | (188.9 | ) | (125.5 | ) | (220.9 | ) | (50.2 | ) | (586.5 | ) | ||||||||||
Underwriting profit (loss) | $ | 248.4 | $ | 16.8 | $ | 61.6 | $ | (38.4 | ) | $ | 288.4 | |||||||||
Net reserves for loss and loss adjustment expenses | $ | 355.2 | $ | 1,512.5 | $ | 992.4 | $ | 149.5 | $ | 3,009.6 | ||||||||||
Ratios | ||||||||||||||||||||
Loss ratio | 21.7 | % | 67.3 | % | 61.1 | % | 88.3 | % | 52.0 | % | ||||||||||
Expense ratio | 33.9 | % | 28.8 | % | 30.4 | % | 49.6 | % | 32.1 | % | ||||||||||
Combined ratio | 55.6 | % | 96.1 | % | 91.5 | % | 137.9 | % | 84.1 | % |
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Twelve Months Ended December 31, 2008 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||
Gross written premiums | $ | 589.0 | $ | 416.3 | $ | 867.8 | $ | 128.6 | $ | 2,001.7 | ||||||||||
Net premiums written | 564.1 | 412.9 | 757.8 | 100.7 | 1,835.5 | |||||||||||||||
Gross premiums earned | 592.4 | 418.4 | 758.2 | 120.1 | 1,889.1 | |||||||||||||||
Net premiums earned | 532.4 | 413.6 | 661.8 | 94.0 | 1,701.7 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Losses and loss expenses | (314.7 | ) | (272.2 | ) | (473.5 | ) | (59.1 | ) | (1,119.5 | ) | ||||||||||
Policy acquisition, operating and administrative expenses | (170.7 | ) | (108.6 | ) | (187.8 | ) | (40.3 | ) | (507.4 | ) | ||||||||||
Underwriting profit (loss) | $ | 47.0 | $ | 32.7 | $ | 0.5 | $ | (5.4 | ) | $ | 74.8 | |||||||||
Net reserves for loss and loss adjustment expenses | $ | 450.6 | $ | 1,305.2 | $ | 906.5 | $ | 124.7 | $ | 2,787.0 | ||||||||||
Ratios | ||||||||||||||||||||
Loss ratio | 59.1 | % | 65.8 | % | 71.5 | % | 62.9 | % | 65.8 | % | ||||||||||
Expense ratio | 32.0 | % | 26.2 | % | 28.3 | % | 42.9 | % | 29.8 | % | ||||||||||
Combined ratio | 91.1 | % | 92.0 | % | 99.8 | % | 105.8 | % | 95.6 | % |
Twelve Months Ended December 31, 2007 | ||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Total | ||||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||
Gross written premiums | $ | 601.5 | $ | 431.5 | $ | 633.0 | $ | 122.5 | $ | 1,818.5 | ||||||||||
Net premiums written | 495.0 | 425.1 | 590.1 | 91.2 | 1,601.4 | |||||||||||||||
Gross premiums earned | 624.3 | 483.3 | 658.9 | 136.8 | 1,903.3 | |||||||||||||||
Net premiums earned | 555.6 | 475.3 | 597.2 | 105.5 | 1,733.6 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Losses and loss expenses | (220.7 | ) | (332.1 | ) | (308.9 | ) | (58.1 | ) | (919.8 | ) | ||||||||||
Policy acquisition, operating and administrative expenses | (182.7 | ) | (117.5 | ) | (172.9 | ) | (45.6 | ) | (518.7 | ) | ||||||||||
Underwriting profit | $ | 152.2 | $ | 25.7 | $ | 115.4 | $ | 1.8 | $ | 295.1 | ||||||||||
Net reserves for loss and loss adjustment expenses | $ | 459.3 | $ | 1,262.6 | $ | 860.0 | $ | 59.4 | $ | 2,641.3 | ||||||||||
Ratios | ||||||||||||||||||||
Loss ratio | 39.7 | % | 69.9 | % | 51.7 | % | 55.1 | % | 53.1 | % | ||||||||||
Expense ratio | 32.9 | % | 24.7 | % | 29.0 | % | 43.2 | % | 29.9 | % | ||||||||||
Combined ratio | 72.6 | % | 94.6 | % | 80.7 | % | 98.3 | % | 83.0 | % |
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Gross Written Premiums | ||||||||||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||||||||||
Lines of Business | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||||||||||
($ in millions) | % increase/ | ($ in millions) | % increase/ | ($ in millions) | ||||||||||||||||
(decrease) | (decrease) | |||||||||||||||||||
Treaty catastrophe | $ | 261.2 | 3.2 | % | $ | 253.0 | (11.1 | )% | $ | 284.5 | ||||||||||
Treaty risk excess | 104.5 | (6.8 | )% | 112.1 | (16.5 | )% | 134.3 | |||||||||||||
Treaty pro rata | 181.4 | 3.9 | % | 174.7 | 20.3 | % | 145.2 | |||||||||||||
Property facultative | 52.8 | 7.1 | % | 49.3 | 31.5 | % | 37.5 | |||||||||||||
Credit and surety reinsurance | 48.8 | NM | (1) | — | — | — | ||||||||||||||
Total | $ | 648.7 | 10.1 | % | $ | 589.1 | (2.1 | )% | $ | 601.5 | ||||||||||
(1) | Not Meaningful — This line of business was not operational at December 31, 2008. |
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Gross Written Premiums | ||||||||||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||||||||||
Lines of Business | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||||||||||
($ in millions) | % increase/ | ($ in millions) | % increase/ | ($ in millions) | ||||||||||||||||
(decrease) | (decrease) | |||||||||||||||||||
U.S. treaty | $ | 277.1 | 0.1 | % | $ | 276.8 | (0.2 | )% | $ | 277.3 | ||||||||||
International treaty | 114.1 | (7.8 | )% | 123.8 | (13.2 | )% | 142.7 | |||||||||||||
Casualty facultative | 16.9 | 7.6 | % | 15.7 | 36.5 | % | 11.5 | |||||||||||||
Total | $ | 408.1 | (2.0 | )% | $ | 416.3 | (3.5 | )% | $ | 431.5 | ||||||||||
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Gross Written Premiums | ||||||||||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||||||||||
Lines of Business | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||||||||||
($ in millions) | % increase/ | ($ in millions) | % increase/ | ($ in millions) | ||||||||||||||||
(decrease) | (decrease) | |||||||||||||||||||
Marine, energy and construction liability | $ | 177.4 | 10.0 | % | $ | 161.3 | 16.5 | % | $ | 138.3 | ||||||||||
Energy property insurance | 83.5 | (12.0 | )% | 94.9 | (7.6 | )% | 102.7 | |||||||||||||
Marine hull | 63.2 | (4.1 | )% | 65.9 | 10.0 | % | 59.9 | |||||||||||||
Aviation insurance | 112.8 | 10.8 | % | 101.8 | (1.6 | )% | 103.3 | |||||||||||||
U.K. commercial property and construction | 56.7 | (11.0 | )% | 63.7 | 27.1 | % | 50.1 | |||||||||||||
U.K. commercial liability | 45.4 | (39.5 | )% | 75.1 | (18.5 | )% | 92.2 | |||||||||||||
Professional liability | 45.9 | 4.3 | % | 44.0 | — | 5.0 | ||||||||||||||
Global excess casualty | 73.6 | 4.2 | % | 70.6 | — | 7.1 | ||||||||||||||
Financial institutions | 25.9 | (33.6 | )% | 39.0 | — | — | ||||||||||||||
Financial and political risk | 32.5 | (16.9 | )% | 39.1 | — | — | ||||||||||||||
Management and technology | 8.1 | 131.4 | % | 3.5 | NM | (1) | — | |||||||||||||
Specie | 6.5 | NM | (1) | — | NM | (1) | — | |||||||||||||
Specialty reinsurance | 116.2 | 6.7 | % | 108.9 | 4.3 | % | 104.4 | |||||||||||||
Total | $ | 847.7 | (2.3 | )% | $ | 867.8 | 30.9 | % | $ | 663.0 | ||||||||||
(1) | Not Meaningful — These lines of business were not operational as at December 31, 2008 and/or December 31, 2007. |
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Gross Written Premiums | ||||||||||||||||||||
For the Twelve Months | For the Twelve Months | For the Twelve Months | ||||||||||||||||||
Lines of Business | Ended December 31, 2009 | Ended December 31, 2008 | Ended December 31, 2007 | |||||||||||||||||
($ in millions) | % increase/ | ($ in millions) | % increase/ | ($ in millions) | ||||||||||||||||
(decrease) | (decrease) | |||||||||||||||||||
U.S Property insurance | $ | 82.5 | 55.1 | % | $ | 53.2 | 29.4 | % | $ | 41.1 | ||||||||||
U.S. Casualty insurance | 77.1 | 2.3 | % | 75.4 | (7.5 | )% | 81.4 | |||||||||||||
U.S. Risk Solutions | 3.0 | NM | (1) | — | NM | (1) | — | |||||||||||||
Total | $ | 162.6 | 26.4 | % | $ | 128.6 | 5.0 | % | $ | 122.5 | ||||||||||
(1) | Not Meaningful — This line of business was not operational as at December 31, 2008. |
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As at December 31, 2009 | As at December 31, 2008 | |||||||||||||||
Percentage of | Percentage of | |||||||||||||||
Estimated | Fixed Income | Estimated | Fixed Income | |||||||||||||
Fair Value | Portfolio | Fair Value | Portfolio | |||||||||||||
Marketable Securities — Available for Sale | ||||||||||||||||
U.S. Government Securities | $ | 507.5 | 7.4 | % | $ | 650.7 | 10.9 | % | ||||||||
U.S. Government Agency Securities | 389.1 | 5.7 | % | 393.1 | 6.6 | % | ||||||||||
Municipal Securities | 19.5 | 0.3 | % | 8.0 | 0.1 | % | ||||||||||
Corporate Securities | 2,264.6 | 33.2 | % | 1,424.5 | 23.8 | % | ||||||||||
Foreign Government | 522.3 | 7.7 | % | 384.5 | 6.4 | % | ||||||||||
Asset-backed Securities | 115.1 | 1.7 | % | 205.5 | 3.4 | % | ||||||||||
Mortgage-backed Securities | 1,431.8 | 21.0 | % | 1,366.8 | 22.9 | % | ||||||||||
Total Fixed Income — Available for Sale | 5,249.9 | 77.0 | % | 4,433.1 | 74.1 | % | ||||||||||
Marketable Securities — Trading | ||||||||||||||||
Corporate Securities | 329.4 | 4.8 | % | — | — | |||||||||||
U.S. Government Securities | 6.5 | 0.1 | % | — | — | |||||||||||
Municipal Securities | 1.8 | — | — | — | ||||||||||||
U.S. Government Agency Securities | 0.4 | — | — | — | ||||||||||||
Asset-backed Securities | 5.0 | 0.1 | % | |||||||||||||
Foreign Government Securities | 5.0 | 0.1 | % | — | — | |||||||||||
Total Fixed Income — Trading | 348.1 | 5.1 | % | — | — | |||||||||||
Total Other Investments | 27.3 | 0.4 | % | 286.9 | 4.9 | % | ||||||||||
Total Short-term Investments — Available for Sale | 368.2 | 5.4 | % | 224.9 | 3.8 | % | ||||||||||
Total Short-term Investments — Trading | 3.5 | 0.1 | % | — | — | |||||||||||
Total Cash and Cash Equivalents | 748.4 | 11.0 | % | 809.1 | 13.5 | % | ||||||||||
Total Receivable for Securities Sold | 11.9 | 0.2 | % | 177.2 | 3.0 | % | ||||||||||
Total Accrued Interest Receivable | 54.6 | 0.8 | % | 43.7 | 0.7 | % | ||||||||||
Total Cash and Investments | $ | 6,811.9 | 100.0 | % | $ | 5,974.9 | 100.0 | % | ||||||||
AAA | AA and Below | Total | ||||||||||
Agency | $ | 1,209.6 | $ | — | $ | 1,209.6 | ||||||
Non-agency Commercial | 9.8 | 32.4 | 42.2 | |||||||||
Non-agency Residential | 158.7 | 21.3 | 180.0 | |||||||||
Total Mortgage-backed Securities | $ | 1,378.1 | $ | 53.7 | $ | 1,431.8 | ||||||
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December 31, 2009 | December 31, 2008 | |||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
($ in millions) | ||||||||||||||||
Investment funds | $ | — | $ | — | $ | 311.3 | $ | 286.9 | ||||||||
Cartesian Iris 2009A L.P | 25.0 | 27.3 | — | — | ||||||||||||
Total other investments | $ | 25.0 | $ | 27.3 | $ | 311.3 | $ | 286.9 | ||||||||
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• | quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); | |
• | initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; and; | |
• | comparison of the fair value estimates to its knowledge of the current market. |
Twelve Months Ended | Twelve Months Ended | |||||||
December 31, 2009 | December 31, 2008 | |||||||
Index providers | 81.5 | % | 83.8 | % | ||||
Pricing services | 13.2 | % | 10.8 | % | ||||
Broker-dealers | 5.3 | % | 5.4 | % | ||||
Total | 100.0 | % | 100.0 | % | ||||
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As at December 31, 2009 | As at December 31, 2008 | |||||||||||||
Rating With | Rating without | Market | Rating With | Rating without | ||||||||||
Guarantee | Guarantee | Value | Guarantee | Guarantee | Market Value | |||||||||
($ in millions) | ||||||||||||||
AAA | AAA | $ | 141.9 | AAA | AAA | $ | 103.6 | |||||||
AA+ | — | AA+ | 7.0 | |||||||||||
AA | 16.2 | AA | 1.3 | |||||||||||
AA- | 3.0 | AA− | 3.1 | |||||||||||
A+ | 69.8 | A+ | 71.0 | |||||||||||
A | 34.1 | A | 10.2 | |||||||||||
A− | 107.0 | A− | — | |||||||||||
BBB+ | 7.7 | BBB+ | — | |||||||||||
BBB- | 20.9 | BBB- | — | |||||||||||
AA+ | AA+ | 15.0 | AA+ | AA+ | — | |||||||||
AA | 27.8 | AA | — | |||||||||||
A | 17.3 | A | — | |||||||||||
AA | AA | 3.2 | AA | AA | — | |||||||||
BBB- | BBB− | 0.1 | BBB− | BBB− | 0.1 | |||||||||
$ | 464.0 | $ | 196.3 | |||||||||||
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As at December 31, 2009 | As at December 31, 2008 | |||||||||||||||||||||||
Reinsurance | Reinsurance | |||||||||||||||||||||||
Gross | Recoverable | Net | Gross | Recoverable | Net | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
Property Reinsurance | $ | 390.6 | $ | (35.4 | ) | $ | 355.2 | $ | 488.5 | $ | (37.9 | ) | $ | 450.6 | ||||||||||
Casualty Reinsurance | 1,518.9 | (6.4 | ) | 1,512.5 | 1,311.1 | (5.9 | ) | 1,305.2 | ||||||||||||||||
International Insurance | 1,220.1 | (227.7 | ) | 992.4 | 1,117.4 | (210.9 | ) | 906.5 | ||||||||||||||||
U.S. Insurance | 201.5 | (52.0 | ) | 149.5 | 153.3 | (28.6 | ) | 124.7 | ||||||||||||||||
Total Losses and loss expense reserves | $ | 3,331.1 | $ | (321.5 | ) | $ | 3,009.6 | $ | 3,070.3 | $ | (283.3 | ) | $ | 2,787.0 | ||||||||||
As at December 31, 2009 | ||||||||||||||||
Gross | ||||||||||||||||
Outstandings | Gross IBNR | Gross Reserve | % IBNR | |||||||||||||
($ in millions, except for percentages) | ||||||||||||||||
Property Reinsurance | 205.7 | 184.9 | $ | 390.6 | 47.3 | % | ||||||||||
Casualty Reinsurance | 507.2 | 1,011.7 | 1,518.9 | 66.6 | % | |||||||||||
International Insurance | 635.9 | 584.2 | 1,220.1 | 47.9 | % | |||||||||||
U.S. Insurance | 36.0 | 165.5 | 201.5 | 82.1 | % | |||||||||||
Total Losses and loss expense reserves | $ | 1,384.8 | $ | 1,946.3 | $ | 3,331.1 | 58.4 | % | ||||||||
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As at December 31, 2008 | ||||||||||||||||
Gross | ||||||||||||||||
Outstandings | Gross IBNR | Gross Reserve | % IBNR | |||||||||||||
($ in millions, except for percentages) | ||||||||||||||||
Property Reinsurance | 282.5 | 206.0 | $ | 488.5 | 42.2 | % | ||||||||||
Casualty Reinsurance | 396.4 | 914.7 | 1,311.1 | 69.8 | % | |||||||||||
International Insurance | 573.2 | 544.2 | 1,117.4 | 48.7 | % | |||||||||||
U.S. Insurance | 27.6 | 125.7 | 153.3 | 82.0 | % | |||||||||||
Total Losses and loss expense reserves | $ | 1,279.7 | $ | 1,790.6 | $ | 3,070.3 | 58.3 | % | ||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
Business Segment | December 31, 2009 | December 31, 2008 | December 31, 2007 | |||||||||
($ in millions) | ||||||||||||
Property Reinsurance | $ | 58.5 | $ | 12.1 | $ | (11.5 | ) | |||||
Casualty Reinsurance | 27.5 | 67.2 | 31.8 | |||||||||
International Insurance | 17.7 | (3.9 | ) | 80.8 | ||||||||
U.S. Insurance | (19.3 | ) | 8.1 | 6.3 | ||||||||
Total reduction in prior year loss reserves | $ | 84.4 | $ | 83.5 | $ | 107.4 | ||||||
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As at | As at | |||||||||||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||
($ in millions, except for percentages) | ||||||||||||||||
Share capital, additional paid-in capital and retained income and accumulated other comprehensive income attributable to ordinary shareholders | $ | 2,951.8 | 83.0 | % | $ | 2,359.9 | 77.9 | % | ||||||||
Preference shares (liquidation preference), net of issue costs | 353.6 | 10.0 | % | 419.2 | 13.9 | % | ||||||||||
Long-term debt | 249.6 | 7.0 | % | 249.5 | 8.2 | % | ||||||||||
Total capital | $ | 3,555.0 | 100 | % | $ | 3,028.6 | 100 | % | ||||||||
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As at December 31, | As at December 31, | |||||||
2009 | 2008 | |||||||
($ in millions, except percentages) | ||||||||
Assets held in multi-beneficiary trusts | $ | 1,448.4 | $ | 1,345.6 | ||||
Assets held in single beneficiary trusts | 55.7 | 54.0 | ||||||
Letters of credit issued under our revolving credit facilities (1) | — | 84.6 | ||||||
Secured letters of credit (2) | 528.3 | 422.4 | ||||||
Total | $ | 2,032.4 | $ | 1,906.6 | ||||
Total as % of cash and invested assets | 30.1 | % | 33.1 | % | ||||
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(1) | These letters of credit are not secured by cash or securities, though we have the ability to issue secured letters of credit under the revolving credit facility. | |
(2) | As of December 31, 2009, the Company had funds on deposit of $667.1 million and £18.8 million (December 31, 2008 — $604.6 million and £25.3 million) as collateral for the secured letters of credit. |
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Contractual Basis | Payments Due By Period | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
Operating lease obligations | $ | 55.4 | $ | 7.8 | $ | 13.9 | $ | 12.9 | $ | 20.8 | ||||||||||
Long-term debt obligations (1) | 249.6 | — | — | 249.6 | — | |||||||||||||||
Reserves for losses and loss adjustment expenses (2) | 3,331.1 | 850.1 | 1,235.7 | 477.6 | 767.7 |
(1) | The long term debt obligations disclosed above does not include the $15 million annual interest payable on our outstanding senior notes. | |
(2) | In estimating the time intervals into which payments of our reserves for losses and loss adjustment expenses fall, as set out above, we have utilized actuarially assessed payment patterns. By the nature of the insurance and reinsurance contracts under which these liabilities are assumed, there can be no certainty that actual payments will fall in the periods shown and there could be a material acceleration or deceleration of claims payments depending on factors outside our control. This uncertainty is heightened by the relatively short time in which we have operated, thereby providing limited Company-specific claims loss payment patterns. The total amount of payments in respect of our reserves, as well as the timing of such payments, may differ materially from our current estimates for the reasons set out above under “— Critical Accounting Policies — Reserves for Losses and Loss Expenses.” |
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As at December 31, | As at December 31, | |||||||
2009 | 2008 | |||||||
($ in millions, except percentages) | ||||||||
Share capital, additional paid-in capital and retained income and accumulated other comprehensive income attributable to ordinary shareholders | $ | 3,305.4 | $ | 2,779.1 | ||||
Average adjustment | (853.0 | ) | (486.8 | ) | ||||
Average Equity | $ | 2,452.4 | $ | 2,292.3 | ||||
As at December 31, | As at December 31, | |||||||
2009 | 2008 | |||||||
($ in millions, except percentages) | ||||||||
Net income after tax | $ | 473.9 | $ | 103.8 | ||||
Add (deduct) after tax income: | ||||||||
Net realized and unrealized investment (gains)/losses | (7.6 | ) | 39.5 | |||||
Net realized and unrealized exchange (gains)/losses | (2.0 | ) | 8.2 | |||||
Operating income after tax | $ | 464.3 | $ | 151.5 | ||||
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Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
Effect of Changes in Interest Rates on Portfolio Given a Parallel Shift in the Yield Curve | ||||||||||||||||||||
Movement in rates in basis points | −100 | −50 | 0 | 50 | 100 | |||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||
Market Value | $ | 6,153.9 | $ | 6,069.9 | $ | 5,969.7 | $ | 5,869.5 | $ | 5,769.3 | ||||||||||
Gain/Loss | 184.2 | 100.2 | — | (100.2 | ) | (200.4 | ) | |||||||||||||
Percentage of Portfolio | 3.1 | % | 1.7 | % | — | (1.7 | )% | (3.4 | )% | |||||||||||
Corresponding percentage at December 31, 2008 | 2.9 | % | 1.5 | % | — | (1.6 | )% | (3.2 | )% |
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A.M. Best | ($ in millions) | |||
A++ | $ | 13.2 | ||
A+ | $ | 57.0 | ||
A | $ | 226.2 | ||
A− | $ | 21.3 | ||
Fully collateralized | $ | 0.5 | ||
Not rated | $ | 3.3 | ||
$ | 321.5 | |||
Item 8. | Financial Statements and Supplementary Data |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
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Item 9B. | Other Information |
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Item 10. | Directors, Executive Officers of the Registrant and Corporate Governance |
Corporate | ||||||||||||||||||||||||||||
Director | Governance | |||||||||||||||||||||||||||
Name | Age | Since | Audit | Compensation | & Nominating | Investment | Risk | |||||||||||||||||||||
Class I Directors: | ||||||||||||||||||||||||||||
Christopher O’Kane | 55 | 2002 | ||||||||||||||||||||||||||
Heidi Hutter | 52 | 2002 | ü | Chair | ||||||||||||||||||||||||
David Kelso | 57 | 2005 | ü | ü | ü | |||||||||||||||||||||||
John Cavoores | 52 | 2006 | ü | ü | ||||||||||||||||||||||||
Liaquat Ahamed | 57 | 2007 | Chair | ü | ||||||||||||||||||||||||
Class II Directors: | ||||||||||||||||||||||||||||
Julian Cusack | 59 | 2002 | ü | ü | ||||||||||||||||||||||||
Glyn Jones | 57 | 2006 | ü | |||||||||||||||||||||||||
Richard Houghton | 44 | 2007 | ü | |||||||||||||||||||||||||
Class III Directors: | ||||||||||||||||||||||||||||
Ian Cormack | 62 | 2003 | Chair | ü | ||||||||||||||||||||||||
Matthew Botein | 36 | 2007 | ü | ü | ü | |||||||||||||||||||||||
Richard Bucknall | 61 | 2007 | ü | Chair | ||||||||||||||||||||||||
Peter O’Flinn | 57 | 2009 | ü | Chair |
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Name | Age | Position | ||||
Christopher O’Kane (1) | 55 | Chief Executive Officer of Aspen Holdings | ||||
Richard Houghton (1) | 44 | Chief Financial Officer of Aspen Holdings | ||||
Julian Cusack (1) | 59 | Chief Risk Officer of Aspen Holdings, Chief Executive Officer and Chairman of Aspen Bermuda | ||||
Brian Boornazian | 49 | CEO of Aspen Reinsurance | ||||
Michael Cain | 37 | Group General Counsel | ||||
James Few | 38 | President of Aspen Reinsurance, Chief Underwriting Officer of Aspen Bermuda | ||||
Karen Green | 42 | President and Chief Operating Officer, Aspen U.K. and AMAL Group Head of Corporate Development | ||||
Emil Issavi | 37 | Head of Casualty Reinsurance, Executive Vice President of Aspen Reinsurance | ||||
William Murray | 53 | President of U.S. Insurance | ||||
Rupert Villers | 57 | CEO of Insurance | ||||
Stephen Postlewhite | 38 | Head of Risk Capital | ||||
Kate Vacher | 38 | Director of Underwriting | ||||
Chris Woodman | 48 | Group Head of Human Resources |
(1) | Biography available above under “— Directors” above. |
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• | the name of each person recommended by the shareholder(s) to be considered as a nominee; | |
• | the name(s) and address(es) of the shareholder(s) making the nomination, the number of ordinary shares which are owned beneficially and of record by such shareholder(s) and the period for which such ordinary shares have been held; | |
• | a description of the relationship between the nominating shareholder(s) and each nominee; | |
• | biographical information regarding such nominee, including the person’s employment and other relevant experience and a statement as to the qualifications of the nominee; | |
• | a business address and telephone number for each nominee (ane-mail address may also be included); and | |
• | the written consent to nomination and to serving as a director, if elected, of the recommended nominee. |
• | he or she must have the highest standards of personal and professional integrity; | |
• | he or she must have exhibited mature judgment through significant accomplishments in his or her chosen field of expertise; | |
• | he or she must have a well-developed career history with specializations and skills that are relevant to understanding and benefiting the Company; | |
• | he or she must be able to allocate sufficient time and energy to director duties, including preparation for meetings and attendance at meetings; | |
• | he or she must be able to read and understand financial statements to an appropriate level for the exercise of his or her duties; and | |
• | he or she must be familiar with, and willing to assume, the duties of a director on the Board of Directors of a public company. |
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• | the nominee’s qualifications and accomplishments and whether they complement the Board of Directors’ existing strengths; | |
• | the nominee’s leadership, strategic, or policy setting experience; | |
• | the nominee’s experience and expertise relevant to the Company’s insurance and reinsurance business, including any actuarial or underwriting expertise, or other specialized skills; | |
• | the nominee’s independence qualifications, as defined by NYSE listing standards; | |
• | the nominee’s actual or potential conflict of interest, or the appearance of any conflict of interest, with the best interests of the Company and its shareholders; | |
• | the nominee’s ability to represent the interests of all shareholders of the Company; and | |
• | the nominee’s financial literacy, accounting or related financial management expertise as defined by NYSE listing standards, or qualifications as an audit committee financial expert, as defined by SEC rules and regulations. |
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Item 11. | Executive Compensation |
• | attract and retain highly skilled executives; | |
• | link compensation to achievement of the Company’s financial and strategic goals by having a significant portion of compensation be performance-based; | |
• | create commonality of interest between management and shareholders by tying substantial elements of compensation directly to changes in shareholder value over time in a sustainable manner that does not reward or appear to reward short-term behavior that may involve excessive risk taking; | |
• | maximize the financial efficiency of the overall program to the Company from a tax, accounting, and cash flow perspective; | |
• | ensure compliance with the highest standards of corporate governance; and | |
• | encourage executives to work hard for the success of the business and work effectively with clients and colleagues for the benefit of the business as a whole. |
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• | base salary; | |
• | annual cash bonuses; | |
• | long-term incentive awards; | |
• | other stock plans; and | |
• | benefits and perquisites. |
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• | research of peer company annual reports onForm 10-K and similar filings for companies in our sector in the markets in which we operate; | |
• | publicly available compensation surveys from reputable survey providers; | |
• | advice and tailored research from compensation consultants; and | |
• | experience from recruiting senior positions in the market place. |
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• | the performance of the business; | |
• | the performance of the executives in their roles over the previous year; | |
• | the historical context of the executive’s compensation awards; | |
• | the responsibilities of the role; | |
• | the experience brought to the role by the executive; | |
• | the function undertaken by the role; and |
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• | analysis of the market data from competitors and more general market data from labor markets in which we operate. |
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�� | Bonus | |||||||||||||||||||||||
Name and Principal Position | Year | Potential % | Target ($) | Actual ($) | % of Base | % of Target | ||||||||||||||||||
Christopher O’Kane, | 2009 | 150 | % | $ | 1,128,240 | $ | 2,256,480 | 300 | % | 200 | % | |||||||||||||
Chief Executive Officer | 2008 | 150 | % | $ | 1,250,370 | $ | 0 | 0 | % | 0 | % | |||||||||||||
2007 | 150 | % | $ | 1,249,123 | $ | 1,501,358 | 180 | % | 120 | % | ||||||||||||||
Richard Houghton, | 2009 | 100 | % | $ | 564,120 | $ | 902,592 | 160 | % | 160 | % | |||||||||||||
Chief Financial Officer (2) | 2008 | 100 | % | $ | 648,340 | $ | 0 | 0 | % | 0 | % | |||||||||||||
2007 | 100 | % | $ | 640,576 | $ | 500,453 | 78 | % | 78 | % | ||||||||||||||
Julian Cusack, | 2009 | 100 | % | $ | 564,120 | $ | 902,592 | 160 | % | 160 | % | |||||||||||||
Chief Risk Officer (3) | 2008 | 100 | % | $ | 648,340 | $ | 0 | 0 | % | 0 | % | |||||||||||||
2007 | 60 | % | $ | 187,200 | $ | 625,000 | 200 | % | 334 | % | ||||||||||||||
Brian Boornazian, | 2009 | 135 | % | $ | 675,000 | $ | 1,350,000 | 270 | % | 200 | % | |||||||||||||
CEO of Aspen Reinsurance | 2008 | 135 | % | $ | 634,500 | $ | 245,000 | 52 | % | 39 | % | |||||||||||||
2007 | 135 | % | $ | 594,000 | $ | 800,000 | 182 | % | 135 | % | ||||||||||||||
James Few, | 2009 | 115 | % | $ | 546,250 | $ | 1,092,500 | 230 | % | 200 | % | |||||||||||||
President of Aspen | 2008 | 115 | % | $ | 517,500 | $ | 205,000 | 46 | % | 40 | % | |||||||||||||
Reinsurance | 2007 | 115 | % | $ | 506,000 | $ | 725,000 | 165 | % | 143 | % |
(1) | All compensation information is taken from the Compensation Discussion and Analysis for the year in which the compensation was earned. |
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(2) | Mr. Houghton joined the company in April 2007. His target bonus reflects a full year’s work; he was guaranteed a minimum bonus of $400,360 as part of his negotiation to join Aspen. The decision was made to exceed Mr. Houghton’s minimum to reflect his strong first eight months with the company. | |
(3) | In 2007, Mr. Cusack’s role was changed from Group CFO to Chairman and CEO of Aspen Bermuda. The change in role included a decrease in base salary from $412,000 to $312,000 per annum. |
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1. | Achieve the 2009 business plan within the group’s risk tolerances and underwriting disciplines; | |
2. | Preserve capital, maintain solvency and liquidity; | |
3. | Undertake an evaluation of all business lines to ensure they continue to be relevant for the future of Aspen; | |
4. | Refine underwriting management and control environment procedures and accountabilities to be followed by product heads; | |
5. | Implement the group pricing standard; | |
6. | Undertake a review of the group underwriting structure and enabling functions to ensure an appropriate balance between country/product/legal entity management; | |
7. | Execute our vision for the U.S. market; and | |
8. | Develop a5-year IT strategy, reviewing the current function and assessing existing and future needs. |
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• | if the ROE achieved in any given year is less than 7%, then the portion of the performance shares subject to the conditions of that year will be forfeited; | |
• | if the ROE achieved in any given year is between 7% and 12%, then the percentage of the performance shares eligible for vesting in that year will be between 10%-100% on a straight-line basis; | |
• | if the ROE achieved in any given year is between 12% and 22%, then the percentage of the performance shares eligible for vesting in that year will be between 100%-200% on a straight-line basis; provided however that if the ROE for such year is greater than 12% and the average ROE for such year and the previous year is less than 7%, then only 100% of the shares eligible for vesting in such year shall vest. |
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Year | 2007 | 2008 | 2009 | 2010 | 2011 | |||||||||||||||
Threshold ROE | 10 | % | 10 | % | 7 | % | — | — | ||||||||||||
Target ROE | 15 | % | 15 | % | 12 | % | — | — | ||||||||||||
Actual ROE | 21.6 | % | 3.3 | % | 18.4 | % | — | — | ||||||||||||
2007 Performance share awards (1) | 166 | % | 0 | % | 134 | % | — | — | ||||||||||||
2008 Performance share awards (2) | — | 0 | % | 134 | % | — | — | |||||||||||||
2009 Performance share awards (2) | — | — | 164 | % | — | — |
(1) | Represents annual performance test; percentage to be applied to 25% of the original for grant | |
(2) | Represents annual performance test; percentage to be applied to 33.3% of the original for grant |
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• | All Company shares owned by Group Executive Committee members will be held in own name or joint with spouse; | |
• | All Company shares owned by Group Executive Committee members should be held in a Merrill Lynch brokerage account or other Company approved broker; | |
• | Executive Directors should inform the Chief Executive Officer and the Chairman if they plan to trade Aspen shares, and should provide detailed reasons for sale upon request; | |
• | Other Group Executive Committee members should obtain permission to trade from the Chief Executive Officer and provide detailed reasons for sale upon request; | |
• | The Compensation Committee will be informed on a quarterly basis of all trading of stock by all Aspen employees; |
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• | Recommendation that sales by Group Executive Committee members be undertaken using SECRule 10b5-1 trading programs, where possible with the additional cost of administration connected with such trades to be paid by the Company; | |
• | It is prohibited for Company shares to be used as collateral for loans, purchasing of Company stock on margin or pledging Company stock in a margin account; and | |
• | The Chief Executive Officer should inform the Chairman of any decision to sell stock. |
• | the amount of stock that an executive holds, the duration of the period over which that stock has been held and the amount of stock being requested to be sold; | |
• | the nature of the role held by the executive; | |
• | any reasons related to hardship, retirement planning, divorce etc. that would make a sale of stock required; | |
• | the history of trading by the executive; | |
• | the remaining stock holdings left after the sale; and | |
• | the market conditions and other factors which relate to the Company’s trading situation at the proposed time of sale. |
• | Housing Allowance. Non-Bermudians are restricted by law from owning certain property in Bermuda. This has led to a housing market that is largely based on renting to expatriates who work on the island. Housing allowances are a near universal practice for expatriates and also, increasingly, for local Bermudians in key positions. We base our housing allowances on market information available through local benefits surveys and from information available from the housing market. The allowance is based on the level of the position compared with market data. | |
• | Club Membership. This benefit is common practice in the Bermudian market place and enables the expatriate to settle into the community. It also has the benefit of enabling our NEOs to establish social networks with clients and executives in our industry in furtherance of our business. | |
• | Home Leave. This benefit is common practice for expatriates who are working outside of their home country. We believe that this helps the expatriate andhis/her family keep in touch with the home country in respect of both business and social networks. Such a benefit is provided by other companies within our peer group, is necessary for both recruitment and retention purposes and is important for the success of the overseas assignment. |
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Change in | ||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||
Stock | Option | Deferred | All Other | |||||||||||||||||||||||||||||
Salary | Bonus | Awards | Awards | Compensation | Compensation | |||||||||||||||||||||||||||
Name and Principal Position | Year | ($)(2) | ($)(3) | ($)(4) | ($)(5) | Earnings ($) | ($) | Total ($) | ||||||||||||||||||||||||
Christopher O’Kane, | 2009 | $ | 740,408 | $ | 2,256,480 | $ | 2,792,710 | — | — | $ | 133,273 | $ | 5,922,871 | |||||||||||||||||||
Chief Executive Officer (6) | 2008 | $ | 817,835 | — | $ | 1,405,257 | — | — | $ | 147,210 | $ | 2,370,302 | ||||||||||||||||||||
2007 | $ | 824,746 | $ | 1,501,358 | $ | 1,397,333 | $ | 466,414 | — | $ | 148,454 | $ | 4,338,305 | |||||||||||||||||||
Richard Houghton, | 2009 | $ | 560,203 | $ | 902,592 | $ | 930,903 | — | $ | 79,248 | $ | 2,472,946 | ||||||||||||||||||||
Chief Financial Officer (7) | 2008 | $ | 631,359 | — | $ | 655,783 | — | — | $ | 88,390 | $ | 1,375,532 | ||||||||||||||||||||
2007 | $ | 429,518 | $ | 500,453 | $ | 456,770 | $ | 74,626 | — | $ | 60,132 | $ | 1,521,499 | |||||||||||||||||||
Julian Cusack, | 2009 | $ | 560,203 | $ | 902,592 | $ | 1,396,355 | — | — | $ | 426,239 | $ | 3,285,389 | |||||||||||||||||||
Chief Risk Officer (8) | 2008 | $ | 534,569 | — | $ | 655,783 | — | — | $ | 460,235 | $ | 1,650,587 | ||||||||||||||||||||
2007 | $ | 376,331 | $ | 625,000 | $ | 349,346 | $ | 116,604 | — | $ | 233,517 | $ | 1,700,798 | |||||||||||||||||||
Brian Boornazian, | 2009 | $ | 492,500 | $ | 1,350,000 | $ | 1,163,629 | — | — | $ | 31,434 | $ | 3,037,563 | |||||||||||||||||||
CEO of Aspen Reinsurance (9) | 2008 | $ | 462,500 | $ | 245,000 | $ | 702,628 | — | — | $ | 31,916 | $ | 1,442,044 | |||||||||||||||||||
2007 | $ | 436,250 | $ | 800,000 | $ | 838,415 | $ | 279,850 | — | $ | 24,854 | $ | 2,379,369 | |||||||||||||||||||
James Few, | 2009 | $ | 468,750 | $ | 1,092,500 | $ | 1,163,629 | — | — | $ | 289,032 | $ | 3,013,911 | |||||||||||||||||||
President of Aspen | 2008 | $ | 446,667 | $ | 205,000 | $ | 930,903 | — | — | $ | 281,523 | $ | 1,864,093 | |||||||||||||||||||
Reinsurance (10) | 2007 | $ | 434,999 | $ | 725,000 | $ | 768,541 | $ | 256,525 | — | $ | 275,191 | $ | 2,460,256 |
(1) | Unless otherwise indicated, compensation payments paid in British Pounds have been translated into U.S. Dollars at the average exchange rate of $1.567 to £1, $1.8524 to £1 and $2.0018 to £1 for 2009, 2008 and 2007, respectively. | |
(2) | The salaries provided represent earned salaries. | |
(3) | For a description of our bonus plan, see “Compensation Discussion and Analysis — Cash Compensation — Annual Cash Bonuses” above. | |
(4) | Consists of performance share awards and/or restricted share units, as applicable. Valuation is based on the grant date fair values of the awards calculated in accordance with FASB ASC Topic 718, without regard to forfeiture assumptions. The award’s potential maximum value, assuming the highest level of performance conditions are met $5,250,302, $1,750,098, $2,625,151, $2,187,628 and $2,187,628 for Messrs. O’Kane, Houghton, Cusack, Boornazian and Few, respectively. | |
(5) | Consists of stock options. Valuation is based on the grant date fair values of the awards calculated in accordance with FASB ASC Topic 718, without regard to forfeiture assumptions. Please refer to Note 16 of our financial statements for the assumptions made with respect to our performance share and option awards. For a description of the forfeitures during the year, see “Outstanding Equity Awards at Fiscal Year-End” below. | |
(6) | Mr. O’Kane’s compensation was paid in British Pounds. With respect to “All Other Compensation,” this consists of the Company’s contribution to the pension plan of $133,273, $147,210 and $148,454 in 2009, 2008 and 2007, respectively. | |
(7) | Mr. Houghton’s compensation was paid in British Pounds. For 2007, the salary reflects Mr. Houghton’s pro rated salary from his commencement date on April 30, 2007 and the bonus amount in 2007 includes a minimum guaranteed bonus of £200,000. With respect to “All Other Compensation” this consists of the Company’s contribution to the pension plan of $79,248, $88,390 and $60,132 in 2009, 2008 and 2007, respectively. |
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(8) | For 2008, Mr. Cusack was paid in U.S. Dollars until May 2008. Starting in May 2008, per his new employment agreement, he was paid in British Pounds except for £70,000 which were paid in U.S. Dollars and converted at the applicable exchange rate at the time of payment. For 2009, Mr. Cusack was paid on the same basis except for £72,000 which were paid in U.S. Dollars. For purposes of this table, we have used the average exchange rate from May 1, 2008 to December 31, 2008 of $1.7896:£1 in respect of his salary paid in British Pounds in 2008. For 2007, Mr. Cusack’s compensation was paid in U.S. Dollars, except for £12,500. With respect to “All Other Compensation,” this includes (i) a housing allowance in Bermuda of $180,000, $180,000 and $165,000 for 2009, 2008 and 2007, respectively, (ii) home leave travel expenses for Mr. Cusack and his family of $7,329, $28,400 and $9,321, for 2009, 2008 and 2007, respectively, (iii) a payroll tax contribution in an amount of $13,875, $11,163 and $16,602, for 2009, 2008 and 2007, respectively, (iv) club membership fees of $7,350, $7,000 and $3,150 for 2009, 2008 and 2007, respectively, (v) the Company’s contribution to the pension plan of $112,041, $111,946 and $39,444 for 2009, 2008 and 2007, respectively, (vi) a taxgross-up payment in respect of Mr. Cusack’s housing allowance of $101,511 and $114,193 for 2009 and 2008, respectively and (vii) a taxgross-up in respect of Mr. Cusack’s home leave of $4,134 and $7,534 for 2009 and 2008, respectively. | |
(9) | Mr. Boornazian’s compensation was paid in U.S. Dollars. With respect to “All Other Compensation,” this consists of (i) the Company’s contribution to the 401(K) plan (consisting of profit sharing and matching contributions) of $21,300, $20,700 and $20,000 for 2009, 2008 and 2007, respectively, (ii) additional premium paid of $3,778, $4,856 and $4,854 for 2009, 2008, 2007 and 2006, respectively for additional life insurance and disability benefits and (iii) club membership fees of $6,356 and $6,360 for 2009 and 2008, respectively. | |
(10) | Mr. Few’s compensation was paid in U.S. Dollars. With respect to “All Other Compensation,” this includes (i) a housing allowance in Bermuda of $180,000 for each of 2009, 2008 and 2007, (ii) home leave travel expenses for Mr. Few’s family of $29,286, $31,403 and $27,923 for 2009, 2008 and 2007, respectively, (iii) a payroll tax contribution in an amount of $16,625, $11,163 and $16,602 for 2009, 2008 and 2007, respectively, (iv) club membership fees of $7,350, $5,121 and $8,776 for 2009, 2008 and 2007, respectively, and (v) the Company’s contribution to the pension plan of $55,771, $53,837 and $41,890 for 2009, 2008 and 2007, respectively. |
Grant Date | ||||||||||||||||||||||||||||
Estimated Future Payout Under | Closing Price | Fair Value | ||||||||||||||||||||||||||
Equity Incentive Plan Awards | on Date | of Stock | ||||||||||||||||||||||||||
Grant | Approval | Threshold | Target | Maximum | of Grant | Awards | ||||||||||||||||||||||
Name | Date(1) | Date(1) | (#)(2) | (#)(2) | (#)(3) | ($) | (#)(4) | |||||||||||||||||||||
Christopher O’Kane | 05/01/2009 | 04/28/2009 | 0 | 125,628 | 236,181 | $ | 23.70 | $ | 2,792,710 | |||||||||||||||||||
Richard Houghton | 05/01/2009 | 04/28/2009 | 0 | 41,876 | 78,727 | $ | 23.70 | $ | 930,903 | |||||||||||||||||||
Julian Cusack | 05/01/2009 | 04/28/2009 | 0 | 62,814 | 118,090 | $ | 23.70 | $ | 1,396,355 | |||||||||||||||||||
Brian Boornazian | 05/01/2009 | 04/28/2009 | 0 | 52,345 | 98,409 | $ | 23.70 | $ | 1,163,629 | |||||||||||||||||||
James Few | 05/01/2009 | 04/28/2009 | 0 | 52,345 | 98,409 | $ | 23.70 | $ | 1,163,629 |
(1) | In 2007, we adopted a policy whereby the Compensation Committee approves annual grants at a regularly scheduled meeting. However, if such a meeting takes place while the Company is in a close period (i.e., prior to the release of our quarterly or yearly earnings), the grant date will be the day on which our close period ends. The approval date of April 28, 2009 was during our close period, and therefore the grant date was May 1, 2009, the day our close period ended. |
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In respect of ad hoc grants of RSUs (if not in a close period), in particular with respect to new hires, the grant date is the later of (i) the date on which the Compensation Committee approves the grant or (ii) the date on which the employee commences employment with the Company. | ||
(2) | Under the terms of the 2009 performance share awards, one-third of the grant is eligible for vesting each year. In any given year, if the ROE is less than 7%, then the portion of the grant for such year will not vest and is forfeited. If the ROE is between 7% and 12%, the percentage of the performance shares eligible for vesting in that year will be between 10% and 100% on a straight-line basis. If the ROE is between 12% and 22%, then the percentage of the performance shares eligible for vesting in that year will be between 100% and 200% on a straight-line basis. If in any given year, the shares eligible for vesting are greater than 100% for the portion of such year’s grant (i.e., the ROE was greater than 12% in such year) and the average ROE over such year and the preceding year is less than 7%, then only 100% of the shares that are eligible for vesting in such year shall vest. The amounts provided represent 100% of the performance shares vested at an ROE of 12% each year. For a more detailed description of our performance share awards granted in 2009, refer to “Narrative Description of Summary Compensation and Grants of Plan-Based Awards — Share Incentive Plan — 2009 Performance Share Awards” below. | |
(3) | Amounts provided represent 164% vesting in respect of one-third of the initial grant as our ROE for 2009 was 18.4%, and assumes a vesting of 200% for the remaining two-thirds of the performance shares at an ROE of 22% each year. | |
(4) | Valuation is based on the grant date fair value of the awards calculated in accordance with FASB ASC Topic 718, without regard to forfeiture assumptions, which is $22.23 for the performance shares granted on May 1, 2009. Refer to Note 16 of our financial statements for the assumptions made with respect to our performance share awards. |
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• | the employee becomes bankrupt, is convicted of a criminal offence (other than a traffic violation or a crime with a penalty other than imprisonment), commits serious misconduct or other conduct bringing the employee or Aspen Holdings or any of its subsidiaries into disrepute; | |
• | the employee materially breaches any provisions of the service agreement or conducts himself in a manner prejudicial to the business; | |
• | the employee is disqualified from being a director in the case of Messrs. O’Kane, Cusack and Houghton; or | |
• | the employee breaches any code of conduct or ceases to be registered by any regulatory body; |
• | the employee’s willful misconduct is materially injurious to Aspen Re America or its affiliates; | |
• | the employee intentionally fails to act in accordance with the direction of the Chief Executive Officer or Board; |
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• | the employee is convicted of a felony; | |
• | the employee violates a law, rule or regulation that governs Aspen Re America’s business, has a material adverse effect on Aspen Re America’s business, or disqualifies him from employment; or | |
• | the employee intentionally breaches a non-compete or non-disclosure agreement; |
• | the employee’s annual salary or bonus opportunity is reduced; | |
• | there is a material diminution in the employee’s duties, authority, responsibilities or title, or the employee is assigned duties materially inconsistent with his position; | |
• | the employee is removed from any of his positions (or in the case of Mr. O’Kane is not elected or re-elected to such positions); | |
• | an adverse change in the employee’s reporting relationship occurs in the case of Messrs. O’Kane, Cusack and Few; or | |
• | the employee is required to relocate more than 50 miles from the employee’s current office; | |
• | provided that, in each case, the default has not been cured within 30 days of receipt of a written notice from the employee; |
• | there is a material diminution in the employee’s responsibilities, duties, title or authority; | |
• | the employee’s annual salary is materially reduced; or | |
• | there is a material breach by the Company of the employment agreement; |
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Employee | Company | |||||||||||
Contribution — | Contribution — | |||||||||||
Percentage of | Percentage of | |||||||||||
Scale | Salary | Age of Employee | Employee’s Salary | |||||||||
Standard Scale | 3% | 18 - 19 | 5% | |||||||||
3% | 20 - 24 | 7% | ||||||||||
3% | 25 - 29 | 8% | ||||||||||
3% | 30 - 34 | 9.5% | ||||||||||
3% | 35 - 39 | 10.5% | ||||||||||
3% | 40 - 44 | 12% | ||||||||||
3% | 45 - 49 | 13.5% | ||||||||||
3% | 50 - 54 | 14.5% | ||||||||||
3% | 55 plus | 15.5% | ||||||||||
Director Scale | 3% | 20 - 24 | 7% | |||||||||
3% | 25 - 29 | 8% | ||||||||||
3% | 30 - 34 | 9.5% | ||||||||||
3% | 35 - 39 | 12% | ||||||||||
3% | 40 - 44 | 14% | ||||||||||
3% | 45 - 49 | 16% | ||||||||||
3% | 50 - 54 | 18% | ||||||||||
3% | 55 plus | 20% |
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Contribution | ||||
by the | ||||
Company as a | ||||
Percentage of | ||||
Employee’s | ||||
Age of Employee | Salary | |||
20 - 29 | 3 | % | ||
30 - 39 | 4 | % | ||
40 - 49 | 5 | % | ||
50 and older | 6 | % |
Vesting | ||||
Years of Vesting Service | Percentage | |||
Less than 3 years | 0 | % | ||
3 years | 100 | % |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||||||
Equity | Incentive Plan | |||||||||||||||||||||||||||||||||||||||
Incentive | Awards: | |||||||||||||||||||||||||||||||||||||||
Equity | Plan Awards: | Market | ||||||||||||||||||||||||||||||||||||||
Incentive | Market | Number of | Value or | |||||||||||||||||||||||||||||||||||||
Number of | Number of | Plan Awards: | Number of | Value of | Unearned | Payout Value | ||||||||||||||||||||||||||||||||||
Securities | Securities | Number of | Shares or | Shares or | Shares, | of Unearned | ||||||||||||||||||||||||||||||||||
Underlying | Underlying | Securities | Units of | Units of | Units or | Shares, Units or | ||||||||||||||||||||||||||||||||||
Unexercised | Unexercised | Underlying | Stock That | Stock That | Other Rights | Other Rights | ||||||||||||||||||||||||||||||||||
Options (#) | Options (#) | Unexercised | Option | Option | Have Not | Have Not | That Have | That Have | ||||||||||||||||||||||||||||||||
Year of | Exercisable | Unexer- | Unearned | Exercise | Expiration | Vested (#) | Vested | Not Vested | Not Vested | |||||||||||||||||||||||||||||||
Name | Grant | (1) | cisable | Options (#)(1) | Price ($) | Date | (1) | ($)(2) | (#)(1) | ($)(2) | ||||||||||||||||||||||||||||||
Christopher O’Kane | 2003 | 991,830 | — | $ | 16.20 | 08/20/2013 | — | — | ||||||||||||||||||||||||||||||||
2004 | 23,603 | (3) | — | $ | 24.44 | 12/23/2014 | — | — | ||||||||||||||||||||||||||||||||
2005 | — | (4) | — | $ | 25.88 | 03/03/2015 | — | (6) | — | |||||||||||||||||||||||||||||||
2006 | 87,719 | (5) | — | $ | 23.65 | 02/16/2016 | — | — | ||||||||||||||||||||||||||||||||
2007 | — | 75,988 | — | $ | 27.28 | 05/04/2014 | 57,034 | (7) | $ | 1,451,515 | ||||||||||||||||||||||||||||||
2008 | — | — | 44,784 | (8) | $ | 1,139,753 | ||||||||||||||||||||||||||||||||||
2009 | — | — | 152,429 | (9) | $ | 3,879,318 | ||||||||||||||||||||||||||||||||||
Richard Houghton | 2007 | — | 12,158 | — | $ | 27.28 | 05/04/2014 | 2,667 | $ | 67,875 | 9,125 | (7) | $ | 232,231 | ||||||||||||||||||||||||||
2008 | — | — | 20,900 | (8) | $ | 531,905 | ||||||||||||||||||||||||||||||||||
2009 | — | — | 50,810 | (9) | $ | 1,293,115 | ||||||||||||||||||||||||||||||||||
Julian Cusack | 2003 | 208,474 | — | $ | 16.20 | 08/20/2013 | — | — | ||||||||||||||||||||||||||||||||
2004 | 14,162 | (3) | — | $ | 24.44 | 12/23/2014 | — | — | ||||||||||||||||||||||||||||||||
2005 | — | (4) | — | $ | 25.88 | 03/03/2015 | — | (6) | — | |||||||||||||||||||||||||||||||
2006 | 59,033 | (5) | — | $ | 23.65 | 02/16/2016 | — | — | ||||||||||||||||||||||||||||||||
2007 | — | 18,997 | — | $ | 27.28 | 05/04/2014 | 14,259 | (7) | $ | 362,892 | ||||||||||||||||||||||||||||||
2008 | — | — | 20,900 | (8) | $ | 531,905 | ||||||||||||||||||||||||||||||||||
2009 | — | — | 76,214 | (9) | $ | 1,939,646 | ||||||||||||||||||||||||||||||||||
Brian Boornazian | 2004 | 7,868 | (3) | — | $ | 24.44 | 12/23/2014 | — | — | |||||||||||||||||||||||||||||||
2005 | — | (4) | — | $ | 25.88 | 03/03/2015 | — | (6) | — | |||||||||||||||||||||||||||||||
2006 | 51,862 | (5) | — | $ | 23.65 | 02/16/2016 | — | — | ||||||||||||||||||||||||||||||||
2007 | — | 45,593 | — | $ | 27.28 | 05/04/2014 | 34,221 | (7) | $ | 870,924 | ||||||||||||||||||||||||||||||
2008 | — | — | 22,392 | (8) | $ | 569,876 | ||||||||||||||||||||||||||||||||||
2009 | — | — | 63,512 | (9) | $ | 1,616,380 | ||||||||||||||||||||||||||||||||||
James Few | 2003 | 97,930 | — | $ | 16.20 | 08/20/2013 | — | — | ||||||||||||||||||||||||||||||||
2004 | 35,404 | (3) | — | $ | 24.44 | 12/23/2014 | — | — | ||||||||||||||||||||||||||||||||
2005 | — | (4) | — | $ | 25.88 | 03/03/2015 | — | (6) | — | |||||||||||||||||||||||||||||||
2006 | 63,409 | (5) | — | $ | 23.65 | 02/16/2016 | — | — | ||||||||||||||||||||||||||||||||
2007 | — | 41,793 | — | $ | 27.28 | 05/04/2014 | 31,369 | (7) | $ | 798,341 | ||||||||||||||||||||||||||||||
2008 | — | — | 17,914 | (8) | $ | 455,911 | ||||||||||||||||||||||||||||||||||
2009 | — | — | 63,512 | (9) | $ | 1,616,380 |
(1) | For a description of the terms of the grants and the related vesting schedule, see “Narrative Description of Summary Compensation and Grants of Plan-Based Awards — Share Incentive Plan” above. | |
(2) | Calculated based upon the closing price of $25.45 per share of the Company’s ordinary shares at December 31, 2009. | |
(3) | As the performance targets for the 2004 options were not fully met based on the 2004 ROE achieved, 51.48% of the grant vested and the remaining portion of the grant was forfeited. | |
(4) | As the performance targets have not been met, the 2005 options were forfeited. | |
(5) | As the performance targets for the 2006 options were not fully met, 92.2% of the grant vested and the remaining portion of the grant was forfeited. | |
(6) | With respect to the 2005 performance shares, of which one-third of the grant is earned based on the achievement of the 2005 ROE target and two-thirds have a performance condition based on an average three-year(2005-2007) ROE, one-third of the grants has been forfeited as the 2005 ROE target has not been met. As the performance target for 2005, and the average performance target for2005-2007 were not met, the entire grant has been forfeited. | |
(7) | With respect to the 2007 performance shares, amount represents (i) 166% vesting in respect of one-fourth of the initial grant as our ROE for 2007 was 21.6%, (ii) no vesting for one-fourth of the grant in respect |
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of the 2008 ROE as it was less than 10%, (iii) 134% vesting in respect of one-fourth of the grant as our ROE for 2009 was 18.4% and (iv) assumes a vesting of 100% for the remaining quarter of the grant. | ||
(8) | With respect to the 2008 performance shares, amount represents (i) no vesting in respect of one-third of the initial grant as our ROE for 2008 was less than 10%, (ii) 134% vesting in respect of one-third of the grant as our ROE for 2009 was 18.4% and (iii) assumes a vesting of 100% for the remaining one-third of the grant. | |
(9) | With respect to the 2009 performance shares, amount represents (i) 164% vesting in respect of one-third of the grant as our ROE for 2009 was 18.4%, and (ii) assumes a vesting of 100% for the remaining two-thirds of the grant. |
Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Shares | |||||||||||||||
Acquired on | Value Realized on | Acquired on | Value Realized | |||||||||||||
Name | Exercise (#) | Exercise ($) | Vesting (#) | on Vesting ($)(1) | ||||||||||||
Christopher O’Kane | — | — | 5,847 | $ | 126,178 | |||||||||||
Richard Houghton | — | — | 2,666 | $ | 63,184 | |||||||||||
Julian Cusack | — | — | 3,935 | $ | 84,917 | |||||||||||
Brian Boornazian | — | — | 3,457 | $ | 74,602 | |||||||||||
James Few | — | — | 5,159 | $ | 111,331 |
(1) | The restricted share units for Mr. Houghton vested on May 1, 2009. The market value was calculated based on the closing price of $23.70 on May 1, 2009. The other amounts in this column reflect the 2006 performance share awards which vested on February 26, 2009 (the date on which the Annual Report onForm 10-K for the year ended December 31, 2008 was filed). The amounts reflect the amount vested (gross of tax). The market value was calculated based on the closing price of $21.58 on February 26, 2009. |
Christopher O’Kane(1) | Richard Houghton (1) | Julian Cusack (1) | ||||||||||||||||||||||
Value of | Value of | Value of | ||||||||||||||||||||||
Total Cash | Accelerated | Total Cash | Accelerated | Total Cash | Accelerated | |||||||||||||||||||
Payout | Equity Awards | Payout | Equity Awards | Payout | Equity Awards | |||||||||||||||||||
Termination without Cause (or other than for Cause) or for Good Reason(2) | $ | 3,619,770 | (6) | — | $ | 955,870 | (8) | — | $ | 1,280,787 | (10) | — | ||||||||||||
Death(3) | $ | 1,128,240 | $ | 3,489,143 | $ | 564,120 | $ | 1,129,241 | $ | 564,120 | $ | 1,450,664 | ||||||||||||
Disability(4) | $ | 376,080 | $ | 3,489,143 | $ | 282,060 | $ | 1,129,241 | $ | 282,060 | $ | 1,450,664 | ||||||||||||
Change in Control(5) | $ | 3,619,770 | (6) | $ | 6,470,589 | (7) | $ | 955,870 | (8) | $ | 2,125,097 | (9) | $ | 1,280,787 | (10) | $ | 2,834,434 | (11) |
(1) | The calculation for the payouts for Messrs. O’Kane, Houghton and Cusack were converted from British Pounds into U.S. Dollars at the average exchange rate of $1.567 to £1 for 2009. | |
(2) | For a description of termination provisions, see “Narrative Description of Summary Compensation and Grants of Plan-Based Awards — Employment-Related Agreements” above. |
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(3) | In respect of death, the executives are entitled to the pro rated annual bonus based on the actual bonus earned for the year in which the date of termination occurs. This amount represents 100% of the bonus potential for 2009. In addition, the Compensation Committee approved amendments to the terms of the awards granted under the 2003 Share Incentive Plan where in the event of death or disability, the amount of performance share awards that have already met their vesting criteria but have not vested yet, would vest and be issued. Any options granted would continue to vest under the terms of their agreement. Similarly, restricted share unit awards will accelerate and vest upon death or disability. | |
(4) | In respect of disability, the executive would be entitled to six months’ salary after which he would be entitled to long-term disability benefits under our health insurance coverage. In addition, the Compensation Committee approved amendments to the terms of the awards granted under the 2003 Share Incentive Plan where in the event of death or disability, the amount of performance share awards that have already met their vesting criteria but have not vested yet, would vest and be issued. Any options granted would continue to vest under the terms of their agreement. Similarly, restricted share unit awards will accelerate and vest upon death or disability. | |
(5) | The total cash payout and the acceleration of vesting are provided only if the employment of the above named executive is terminated by the Company without Cause or by the executive with Good Reason (as described above under “Employment-Related Agreements” and as defined in each of the individual’s respective employment agreement) within the six-month period prior to a change in control or within a two-year period after a change in control. The occurrence of any of the following events constitutes a “Change in Control”: |
(A) | the sale or disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any person or group (other than (x) any subsidiary of the Company or (y) any entity that is a holding company of the Company (other than any holding company which became a holding company in a transaction that resulted in a Change in Control) or any subsidiary of such holding company); | |
(B) | any person or group is or becomes the beneficial owner, directly or indirectly, of more than 30% of the combined voting power of the voting shares of the Company (or any entity which is the beneficial owner of more than 50% of the combined voting power of the voting shares of the Company), including by way of merger, consolidation, tender or exchange offer or otherwise; excluding, however, the following: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by a person or group if immediately after such acquisition a person or group who is a shareholder of the Company on the effective date of our 2003 Share Incentive Plan continues to own voting power of the voting shares of the Company that is greater than the voting power owned by such acquiring person or group; | |
(C) | the consummation of any transaction or series of transactions resulting in a merger, consolidation or amalgamation, in which the Company is involved, other than a merger, consolidation or amalgamation which would result in the shareholders of the Company immediately prior thereto continuing to own (either by remaining outstanding or by being converted into voting securities of the surviving entity), in the same proportion as immediately prior to the transaction(s), more than 50% of the combined voting power of the voting shares of the Company or such surviving entity outstanding immediately after such merger, consolidation or amalgamation; or | |
(D) | a change in the composition of the Board such that the individuals who, as of the effective date of the 2003 Share Incentive Plan, constitute the Board of Directors (such Board of Directors shall be referred to for purposes of this section only as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board of Directors subsequent to the Effective Date, whose election, or nomination for election, by a majority of those individuals who are members of the Board of Directors and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and, provided further, however, that any such individual whose initial assumption of office occurs as the result of or |
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in connection with either an actual or threatened election contest (as such terms are used inRule 14a-11 or Regulation 14A of the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Board of Directors shall not be so considered as a member of the Incumbent Board. |
(6) | Represents the lesser of the target annual incentive for the year in which termination occurs and the average of the bonus received by Mr. O’Kane for the previous three years ($705,150) plus twice the sum of the highest salary paid during the term of the agreement ($752,160) and the average bonus actually earned during three years immediately prior to termination ($705,150). Mr. O’Kane’s agreement includes provisions with respect the treatment of “parachute payments” under the U.S. Internal Revenue Code. As Mr. O’Kane is currently not a U.S. taxpayer, the above amounts do not reflect the impact of such provisions. | |
(7) | Represents the acceleration of vesting of the entire grant of the 2007 options, the 2007 performance shares (other than 1/4 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test), the 2008 performance shares (other than 1/3 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test) and the 2009 performance shares. For the portions of the 2007, 2008 and 2009 performance shares which have exceeded the performance threshold, we have assumed the greater percentage amount for calculation purposes. With respect to options, the value is based on the difference between the exercise price and the closing price of our shares on December 31, 2009 of $25.45. With respect to performance shares, the value is based on the closing price of our shares on December 31, 2009. The amounts do not include the (i) 2003 options as they have fully vested on December 31, 2009, (ii) 2005 options, as the performance targets were not met and the options were forfeited, (iii) 2005 performance share awards as the performance targets were not met and the performance shares were forfeited, (iv) 2004 options as the earned portion has vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance targets and (v) 2006 options and performance as the earned portions have vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance tests. | |
(8) | Represents the lesser of the target annual incentive for the year in which termination occurs and average of Mr. Houghton’s bonuses for 2007 (which included a guaranteed bonus of £200,000, as Mr. Houghton was hired in 2007) and 2008 ($195,875), and therefore an average bonus over a three-year period preceding termination is not applicable, plus the sum of the highest salary paid during the term of the agreement ($564,120) and the average bonus actually earned during two years (as he joined the Company in 2007) immediately prior to termination ($195,875). | |
(9) | Represents the acceleration of vesting of the entire grant of the 2007 options, the 2007 performance shares (other than 1/4 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test), the 2008 performance shares (other than 1/3 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test), the 2009 performance shares, as well as restricted share units. For the portions of the 2007, 2008 and 2009 performance shares which have exceeded the performance threshold, we have assumed the greater percentage amount for calculation purposes. With respect to options, the value is based on the difference between the exercise price and the closing price of our shares on December 31, 2009 of $25.45. With respect to performance shares, the value is based on the closing price of our shares on December 31, 2009. | |
(10) | Represents the lesser of the target annual incentive for the year in which termination occurs and the average of the bonus received by Mr. Cusack for the previous three years ($358,333) plus the sum of the highest salary paid during the term of the agreement ($564,120) and the average bonus actually earned during three years immediately prior to termination ($358,333). | |
(11) | Represents the acceleration of vesting of the entire grant of the 2007 options, the 2007 performance shares (other than 1/4 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test), the 2008 performance shares (other than 1/3 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test) and the 2009 performance shares. With respect to options, the value is based on the difference between the exercise price and the closing price of our shares on December 31, 2009 of $25.45. With respect to performance shares, the value is based on |
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the closing price of our shares on December 31, 2009. The amounts do not include the (i) 2003 options as they have fully vested on December 31, 2009, (ii) 2005 options, as the performance targets were not met and the options were forfeited, (iii) 2005 performance share awards as the performance targets were not met and the performance shares were forfeited, (iv) 2004 options as the earned portion has vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance targets and (v) 2006 options and performance as the earned portions have vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance tests. |
Brian Boornazian | James Few | |||||||||||||||
Value of | Value of | |||||||||||||||
Accelerated | Accelerated | |||||||||||||||
Total Cash | Equity | Total Cash | Equity | |||||||||||||
Payout | Awards | Payout | Awards | |||||||||||||
Termination without Cause (or other than for Cause) or for Good Reason (1) | $ | 1,566,667 | (5) | — | $ | 1,545,000 | (7) | — | ||||||||
Death (2) | $ | 675,000 | $ | 1,707,795 | $ | 546,250 | $ | 1,588,096 | ||||||||
Disability (3) | $ | 250,000 | $ | 1,707,795 | $ | 237,500 | $ | 1,588,096 | ||||||||
Change in Control (4) | $ | 1,566,667 | (5) | $ | 3,200,876 | (6) | $ | 1,545,000 | (7) | $ | 2,870,638 | (8) |
(1) | For a description of termination provisions, see “Narrative Description of Summary Compensation and Grants of Plan-Based Awards — Employment-Related Agreements” above. | |
(2) | In respect of death, the executives are entitled to the pro rated annual bonus based on the actual bonus earned for the year in which the date of termination occurs. This amount represents 100% of the bonus potential for 2009. In addition, the Compensation Committee approved amendments to the terms of the awards granted under the 2003 Share Incentive Plan where in the event of death or disability, the amount of performance share awards that have already met their vesting criteria but have not vested yet, would vest and be issued. Any options granted would continue to vest under the terms of their agreement. Similarly, restricted share unit awards will accelerate and vest upon death or disability. | |
(3) | In respect of disability, the executive would be entitled to six months’ salary after which he would be entitled to long-term disability benefits under our health insurance coverage. In addition, the Compensation Committee approved amendments to the terms of the awards granted under the 2003 Share Incentive Plan where in the event of death or disability, the amount of performance share awards that have already met their vesting criteria but have not vested yet, would vest and be issued. Any options granted would continue to vest under the terms of their agreement. Similarly, restricted share unit awards will accelerate and vest upon death or disability. | |
(4) | Same as Footnote 5 in table above. | |
(5) | On October 28, 2009, the Compensation Committee approved an amendment to Mr. Boornazian’s employment agreement to amend the basis for calculation of termination amounts. Represents the sum of the highest salary paid during the term of the agreement ($500,000) and the average bonus actually earned during three years immediately prior to termination ($391,667), plus a prorated annual bonus based on the actual bonus earned for the year in which his termination occurs ($675,000, which represents 100% of the bonus potential for 2009). | |
(6) | Represents the acceleration of vesting of the entire grant of the 2007 options, the 2007 performance shares (other than 1/4 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test), the 2008 performance shares (other than 1/3 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test) and the 2009 performance shares. For the portions of the 2007, 2008 and 2009 performance shares which have exceeded the performance threshold, we have assumed the greater percentage amount for calculation purposes. With respect to options, the value is based on the difference between the exercise price and the closing price of our shares on December 31, 2009 of $25.45. With respect to performance shares, the value is based on the closing price of our shares on December 31, 2009. The amounts do not include the (i) 2005 options, as the performance targets were not met and the options were forfeited, (ii) 2005 performance share awards as the performance targets were not met and the performance shares were forfeited, (iii) 2004 options as the earned portion has vested and any remaining unearned portions of the grant were forfeited due to non- |
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achievement of performance targets and (iv) 2006 options and performance as the earned portions have vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance tests. | ||
(7) | Represents the lesser of the target annual incentive for the year in which termination occurs and the average of the bonus received by Mr. Few for the previous three years ($535,000) plus the sum of the highest salary paid during the term of the agreement ($475,000) and the average bonus actually earned during three years immediately prior to termination ($535,000). | |
(8) | Represents the acceleration of vesting of the entire grant of the 2007 options, the 2007 performance shares (other than 1/4 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test), the 2008 performance shares (other than 1/3 of the grant which will be forfeited on vesting for non-achievement of the 2008 performance test) and the 2009 performance shares. The amounts do not include the (i) 2003 options as they have fully vested on December 31, 2009, (ii) 2005 options, as the performance targets were not met and the options were forfeited, (iii) 2005 performance share awards as the performance targets were not met and the performance shares were forfeited, (iv) 2004 options as the earned portion has vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance targets and (v) 2006 options and performance shares as the earned portions have vested and any remaining unearned portions of the grant were forfeited due to non-achievement of performance tests. |
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2009 | 2009 | |||||||||||||||||||
Fees Earned | Stock | Option | ||||||||||||||||||
or Paid in | Awards | Awards | All Other | |||||||||||||||||
Name | Cash ($)(1) | ($)(2) | ($) | Compensation ($) | Total ($) | |||||||||||||||
Liaquat Ahamed (3) | $ | 80,000 | $ | 75,011 | — | — | $ | 155,011 | ||||||||||||
Matthew Botein (4) | $ | 85,000 | $ | 75,011 | — | — | $ | 160,011 | ||||||||||||
Richard Bucknall (5) | $ | 136,340 | $ | 75,011 | — | — | $ | 211,351 | ||||||||||||
John Cavoores (6) | $ | 80,000 | $ | 75,011 | — | — | $ | 155,011 | ||||||||||||
Ian Cormack (7) | $ | 135,000 | $ | 75,011 | — | — | $ | 210,011 | ||||||||||||
Heidi Hutter (8) | $ | 139,175 | $ | 75,011 | — | — | $ | 214,186 | ||||||||||||
Glyn Jones (9) | $ | 313,400 | $ | 200,004 | — | $ | 470,100 | $ | 983,504 | |||||||||||
David Kelso (10) | $ | 85,000 | $ | 75,011 | — | — | $ | 160,011 | ||||||||||||
Peter O’Flinn (11) | $ | 63,333 | $ | 75,011 | — | — | $ | 138,344 | ||||||||||||
Norman Rosenthal (12) | $ | 25,417 | — | — | — | $ | 25,417 |
(1) | Effective July 2007, for directors who are paid for their services to Aspen Holdings in British Pounds rather than U.S. Dollars such as Mr. Bucknall, his remuneration is converted at an exchange rate of $1.779:£1. For fees paid to directors in British Pounds such as Mr. Jones for his salary of £200,000, and Ms. Hutter and Mr. Bucknall, for their services to AMAL, for reporting purposes, an exchange rate of $1.567:£1 has been used for 2009, the average rate of exchange. | |
(2) | Consists of restricted share units. Valuation is based on the grant date fair values of the awards calculated in accordance with FASB ASC Topic 718, without regard to forfeiture assumptions. | |
(3) | Represents the annual board fee of $50,000, $25,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director) and $5,000 for serving as the Chair of the Investment Committee. Mr. Ahamed was granted 847 restricted share units on February 8, 2008 representing the pro rata amount of restricted share units granted to members of the Board on May 4, 2007 and 1,913 restricted share units on May 2, 2008. All those restricted share units have vested and are issued. Mr. Ahamed was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(4) | Represents the annual board fee of $50,000, $20,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director) and an additional $15,000 for three additional meetings attended by Mr. Botein. Mr. Botein holds 3,431 ordinary shares (which reflect the vesting and issuance of 1,913 restricted share units granted in 2008 and 1,500 restricted share units granted in 2007). Mr. Botein was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(5) | Represents the annual board fee of $50,000, $30,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director), $10,000 for serving on the Audit Committee, $5,000 for serving as the Chair of the Compensation Committee, $10,000 for serving as director of Aspen U.K., and £20,000 for serving as director of AMAL. Mr. Bucknall holds 8,931 ordinary shares (which include the vesting and issuance of 1,913 restricted share units granted in 2008 and 1,500 restricted share units granted in 2007). Mr. Bucknall was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(6) | Represents the annual board fee of $50,000 and $30,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director). Mr. Cavoores holds 3,758 ordinary shares (which reflect the vesting and issuance of 1,913 restricted share units granted in 2008 and 1,845 restricted share units granted in 2007). Mr. Cavoores was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. Mr. Cavoores also holds 2,012 unvested options. |
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(7) | Represents the annual board fee of $50,000, $25,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director), $25,000 fee for serving as the Audit Committee Chairman, $10,000 for serving on the Board of Aspen U.K. and $25,000 for serving as the Chair of the Audit Committee of Aspen U.K. Mr. Cormack holds 5,928 ordinary shares (which include the vesting and issuance of 1,913 restricted share units granted in 2008 and 1,845 restricted share units granted in 2007). Mr. Cormack holds a total of 45,175 vested options as at December 31, 2009. Mr. Cormack was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(8) | Represents the annual board fee of $50,000, $25,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director), $10,000 for serving as a member of the Audit Committee, $5,000 for serving as the Chair of the Risk Committee, $10,000 for serving on the Board of Aspen U.K. and £25,000 for serving as the Chair of AMAL. Eighty percent of the total compensation is paid to The Black Diamond Group LLC, of which Ms. Hutter is the Chief Executive Officer. Ms. Hutter holds a total of 85,925 vested options as at December 31, 2009. Ms. Hutter (including the awards held by The Black Diamond Group) holds 8,098 ordinary shares (which include the vesting and issuance of 1,913 restricted share units granted in 2008 and 1,845 restricted share units granted in 2007). Ms. Hutter was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(9) | Represents Mr. Jones’ annual salary of £200,000 and bonus of £300,000 (converted at £1: $1.567). In connection with his appointment as Chairman in 2007, Mr. Jones was granted 7,380 restricted share units, one-third (1/3) of which vests annually from the grant date; 4,920 shares have vested and have been issued. Mr. Jones was also granted 7,651 restricted share units on May 2, 2008, one-third (1/3) of which vests annually from the date of grant; 2,551 shares have vested and have been issued. Mr. Jones was also granted 8,439 restricted share units on May 1, 2009, none of which has vested. Mr. Jones also holds 2,012 unvested options. | |
(10) | Represents the annual board fee of $50,000, $25,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director) and $10,000 for serving as a member of the Audit Committee. Mr. Kelso holds 4,435 vested options as at December 31, 2009. Mr. Kelso holds 5,758 ordinary shares (which include the vesting and issuance of 1,913 restricted share units granted in 2008 and 1,845 restricted share units granted in 2007). Mr. Kelso was also granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(11) | Represents the pro rata amount of the annual fee of $50,000 as Mr. O’Flinn joined our Board on April 29, 2009, $20,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director), the pro rata fee of $10,000 for serving as a member of the Audit Committee and the pro rata fee of $5,000 for acting as Chair of the Corporate Governance and Nominating Committee with effect on April 29, 2009. Mr. O’Flinn was granted 3,165 restricted share units on May 1, 2009, of those 1,846 have vested and are issued. | |
(12) | Represents the pro rata amount of the annual fee of $50,000 as Mr. Rosenthal ceased being a member of our Board on April 29, 2009, $5,000 attendance fee ($5,000 for each board meeting or separate committee meeting not scheduled around the Board meeting, attended by a director), the pro rata fee of $10,000 for serving as a member of the Audit Committee. Mr. Rosenthal holds 10,608 ordinary shares. |
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Compensation Committee Richard Bucknall (Chair) Matthew Botein John Cavoores |
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Audit Committee Ian Cormack (Chair) Richard Bucknall Heidi Hutter David Kelso Peter O’Flinn |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
• | each person known by us to beneficially own approximately 5% or more of our outstanding ordinary shares; | |
• | each of our directors; | |
• | each of our named executive officers; and | |
• | all of our executive officers and directors as a group. |
Percentage of | ||||||||
Number of Ordinary | Ordinary Shares | |||||||
Name and Address of Beneficial Owner(1) | Shares(2) | Outstanding(2) | ||||||
BlackRock, Inc. (3) | 8,066,343 | 10.2 | % | |||||
40 East 52nd Street New York, NY 10022 U.S.A | ||||||||
Royce & Associates LLC (4) | 4,258,842 | 5.4 | % | |||||
745 Fifth Avenue New York, NY 10151 U.S.A | ||||||||
Norges Bank (The Central Bank of Norway) (5) | 4,143,666 | 5.2 | % | |||||
Bankplassen 2 PO Box 1179 Sentrum NO 0107 Oslo Norway | ||||||||
Glyn Jones (6) | 7,471 | * | ||||||
Christopher O’Kane (7) | 1,137,902 | 1.38 | % | |||||
Richard Houghton (8) | 5,812 | |||||||
Julian Cusack (9) | 284,018 | * | ||||||
Brian Boornazian (10) | 82,392 | * | ||||||
James Few (11) | 206,192 | * | ||||||
Liaquat Ahamed (12) | 5,397 | * | ||||||
Matthew Botein (13) | 6,050 | * | ||||||
Richard Bucknall(14) | 11,550 | * | ||||||
John Cavoores (15) | 6,395 | * | ||||||
Ian Cormack (16) | 53,740 | * | ||||||
Heidi Hutter (17) | 88,074 | * | ||||||
David Kelso (18) | 12,830 | * | ||||||
Peter O’Flinn (19) | 2,637 | * | ||||||
All directors and executive officers as a group (22 persons) | 2,172,007 | 2.70 | % |
* | Less than 1% |
(1) | Unless otherwise stated, the address for each director and officer isc/o Aspen Insurance Holdings Limited, Maxwell Roberts Building, 1 Church Street, Hamilton HM 11, Bermuda. | |
(2) | Represents the outstanding ordinary shares as at February 15, 2010, except for unaffiliated shareholders, whose information is disclosed as of the dates of their Schedule 13G noted in their respective footnotes. |
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With respect to the directors and officers, includes the vested options exercisable and awards issuable for ordinary shares. The percentage of ordinary shares outstanding reflects the amount outstanding as at February 15, 2010, which takes into account the number of shares we repurchased as disclosed above. However, the beneficial ownership for non-affiliates is as of the earlier dates referenced in their respective notes below. Accordingly, the percentage ownership may have changed following such Schedule 13G filings. | ||
Our bye-laws generally provide for voting adjustments in certain circumstances. | ||
(3) | As filed with the SEC on Schedule 13G on January 29, 2010. The Schedule 13G amends the most recent Schedule 13G filed by Barclays Global Investors, NA following BlackRock’s completion of its acquisition of Barclays Global Investors NA on December 1, 2009. BlackRock Institutional Trust Company, N.A. beneficially owns 5% or greater of the ordinary shares as filed by BlackRock on Schedule 13G. | |
(4) | As filed with the SEC on Schedule 13G/A by Royce & Associates LLC on January 26, 2010. | |
(5) | As filed with the SEC on Schedule 13G/A by Norges Bank (Central Bank of Norway) on January 12, 2010. | |
(6) | Represents 7,471 ordinary shares. | |
(7) | Includes 34,750 ordinary shares and 1,103,152 ordinary shares issuable upon exercise of vested options, held by Mr. O’Kane. | |
(8) | Represents 3,145 ordinary shares and 2,667 restricted share units that are issuable. | |
(9) | Includes 2,349 ordinary shares and 281,669 ordinary shares issuable upon exercise of vested options, held by Mr. Cusack. | |
(10) | Includes 22,662 ordinary shares and 59,730 ordinary shares issuable upon exercise of vested options, held by Mr. Boornazian. | |
(11) | Includes 9,449 ordinary shares and 196,743 ordinary shares issuable upon exercise of vested options, held by Mr. Few. | |
(12) | Represents 4,606 ordinary shares and 791 vested restricted share units that are issuable. | |
(13) | Represents 5,259 ordinary shares and 791 vested restricted share units that are issuable. | |
(14) | Represents 10,759 ordinary shares and 791 vested restricted share units that are issuable. | |
(15) | Represents 5,604 ordinary shares and 791 vested restricted share units that are issuable. | |
(16) | Represents 7,774 ordinary shares, 45,175 ordinary shares issuable upon exercise of vested options, held by Mr. Cormack and 791 vested restricted share units that are issuable. | |
(17) | Ms. Hutter, one of our directors, is the beneficial owner of 1,991 ordinary shares. As Chief Executive Officer of The Black Diamond Group, LLC, Ms. Hutter has shared voting and investment power over the 7,953 ordinary shares beneficially owned by The Black Diamond Group, LLC. The business address of Ms. Hutter isc/o Black Diamond Group, 515 Congress Avenue, Suite 2220, Austin, Texas 78701. Ms. Hutter also holds vested options exercisable for 85,925 ordinary shares. Ms. Hutter also holds 791 vested restricted share units that are issuable. | |
(16) | Represents 7,604 ordinary shares, 4,435 vested options and 791 vested restricted share units that are issuable. | |
(17) | Represents 1,846 ordinary shares and 791 vested restricted share units that are issuable. |
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A | B | C | ||||||||||
Number of Securities | ||||||||||||
Remaining Available for | ||||||||||||
Weighted-Average | Future Issuance Under | |||||||||||
Number of Securities to | Exercise | Equity Compensation | ||||||||||
Be Issued Upon Exercise | of Price of Outstanding | Plans (Excluding | ||||||||||
of Outstanding Options, | Options, Warrants and | Securities Reflected in | ||||||||||
Plan Category | Warrants and Rights | Rights(1) | Column A) | |||||||||
Equity compensation plans approved by security holders | 5,101,237 | $ | 12.86 | 2,653,482 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 5,101,237 | $ | 12.86 | 2,653,482 |
(1) | The weighted average exercise price calculation includes option exercise prices between $16.20 and $27.52 plus outstanding restricted share units and performance shares which have a $Nil exercise price. |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
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Item 14. | Principal Accounting Fees and Services |
Twelve Months Ended | Twelve Months Ended | |||||||
December 31, 2009 | December 31, 2008 | |||||||
($ in thousands) | ||||||||
Audit Fees (a) | $ | 2,984.6 | $ | 2,685.3 | ||||
Audit-Related Fees (b) | $ | 199.1 | $ | 206.0 | ||||
Tax Fees (c) | — | — | ||||||
All Other Fees (d) | — | — | ||||||
Total Fees | $ | 3,183.7 | $ | 2,891.3 | ||||
(a) | Audit fees related to the audit of the Company’s financial statements for the twelve months ended December 31, 2009 and 2008, the review of the financial statements included in our quarterly reports onForm 10-Q during 2009 and 2008 and for services that are normally provided by KPMG in connection with statutory and regulatory filings for the relevant fiscal years. | |
(b) | Audit-related fees are fees related to assurance and related services for the performance of the audit or review of the Company’s financial statements (other than the audit fees disclosed above). | |
(c) | Tax fees are fees related to tax compliance, tax advice and tax planning services. | |
(d) | All other fees relate to fees billed to the Company by KPMG for all other non-audit services rendered to the Company. |
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Item 15. | Exhibits, Financial Statement Schedules |
Exhibit | ||||
Number | Description | |||
3 | .1 | Certificate of Incorporation and Memorandum of Association (incorporated herein by reference to exhibit 3.1 to the Company’s 2003 Registration Statement onForm F-1 (RegistrationNo. 333-110435)) | ||
3 | .2 | Amendments to the Memorandum of Association (incorporated by reference to exhibit 3.2 of the Company’s Current Report onForm 8-K filed on May 4, 2009) | ||
3 | .3 | Amended and Restated Bye-laws (incorporated herein by reference to exhibit 3.1 to the Company’s Current Report onForm 8-K filed on May 4, 2009) | ||
4 | .1 | Specimen Ordinary Share Certificate (incorporated herein by reference to exhibit 4.1 to the Company’s 2003 Registration Statement onForm F-1 (RegistrationNo. 333-110435)) | ||
4 | .2 | Amended and Restated Instrument Constituting Options to Subscribe for Shares in Aspen Insurance Holdings Limited, dated September 30, 2005 (incorporated herein by reference to exhibit 4.1 to the Company’s Current Report onForm 8-K filed on September 30, 2005) | ||
4 | .3 | Indenture between Aspen Insurance Holdings Limited and Deutsche Bank Trust Company Americas, as trustee dated as of August 16, 2004 (incorporated herein by reference to exhibit 4.3 to the Company’s 2004 Registration Statement onForm F-1 (RegistrationNo. 333-119-314)) | ||
4 | .4 | First Supplemental Indenture by and between Aspen Insurance Holdings Limited, as issuer and Deutsche Bank Trust Company Americas, as trustee dated as of August 16, 2004 (incorporated herein by reference to exhibit 4.4 to the Company’s 2004 Registration Statement onForm F-1 (RegistrationNo. 333-119-314)) | ||
4 | .5 | Certificate of Designations of the Company’s Perpetual PIERS, dated December 12, 2005 (incorporated herein by reference to exhibit 4.1 to the Company’s Current Report onForm 8-K filed on December 13, 2005) | ||
4 | .6 | Specimen Certificate for the Company’s Perpetual PIERS (incorporated herein by reference to the form of which is in exhibit 4.1 to the Company’s Current Report onForm 8-K filed on December 13, 2005) | ||
4 | .7 | Certificate of Designations of the Company’s Preference Shares, dated December 12, 2005 (incorporated herein by reference to exhibit 4.3 to the Company’s Current Report onForm 8-K filed on December 13, 2005) | ||
4 | .8 | Specimen Certificate for the Company’s Preference Shares (incorporated herein by reference to the form of which is in exhibit 4.3 to the Company’s Current Report onForm 8-K filed on December 13, 2005) | ||
4 | .9 | Form of Certificate of Designations of the Company’s Perpetual Preference Shares, dated November 15, 2006 (incorporated herein by reference to exhibit 4.1 to the Company’s Current Report onForm 8-K filed on November 15, 2006) | ||
4 | .10 | Specimen Certificate for the Company’s Perpetual Preference Shares, (incorporated herein by reference to the form of which is in exhibit 4.1 to the Company’s Current Report onForm 8-K filed on November 15, 2006) | ||
4 | .11 | Form of Replacement Capital Covenant, dated November 15, 2006 (incorporated herein by reference to exhibit 4.3 to the Company’s Current Report onForm 8-K filed on November 15, 2006) |
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Exhibit | ||||
Number | Description | |||
10 | .1 | Amended and Restated Shareholders’ Agreement, dated as of September 30, 2003 among the Company and each of the persons listed on Schedule A thereto (incorporated herein by reference to exhibit 10.1 to the Company’s 2003 Registration Statement onForm F-1 (RegistrationNo. 333-110435)) | ||
10 | .2 | Third Amended and Restated Registration Rights Agreement dated as of November 14, 2003 among the Company and each of the persons listed on Schedule 1 thereto (incorporated herein by reference to exhibit 10.2 to the Company’s 2003 Registration Statement onForm F-1 (RegistrationNo. 333-110435)) | ||
10 | .3 | Service Agreement dated September 24, 2004 among Christopher O’Kane, Aspen Insurance UK Services Limited and the Company (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on September 24, 2004)* | ||
10 | .4 | Service Agreement between Julian Cusack and Aspen Insurance UK Services Limited, dated May 1, 2008 (incorporated herein by reference to exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2008, filed August 6, 2008)* | ||
10 | .5 | Amended and Restated Service Agreement between Julian Cusack and the Company, dated May 13, 2008 (incorporated herein by reference to exhibit 10.2 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2008, filed August 6, 2008)* | ||
10 | .6 | Service Agreement dated March 10, 2005 between James Few and Aspen Insurance Limited (incorporated herein by reference to exhibit 10.20 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2004, filed on March 14, 2005)* | ||
10 | .7 | Employment Agreement dated January 12, 2004 between Brian Boornazian and Aspen Insurance U.S. Services Inc. (incorporated herein by reference to exhibit 10.8 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2005, filed on March 6, 2006)* | ||
10 | .8 | Addendum, dated February 5, 2008, to the Employment Agreement dated January 12, 2004 between Brian Boornazian and Aspen Insurance U.S. Services Inc. (incorporated herein by reference to exhibit 10.7 to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007, filed on February 29, 2008)* | ||
10 | .9 | Amendment to Brian Boornazian’s Employment Agreement, dated October 28, 2008 (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on November 3, 2008), as further amended, dated December 31, 2008, (incorporated herein by reference to exhibit 10.9 to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2008, filed on February 26, 2009)* | ||
10 | .10 | Amendment No. 2 to Brian Boornazian’s Employment Agreement, dated February 11, 2010, filed with this report* | ||
10 | .11 | Appointment Letter between Glyn Jones and Aspen Insurance Holdings Limited, dated April 19, 2007 (incorporated herein by reference to exhibit 10.2 to the Company’s Quarterly Report onForm 10-Q for three months ended March 31, 2007, filed May 9, 2007) | ||
10 | .12 | Letter Agreement between Aspen Insurance Holdings Limited and Julian Cusack, dated November 1, 2007 (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed November 5, 2007)* | ||
10 | .13 | Service Agreement dated April 3, 2007 among Richard David Houghton and Aspen Insurance UK Services Limited (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on April 9, 2007)* | ||
10 | .14 | Amendment to Richard David Houghton’s Service Agreement, dated May 13, 2008 (incorporated herein by reference to exhibit 10.3 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2008, filed August 6, 2008)* | ||
10 | .15 | Letter to Richard David Houghton dated April 3, 2007 (incorporated herein by reference to exhibit 10.2 to the Company’s Current Report onForm 8-K filed April 9, 2007)* | ||
10 | .16 | Richard David Houghton’s Restricted Share Unit Award Agreement, as amended, effective October 27, 2009 , filed with this report* | ||
10 | .17 | Aspen Insurance Holdings Limited 2003 Share Incentive Plan, as amended dated February 6, 2008 (incorporated herein by reference to exhibit 10.12 to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007, filed on February 29, 2008)* |
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Exhibit | ||||
Number | Description | |||
10 | .18 | Amendment to the Aspen Insurance Holdings Limited Amended 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2008, filed November 10, 2008)* | ||
10 | .19 | Aspen Insurance Holdings Limited 2006 Stock Incentive Plan for Non-Employee Directors, as amended dated March 21, 2007 (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on May 7, 2007)* | ||
10 | .20 | Amendment to the Aspen Insurance Holdings Limited 2006 Stock Incentive Plan for Non-Employee Directors (incorporated herein by reference to exhibit 10.2 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2008, filed November 10, 2008)* | ||
10 | .21 | Employee Share Purchase Plan, including the International Employee Share Purchase Plan of Aspen Insurance Holdings Limited (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on May 5, 2008)* | ||
10 | .22 | Aspen Insurance Holdings Limited 2008 Sharesave Scheme (incorporated herein by reference to exhibit 99.2 to the Company’s Registration Statement onForm S-8 filed on November 4, 2008)* | ||
10 | .23 | Five-Year Credit Agreement, dated as of August 2, 2005, by and among the Company, certain of its direct and indirect subsidiaries, the lenders party thereto, Barclays Bank plc, as administrative agent and letter of credit issuer, Bank of America, N.A. and Calyon, New York Branch, as co-syndication agents, Credit Suisse, Cayman Islands Branch and Deutsche Bank AG, New York Branch, as co-documentation agents, The Bank of New York, as collateral agent (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on August 4, 2005) | ||
10 | .24 | Amendment, dated as of April 13, 2006, to the Credit Agreement, dated as of August 2, 2005, among the Company, certain of its direct and indirect subsidiaries, the lenders party thereto, Barclays Bank plc, as administrative agent, Bank of America, N.A. and Calyon, New York Branch, as co-syndication agents, Credit Suisse, Cayman Islands Branch and Deutsche Bank AG, New York Branch, as co-documentation agents, and The Bank of New York, as collateral agent (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on April 18, 2006) | ||
10 | .25 | Second Amendment, dated as of June 28, 2007, to the Credit Agreement, dated as of August 2, 2005, among the Company, certain of its direct and indirect subsidiaries, the lenders party thereto, Barclays Bank plc, as administrative agent, Bank of America, N.A. and Calyon, New York Branch, as co-syndication agents, Credit Suisse, Cayman Islands Branch and Deutsche Bank AG, New York Branch, as co-documentation agents, and The Bank of New York, as collateral agent (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on June 29, 2007) | ||
10 | .26 | Commitment Increase Supplement, dated September 1, 2006, to the Credit Agreement dated as of August 2, 2005, among the Company, certain of its direct and indirect subsidiaries, the lenders party thereto, Barclays Bank plc, as administrative agent, Bank of America, N.A. and Calyon, New York Branch, as co-syndication agents, Credit Suisse, Cayman Islands Branch and Deutsche Bank AG, New York Branch, as co-documentation agents, and The Bank of New York, as collateral agent (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K filed on September 1, 2006) | ||
10 | .27 | Form of Shareholders’ Agreement between the Company and certain employee and/or director shareholders and/or optionholders (incorporated herein by reference to exhibit 4.11 to the Company’s 2005 Registration Statement onForm F-3 (RegistrationNo. 333-122571))* | ||
10 | .28 | Form of First Amendment to Shareholders’ Agreement between the Company and certain employee and/or director shareholders and/or optionholders, dated as of May 4, 2007 (incorporated herein by reference to exhibit 10.3 to the Company’s Current Report onForm 8-K filed on May 7, 2007)* | ||
10 | .29 | Form of Option Agreement relating to initial option grants under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.21 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2004, filed on March 14, 2005)* | ||
10 | .30 | Form of Option Agreement relating to options granted in 2004 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.22 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2004, filed on March 14, 2005)* |
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Exhibit | ||||
Number | Description | |||
10 | .31 | Form of Performance Share Award Agreement relating to grants in 2004 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.23 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2004, filed on March 14, 2005)* | ||
10 | .32 | Form of Option Agreement relating to options granted in 2005 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.24 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2004, filed on March 14, 2005)* | ||
10 | .33 | Form of Performance Share Award Agreement relating to grants in 2005 under the Share Incentive Plan (incorporated herein by reference to exhibit 10.25 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2004, filed on March 14, 2005)* | ||
10 | .34 | Form of letter amendment to the Option Agreements relating to options granted in 2004 and 2005 and Performance Share Award Agreements relating to grants in 2004 and 2005 to certain Bermudian employees including James Few (incorporated herein by reference to exhibit 10.26 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2005, filed on November 9, 2005)* | ||
10 | .35 | Form of Option Agreement relating to options granted in 2006 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.24 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2005, filed on March 6, 2006)* | ||
10 | .36 | Form of Performance Share Award Agreement relating to grants in 2006 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.25 to the Company’s Annual Report onForm 10-K for fiscal year ended December 31, 2005, filed on March 6, 2006)* | ||
10 | .37 | Amendment to Form of 2006 Performance Share Award Agreement (incorporated herein by reference to exhibit 10.3 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2008, filed November 10, 2008)* | ||
10 | .38 | 2006 Option Plan for Non-Employee Directors (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed May 26, 2006)* | ||
10 | .39 | Form of Non-Employee Director Nonqualified Share Option Agreement (incorporated herein by reference to exhibit 10.2 to the Company’s Current Report onForm 8-K, filed May 26, 2006)* | ||
10 | .40 | Form of Non-Employee Director Restricted Share Unit Award Agreement (incorporated herein by reference to exhibit 10.2 to the Company’s Current Report onForm 8-K, filed on May 7, 2007)* | ||
10 | .41 | Form of 2008 Non-Employee Director Restricted Share Unit Award Agreement (incorporated herein by reference to exhibit 10.5 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2008, filed August 6, 2008)* | ||
10 | .42 | Form of Restricted Share Unit Award Agreement (incorporated herein by reference to exhibit 10.40 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2008, filed on February 26, 2009)* | ||
10 | .43 | Amendment to Form of Restricted Share Unit Award Agreement (U.S. version) (incorporated herein by reference to exhibit 10.5 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2008, filed November 10, 2008)* | ||
10 | .44 | Amendment to Form of Restricted Share Unit Award Agreement (U.S. employees employed outside the U.S.) (incorporated herein by reference to exhibit 10.6 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2008, filed November 10, 2008)* | ||
10 | .45 | Form of Option Agreement relating to options granted in 2007 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2007, filed August 7, 2007)* | ||
10 | .46 | Form of Performance Share Award relating to performance shares granted in 2007 under the 2003 Share Incentive Plan (incorporated herein by reference to exhibit 10.2 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2007, filed August 7, 2007)* | ||
10 | .47 | Amendment to Form of 2007 Performance Share Agreement (incorporated herein by reference to exhibit 10.4 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2008, filed November 10, 2008)* | ||
10 | .48 | Form of 2008 Performance Share Agreement (incorporated herein by reference to exhibit 10.4 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2008, filed August 6, 2008)* |
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Exhibit | ||||
Number | Description | |||
10 | .49 | Form of 2009 Performance Share Agreement (incorporated herein by reference to exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for six months ended June 30, 2009, filed August 4, 2009)* | ||
10 | .50 | Amendment to the Form of Option Agreement relating to options granted in 2007 under the 2003 Share Incentive Plan, filed with this report* | ||
10 | .51 | Amendment to the Forms of Performance Share Award Agreements relating to grants in 2007, 2008 and 2009 under the 2003 Share Incentive Plan, filed with this report* | ||
10 | .52 | Share Purchase Agreement, dated May 13, 2008, among the Company, Halifax EES Trustees International Limited and various Candover Investments plc entities (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed on May 14, 2008) | ||
10 | .53 | Master Confirmation, dated as of September 28, 2007, between the Company and Goldman, Sachs & Co. relating to the accelerated share purchase program (incorporated herein by reference to exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2007, filed November 8, 2007) | ||
10 | .54 | Supplemental Confirmation, dated as of September 28, 2007, between the Company and Goldman, Sachs & Co. relating to the accelerated share purchase program (incorporated herein by reference to exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for nine months ended September 30, 2007, filed November 8, 2007) | ||
10 | .55 | Supplemental Confirmation, dated as of November 9, 2007, between the Company and Goldman, Sachs & Co. relating to the accelerated share purchase program (incorporated herein by reference to exhibit 10.37 to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007, filed on February 29, 2008) | ||
10 | .56 | Amendment Agreement, dated as of November 9, 2007, between the Company and Goldman, Sachs & Co. relating to the accelerated share purchase program (incorporated herein by reference to exhibit 10.38 to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007, filed on February 29, 2008) | ||
10 | .57 | Committed Letter of Credit Facility dated October 11, 2006 between Aspen Insurance Limited and Citibank Ireland Financial Services plc. (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed October 13, 2006) | ||
10 | .58 | Insurance Letters of Credit — Master Agreement dated December 15, 2003 between Aspen Insurance Limited and Citibank Ireland Financial Services plc. (incorporated herein by reference to exhibit 10.2 to the Company’s Current Report onForm 8-K, filed October 13, 2006) | ||
10 | .59 | Pledge Agreement dated January 17, 2006 between Aspen Insurance Limited and Citibank, N.A. (incorporated herein by reference to exhibit 10.3 to the Company’s Current Report onForm 8-K, filed October 13, 2006) | ||
10 | .60 | Side Letter relating to the Pledge Agreement, dated January 27, 2006 between Aspen Insurance Limited and Citibank, N.A. (incorporated herein by reference to exhibit 10.4 to the Company’s Current Report onForm 8-K, filed October 13, 2006) | ||
10 | .61 | Assignment Agreement dated October 11, 2006 among Aspen Insurance Limited, Citibank, N.A., Citibank Ireland Financial Services plc and The Bank of New York (incorporated herein by reference to exhibit 10.5 to the Company’s Current Report onForm 8-K, filed October 13, 2006) | ||
10 | .62 | Letter Agreement dated October 11, 2006 between Aspen Insurance Limited and Citibank Ireland Financial Services plc. (incorporated herein by reference to exhibit 10.6 to the Company’s Current Report onForm 8-K, filed October 13, 2006) | ||
10 | .63 | Amendment to Committed Letter of Credit Facility dated October 29, 2008 between Aspen Insurance Limited and Citibank Europe plc (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed November 4, 2008) | ||
10 | .64 | Amendment to Pledge Agreement dated October 29, 2008 between Aspen Insurance Limited and Citibank Europe plc (incorporated herein by reference to exhibit 10.2 to the Company’s Current Report onForm 8-K, filed November 4, 2008) |
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Exhibit | ||||
Number | Description | |||
10 | .65 | Letter of Credit between Aspen Insurance Limited and Citibank Europe plc dated April 29, 2009 (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed on May 4, 2009) | ||
10 | .66 | $200,000,000 Facility Agreement between Aspen Insurance Limited, Aspen Insurance UK Limited and Barclays Bank plc dated October 6, 2009 (incorporated herein by reference to exhibit 10.1 to the Company’s Current Report onForm 8-K, filed on October 7, 2009) | ||
10 | .67 | Supplemental Confirmation, dated as of January 5, 2010, between the Company and Goldman, Sachs & Co. relating to a collared accelerated stock buyback, filed with this report** | ||
21 | .1 | Subsidiaries of the Company, filed with this report | ||
23 | .1 | Consent of KPMG Audit Plc, filed with this report | ||
24 | .1 | Power of Attorney for officers and directors of Aspen Insurance Holdings Limited (included on the signature page of this report) | ||
31 | .1 | Officer Certification of Christopher O’Kane, Chief Executive Officer of Aspen Insurance Holdings Limited, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with this report | ||
31 | .2 | Officer Certification of Richard Houghton, Chief Financial Officer of Aspen Insurance Holdings Limited, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with this report | ||
32 | .1 | Officer Certification of Christopher O’Kane, Chief Executive Officer of Aspen Insurance Holdings Limited, and Richard Houghton, Chief Financial Officer of Aspen Insurance Holdings Limited, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, submitted with this report |
* | This exhibit is a management contract or compensatory plan or arrangement. | |
** | Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been separately filed with the SEC. |
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Last(2) | High | Low | Average(3) | |||||||||||||
Month Ended January 31, 2010 | 1.6151 | 1.6362 | 1.5933 | 1.6159 | ||||||||||||
Month Ended December 31, 2009 | 1.6170 | 1.6629 | 1.6220 | 1.5904 | ||||||||||||
Month Ended November 30, 2009 | 1.6440 | 1.6818 | 1.6408 | 1.6612 | ||||||||||||
Month Ended October 31, 2009 | 1.6452 | 1.6624 | 1.5799 | 1.6612 | ||||||||||||
Month Ended September 30, 2009 | 1.5982 | 1.6657 | 1.5882 | 1.6313 | ||||||||||||
Month Ended August 31, 2009 | 1.6287 | 1.6989 | 1.6249 | 1.6535 | ||||||||||||
Year Ended December 31, 2009 | 1.6170 | 1.6989 | 1.3753 | 1.5670 | ||||||||||||
Year Ended December 31, 2008 | 1.4593 | 2.0335 | 1.4392 | 1.8524 | ||||||||||||
Year Ended December 31, 2007 | 1.9849 | 2.1074 | 1.9205 | 2.0019 | ||||||||||||
Year Ended December 31, 2006 | 1.9589 | 1.9815 | 1.7199 | 1.8436 | ||||||||||||
Year Ended December 31, 2005 | 1.7230 | 1.9291 | 1.7142 | 1.8196 | ||||||||||||
Year Ended December 31, 2004 | 1.9183 | 1.9467 | 1.7663 | 1.8323 | ||||||||||||
Year Ended December 31, 2003 | 1.7902 | 1.7902 | 1.5500 | 1.6450 | ||||||||||||
Year Ended December 31, 2002 | 1.6099 | 1.6099 | 1.4088 | 1.5033 |
(1) | Data obtained from Bloomberg LP. | |
(2) | “Last” is the closing exchange rate on the last business day of each of the periods indicated. | |
(3) | “Average” for the monthly exchange rates is the average of the daily closing exchange rates during the periods indicated. “Average” for the year ended periods is also calculated using daily closing exchange rate during those periods. |
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By: | /s/ Christopher O’Kane |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Glyn Jones Glyn Jones | Chairman and Director | |||
/s/ Christopher O’Kane Christopher O’Kane | Chief Executive Officer and Director(Principal Executive Officer) | |||
/s/ Richard Houghton Richard Houghton | Chief Financial Officer and Director(Principal Financial Officer and Principal Accounting Officer) | |||
/s/ Liaquat Ahamed Liaquat Ahamed | Director | |||
/s/ Matthew Botein Matthew Botein | Director |
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Signature | Title | |||
/s/ Richard Bucknall Richard Bucknall | Director | |||
/s/ John Cavoores John Cavoores | Director | |||
/s/ Ian Cormack Ian Cormack | Director | |||
/s/ Julian Cusack Julian Cusack | Director | |||
/s/ Heidi Hutter Heidi Hutter | Director | |||
/s/ David Kelso David Kelso | Director | |||
/s/ Peter O’Flinn Peter O’Flinn | Director |
209
Page | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
Consolidated Financial Statements for the Twelve Months ended December 31, 2009, December 31, 2008 and December 31, 2007 | ||||
F-5 | ||||
F-6 | ||||
F-8 | ||||
F-9 | ||||
F-10 | ||||
F-12 |
F-1
Table of Contents
F-2
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F-3
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F-4
Table of Contents
Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Revenues | ||||||||||||
Net earned premium | $ | 1,823.0 | $ | 1,701.7 | $ | 1,733.6 | ||||||
Net investment income | 248.5 | 139.2 | 299.0 | |||||||||
Realized and unrealized investment gains (losses) | 11.4 | (47.9 | ) | (13.1 | ) | |||||||
Change in fair value of derivatives | (8.0 | ) | (7.8 | ) | (11.4 | ) | ||||||
Total Revenues | 2,074.9 | 1,785.2 | 2,008.1 | |||||||||
Expenses | ||||||||||||
Losses and loss adjustment expenses | 948.1 | 1,119.5 | 919.8 | |||||||||
Policy acquisition expenses | 334.1 | 299.3 | 313.9 | |||||||||
Operating and administrative expenses | 252.4 | 208.1 | 204.8 | |||||||||
Interest on long-term debt | 15.6 | 15.6 | 15.7 | |||||||||
Net foreign exchange (gains)/losses | (2.0 | ) | 8.2 | (20.6 | ) | |||||||
Other (income) expenses | (8.0 | ) | (5.7 | ) | 0.5 | |||||||
Total Expenses | 1,540.2 | 1,645.0 | 1,434.1 | |||||||||
Income from operations before income tax | 534.7 | 140.2 | 574.0 | |||||||||
Income tax expense | (60.8 | ) | (36.4 | ) | (85.0 | ) | ||||||
Net Income | $ | 473.9 | $ | 103.8 | $ | 489.0 | ||||||
Per share data | ||||||||||||
Weighted average number of ordinary share and share equivalents | ||||||||||||
Basic | 82,698,325 | 82,962,882 | 87,807,811 | |||||||||
Diluted | 85,327,212 | 85,532,102 | 90,355,213 | |||||||||
Basic earnings per ordinary share adjusted for preference share dividends | $ | 5.82 | $ | 0.92 | $ | 5.25 | ||||||
Diluted earnings per ordinary share adjusted for preference share dividends | $ | 5.64 | $ | 0.89 | $ | 5.11 | ||||||
F-5
Table of Contents
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Investments | ||||||||
Fixed income maturities, available for sale at fair value (amortized cost — $5,064.3 and $4,365.7) | $ | 5,249.9 | $ | 4,433.1 | ||||
Fixed income maturities, trading at fair value (amortized cost — $332.5 and $Nil) | 348.1 | — | ||||||
Other investments, equity method | 27.3 | 286.9 | ||||||
Short-term investments, available for sale at fair value (amortized cost — $368.2 and $224.9) | 368.2 | 224.9 | ||||||
Short-term investments, trading at fair value (amortized cost — $3.5 and $Nil) | 3.5 | — | ||||||
Total investments | 5,997.0 | 4,944.9 | ||||||
Cash and cash equivalents | 748.4 | 809.1 | ||||||
Reinsurance recoverables | ||||||||
Unpaid losses | 321.5 | 283.3 | ||||||
Ceded unearned premiums | 103.8 | 46.3 | ||||||
Receivables | ||||||||
Underwriting premiums | 708.3 | 677.5 | ||||||
Other | 64.1 | 46.5 | ||||||
Funds withheld | 85.1 | 85.0 | ||||||
Deferred policy acquisition costs | 165.5 | 149.7 | ||||||
Derivatives at fair value | 6.7 | 11.8 | ||||||
Receivable for securities sold | 11.9 | 177.2 | ||||||
Office properties and equipment | 27.5 | 33.8 | ||||||
Other assets | 9.2 | 15.5 | ||||||
Intangible assets | 8.2 | 8.2 | ||||||
Total Assets | $ | 8,257.2 | $ | 7,288.8 | ||||
F-6
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CONSOLIDATED BALANCE SHEETS
As at December 31, 2009 and 2008
($ in millions, except share and per share amounts)
December 31, | December 31, | |||||||
2009 | 2008 | |||||||
LIABILITIES | ||||||||
Insurance reserves | ||||||||
Losses and loss adjustment expenses | $ | 3,331.1 | $ | 3,070.3 | ||||
Unearned premiums | 907.6 | 810.7 | ||||||
Total insurance reserves | 4,238.7 | 3,881.0 | ||||||
Payables | ||||||||
Reinsurance premiums | 110.8 | 103.0 | ||||||
Deferred taxation | 83.9 | 63.6 | ||||||
Current taxation | 10.3 | 9.0 | ||||||
Accrued expenses and other payables | 249.3 | 192.5 | ||||||
Liabilities under derivative contracts | 9.2 | 11.1 | ||||||
Total payables | 463.5 | 379.2 | ||||||
Long-term debt | 249.6 | 249.5 | ||||||
Total liabilities | $ | 4,951.8 | $ | 4,509.7 | ||||
Commitments and contingent liabilities (see Note 18) | — | — | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Ordinary shares: 83,327,594 shares of 0.15144558¢ each (2008 — 81,506,503). | 0.1 | 0.1 | ||||||
Preference shares: 4,600,000 5.625% shares of par value 0.15144558¢ each (2008 — 4,600,000) | — | — | ||||||
5,327,500 7.401% shares of par value 0.15144558¢ each(2008-8,000,000) | — | — | ||||||
Additional paid-in capital | 1,763.0 | 1,754.8 | ||||||
Retained earnings | 1,285.0 | 884.7 | ||||||
Accumulated other comprehensive income | 257.3 | 139.5 | ||||||
Total shareholders’ equity | 3,305.4 | 2,779.1 | ||||||
Total liabilities and shareholders’ equity | $ | 8,257.2 | $ | 7,288.8 | ||||
F-7
Table of Contents
For The Twelve Months Ended December 31, 2009, 2008 and 2007
($ in millions)
Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Ordinary shares | ||||||||||||
Beginning and end of year | $ | 0.1 | $ | 0.1 | $ | 0.1 | ||||||
Preference shares | ||||||||||||
Beginning and end of year | — | — | — | |||||||||
Additional paid-in capital | ||||||||||||
Beginning of year | 1,754.8 | 1,846.1 | 1,921.7 | |||||||||
New ordinary shares issued | 25.1 | 2.0 | 12.8 | |||||||||
Ordinary shares repurchased and cancelled | — | (100.3 | ) | (101.2 | ) | |||||||
Preference shares repurchased and cancelled | (34.1 | ) | — | — | ||||||||
Share-based compensation | 17.2 | 7.0 | 12.8 | |||||||||
End of year | 1,763.0 | 1,754.8 | 1,846.1 | |||||||||
Retained earnings | ||||||||||||
Beginning of year | 884.7 | 858.8 | 450.5 | |||||||||
Net income for the year | 473.9 | 103.8 | 489.0 | |||||||||
Dividends on ordinary shares | (49.8 | ) | (50.2 | ) | (53.0 | ) | ||||||
Dividends on preference shares | (23.8 | ) | (27.7 | ) | (27.7 | ) | ||||||
End of year | 1,285.0 | 884.7 | 858.8 | |||||||||
Accumulated other comprehensive income: | ||||||||||||
Cumulative foreign currency translation adjustments, net of taxes | ||||||||||||
Beginning of year | 87.6 | 80.2 | 59.1 | |||||||||
Change for the year net of income tax of $Nil and $Nil | 15.8 | 7.4 | 21.1 | |||||||||
End of year | 103.4 | 87.6 | 80.2 | |||||||||
Loss on derivatives, net of taxes | ||||||||||||
Beginning of year | (1.4 | ) | (1.6 | ) | (1.8 | ) | ||||||
Reclassification to interest payable | 0.2 | 0.2 | 0.2 | |||||||||
End of year | (1.2 | ) | (1.4 | ) | (1.6 | ) | ||||||
Unrealized appreciation/(depreciation) on investments, net of taxes: | ||||||||||||
Beginning of year | 53.3 | 34.0 | (40.3 | ) | ||||||||
Change for the year net of income tax expense of $16.4 and $6.4 | 101.8 | 19.3 | 74.3 | |||||||||
End of year | 155.1 | 53.3 | 34.0 | |||||||||
Total accumulated other comprehensive income | 257.3 | 139.5 | 112.6 | |||||||||
Total Shareholders’ Equity | $ | 3,305.4 | $ | 2,779.1 | $ | 2,817.6 | ||||||
F-8
Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Twelve Months Ended December 31, 2009, 2008 and 2007
($ in millions)
Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net income | $ | 473.9 | $ | 103.8 | $ | 489.0 | ||||||
Other comprehensive income, net of taxes | ||||||||||||
Available for sale investments: | ||||||||||||
Reclassification adjustment for net realized losses on investments included in net income | 3.8 | 24.3 | 13.9 | |||||||||
Change in net unrealized gains and losses on available for sale securities held | 98.0 | (5.0 | ) | 60.4 | ||||||||
Amortization of loss on derivative contract | 0.2 | 0.2 | 0.2 | |||||||||
Change in foreign currency translation adjustment | 15.8 | 7.4 | 21.1 | |||||||||
Other comprehensive income | 117.8 | 26.9 | 95.6 | |||||||||
Comprehensive income | $ | 591.7 | $ | 130.7 | $ | 584.6 | ||||||
F-9
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2009, 2008 and 2007
($ in millions)
Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Operating Activities: | ||||||||||||
Net income | $ | 473.9 | $ | 103.8 | $ | 489.0 | ||||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 10.5 | 10.6 | 18.2 | |||||||||
Share-based compensation expense | 17.2 | 7.0 | 12.8 | |||||||||
Net realized and unrealized (gains) losses | (11.4 | ) | 47.9 | 13.1 | ||||||||
Net realized (gains)/losses included in net investment income | (19.6 | ) | 96.6 | (44.5 | ) | |||||||
Loss on derivative contract | 0.2 | 0.2 | 0.2 | |||||||||
Changes in: | ||||||||||||
Insurance reserves: | ||||||||||||
Losses and loss adjustment expenses | 171.5 | 332.9 | 80.8 | |||||||||
Unearned premiums | 96.9 | 53.1 | (84.9 | ) | ||||||||
Reinsurance recoverables: | ||||||||||||
Unpaid losses | (38.6 | ) | 22.1 | 169.1 | ||||||||
Ceded unearned premiums | (57.5 | ) | 30.7 | (47.2 | ) | |||||||
Accrued investment income and other receivables | (17.6 | ) | 13.3 | 2.4 | ||||||||
Deferred policy acquisition costs | (15.8 | ) | (15.8 | ) | 7.5 | |||||||
Reinsurance premiums payable | 5.0 | 22.5 | 18.9 | |||||||||
Funds withheld | (0.1 | ) | 19.5 | (25.4 | ) | |||||||
Premiums receivable | (55.9 | ) | (144.6 | ) | 82.1 | |||||||
Deferred taxes | 20.3 | 3.9 | 25.6 | |||||||||
Income tax payable | 1.3 | (51.5 | ) | 32.8 | ||||||||
Accrued expenses and other payable | 56.8 | (17.6 | ) | 23.9 | ||||||||
Fair value of derivatives and settlement of liabilities under derivatives | 3.2 | (2.4 | ) | 5.8 | ||||||||
Other assets | 6.3 | (1.7 | ) | (6.2 | ) | |||||||
Net cash generated by operating activities | $ | 646.6 | $ | 530.5 | $ | 774.0 | ||||||
F-10
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2009, 2008 and 2007
($ in millions)
Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Cash flows used in investing activities: | ||||||||||||
Purchases of fixed income maturities | $ | (2,927.2 | ) | $ | (2,627.0 | ) | $ | (2,864.6 | ) | |||
Proceeds (purchases) of other investments | 447.5 | — | (360.0 | ) | ||||||||
Proceeds from sales and maturities of fixed maturities | 1,898.9 | 2,358.8 | 2,402.7 | |||||||||
Net (purchases)/sales of short-term investments | (97.0 | ) | 24.3 | 407.0 | ||||||||
Purchase of equipment | (4.6 | ) | (11.4 | ) | (11.1 | ) | ||||||
Net cash used in investing activities | (682.4 | ) | (255.3 | ) | (426.0 | ) | ||||||
Cash flows used in financing activities: | ||||||||||||
Proceeds from the issuance of ordinary shares, net of issuance costs | 25.1 | 2.0 | 12.8 | |||||||||
Ordinary shares repurchased | — | (100.3 | ) | (101.2 | ) | |||||||
Costs from the redemption of preference shares | (34.1 | ) | — | — | ||||||||
Dividends paid on ordinary shares | (49.8 | ) | (50.2 | ) | (53.0 | ) | ||||||
Dividends paid on preference shares | (23.8 | ) | (27.7 | ) | (27.7 | ) | ||||||
Net cash used in financing activities | (82.6 | ) | (176.2 | ) | (169.1 | ) | ||||||
Effect of exchange rate movements on cash and cash equivalents | 57.7 | 58.7 | (22.5 | ) | ||||||||
Increase/(decrease) in cash and cash equivalents | (60.7 | ) | 157.7 | 156.4 | ||||||||
Cash and cash equivalents at beginning of year | 809.1 | 651.4 | 495.0 | |||||||||
Cash and cash equivalents at end of year | $ | 748.4 | $ | 809.1 | $ | 651.4 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid during the year for income tax | 55.5 | 76.2 | 41.0 | |||||||||
Cash paid during the year for interest | 15.0 | 15.0 | 15.0 |
F-11
Table of Contents
1. | History and organization |
2. | Basis of preparation and significant accounting policies |
F-12
Table of Contents
F-13
Table of Contents
F-14
Table of Contents
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
F-18
Table of Contents
3. | Related Party Transactions |
F-19
Table of Contents
4. | Earnings Per Ordinary Share |
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
Earnings | ||||||||||||
Basic | ||||||||||||
Net income as reported | $ | 473.9 | $ | 103.8 | $ | 489.0 | ||||||
Preference dividends | (23.8 | ) | (27.7 | ) | (27.7 | ) | ||||||
Preference stock repurchase gain | 31.5 | — | — | |||||||||
Net income available to ordinary shareholders | 481.6 | 76.1 | 461.3 | |||||||||
Diluted | ||||||||||||
Net income available to ordinary shareholders | 481.6 | 76.1 | 461.3 | |||||||||
Ordinary shares | ||||||||||||
Basic | ||||||||||||
Weighted average ordinary shares | 82,698,325 | 82,962,882 | 87,807,811 | |||||||||
Diluted | ||||||||||||
Weighted average ordinary shares | 82,698,325 | 82,962,882 | 87,807,811 | |||||||||
Weighted average effect of dilutive securities | 2,628,887 | 2,569,220 | 2,547,402 | |||||||||
Total | 85,327,212 | 85,532,102 | 90,355,213 | |||||||||
Earnings per ordinary share | ||||||||||||
Basic | $ | 5.82 | $ | 0.92 | $ | 5.25 | ||||||
Diluted | $ | 5.33 | $ | 0.89 | $ | 5.11 | ||||||
Dividend | Payable on: | Record Date: | ||||||
Ordinary shares | $ | 0.15 | March 5, 2010 | February 22, 2010 | ||||
5.625% preference shares | $ | 0.703125 | April 1, 2010 | March 15, 2010 | ||||
7.401% preference shares | $ | 0.462563 | April 1, 2010 | March 15, 2010 |
5. | Segment Reporting |
F-20
Table of Contents
F-21
Table of Contents
Twelve Months Ended December 31, 2009 | ||||||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Investing | Total | |||||||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||||||
Gross written premiums | $ | 648.7 | $ | 408.1 | $ | 847.7 | $ | 162.6 | $ | — | $ | 2,067.1 | ||||||||||||
Net written premiums | 591.1 | 410.0 | 723.4 | 112.3 | — | 1,836.8 | ||||||||||||||||||
Gross earned premiums | 616.8 | 434.1 | 836.7 | 147.8 | — | 2,035.4 | ||||||||||||||||||
Net premiums earned | 560.0 | 435.7 | 726.1 | 101.2 | — | 1,823.0 | ||||||||||||||||||
Losses and loss adjustment expenses | 121.7 | 293.4 | 443.6 | 89.4 | — | 948.1 | ||||||||||||||||||
Policy acquisition expenses | 111.8 | 82.7 | 122.6 | 17.0 | — | 334.1 | ||||||||||||||||||
Operating and administrative expenses | 78.1 | 42.8 | 98.3 | 33.2 | — | 252.4 | ||||||||||||||||||
Underwriting profit/(loss) | 248.4 | 16.8 | 61.6 | (38.4 | ) | — | 288.4 | |||||||||||||||||
Net investment income | — | — | — | — | $ | 248.5 | 248.5 | |||||||||||||||||
Realized investment gains (losses) | — | — | — | — | 11.4 | 11.4 | ||||||||||||||||||
Segment profit/(loss) | $ | 248.4 | $ | 16.8 | $ | 61.6 | $ | (38.4 | ) | $ | 259.9 | $ | 548.3 | |||||||||||
Change in fair value of derivatives | (8.0 | ) | ||||||||||||||||||||||
Interest on long-term debt | (15.6 | ) | ||||||||||||||||||||||
Net foreign exchange gains | 2.0 | |||||||||||||||||||||||
Other income | 8.0 | |||||||||||||||||||||||
Net income before tax | $ | 534.7 | ||||||||||||||||||||||
Net reserves for loss and loss adjustment expenses | $ | 355.2 | $ | 1,512.5 | $ | 992.4 | $ | 149.5 | $ | 3,009.6 | ||||||||||||||
Ratios | ||||||||||||||||||||||||
Loss ratio | 21.7 | % | 67.3 | % | 61.1 | % | 88.3 | % | 52.0 | % | ||||||||||||||
Policy acquisition expense ratio | 20.0 | % | 19.0 | % | 16.9 | % | 16.8 | % | 18.3 | % | ||||||||||||||
Operating and administrative expense ratio | 13.9 | % | 9.8 | % | 13.5 | % | 32.8 | % | 13.8 | % | ||||||||||||||
Expense ratio | 33.9 | % | 28.8 | % | 30.4 | % | 49.6 | % | 32.1 | % | ||||||||||||||
Combined ratio | 55.6 | % | 96.1 | % | 91.5 | % | 137.9 | % | 84.1 | % | ||||||||||||||
F-22
Table of Contents
Twelve Months Ended December 31, 2008 | ||||||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Investing | Total | |||||||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||||||
Gross written premiums | $ | 589.0 | $ | 416.3 | $ | 867.8 | $ | 128.6 | $ | — | $ | 2,001.7 | ||||||||||||
Net premiums written | 564.1 | 412.9 | 757.8 | 100.7 | — | 1,835.5 | ||||||||||||||||||
Gross premiums earned | 592.4 | 418.4 | 758.2 | 120.1 | — | 1,889.1 | ||||||||||||||||||
Net premiums earned | 532.4 | 413.5 | 661.8 | 94.0 | — | 1,701.7 | ||||||||||||||||||
Losses and loss adjustment expenses | 314.7 | 272.2 | 473.5 | 59.1 | — | 1,119.5 | ||||||||||||||||||
Policy acquisition expenses | 105.0 | 65.4 | 113.4 | 15.5 | — | 299.3 | ||||||||||||||||||
Operating and administrative expenses | 65.7 | 43.2 | 74.4 | 24.8 | — | 208.1 | ||||||||||||||||||
Underwriting profit/(loss) | 47.0 | 32.7 | 0.5 | (5.4 | ) | — | 74.8 | |||||||||||||||||
Net investment income | — | — | — | — | $ | 139.2 | 139.2 | |||||||||||||||||
Realized investment gains | — | — | — | — | (47.9 | ) | (47.9 | ) | ||||||||||||||||
Segment profit/(loss) | $ | 47.0 | $ | 32.7 | $ | 0.5 | $ | (5.4 | ) | $ | 91.3 | $ | 166.1 | |||||||||||
Change in fair value of derivatives | (7.8 | ) | ||||||||||||||||||||||
Interest on long-term debt | (15.6 | ) | ||||||||||||||||||||||
Net foreign exchange gains (losses) | (8.2 | ) | ||||||||||||||||||||||
Other income | 5.7 | |||||||||||||||||||||||
Net income before tax | $ | 140.2 | ||||||||||||||||||||||
Net reserves for loss and loss adjustment expenses | $ | 450.6 | $ | 1,305.2 | $ | 906.5 | $ | 124.7 | $ | 2,787.0 | ||||||||||||||
Ratios | ||||||||||||||||||||||||
Loss ratio | 59.1 | % | 65.8 | % | 71.5 | % | 62.9 | % | 65.8 | % | ||||||||||||||
Policy acquisition expense ratio | 19.7 | % | 15.8 | % | 17.1 | % | 16.5 | % | 17.6 | % | ||||||||||||||
Operating and administrative expense ratio | 12.3 | % | 10.4 | % | 11.2 | % | 26.4 | % | 12.2 | % | ||||||||||||||
Expense ratio | 32.0 | % | 26.2 | % | 28.3 | % | 42.9 | % | 29.8 | % | ||||||||||||||
Combined ratio | 91.1 | % | 92.0 | % | 99.8 | % | 105.8 | % | 95.6 | % | ||||||||||||||
F-23
Table of Contents
Twelve Months Ended December 31, 2007 | ||||||||||||||||||||||||
Property | Casualty | International | U.S. | |||||||||||||||||||||
Reinsurance | Reinsurance | Insurance | Insurance | Investing | Total | |||||||||||||||||||
($ in millions, except percentages) | ||||||||||||||||||||||||
Gross written premiums | $ | 601.5 | $ | 431.5 | $ | 663.0 | $ | 122.5 | $ | — | $ | 1,818.5 | ||||||||||||
Net premiums written | 495.0 | 425.1 | 590.1 | 91.2 | — | 1,601.4 | ||||||||||||||||||
Gross premiums earned | 624.3 | 483.3 | 658.9 | 136.8 | — | 1,903.3 | ||||||||||||||||||
Net premiums earned | 555.6 | 475.3 | 597.2 | 105.5 | — | 1,733.6 | ||||||||||||||||||
Losses and loss adjustment expenses | 220.7 | 332.1 | 308.9 | 58.1 | — | 919.8 | ||||||||||||||||||
Policy acquisition expenses | 117.4 | 69.6 | 105.7 | 21.2 | — | 313.9 | ||||||||||||||||||
Operating and administrative expenses | 65.3 | 47.9 | 67.2 | 24.4 | — | 204.8 | ||||||||||||||||||
Underwriting profit | 152.2 | 25.7 | 115.4 | 1.8 | — | 295.1 | ||||||||||||||||||
Net investment income | — | — | — | — | $ | 299.0 | 299.0 | |||||||||||||||||
Realized investment gains (losses) | — | — | — | — | (13.1 | ) | (13.1 | ) | ||||||||||||||||
Segment profit | $ | 152.2 | $ | 25.7 | $ | 115.4 | $ | 1.8 | $ | 285.9 | $ | 581.0 | ||||||||||||
Change in fair value of derivatives | (11.4 | ) | ||||||||||||||||||||||
Interest on long-term debt | (15.7 | ) | ||||||||||||||||||||||
Net foreign exchange gains | 20.6 | |||||||||||||||||||||||
Other income | (0.5 | ) | ||||||||||||||||||||||
Net income before tax | $ | 574.0 | ||||||||||||||||||||||
Net reserves for loss and loss adjustment expenses | $ | 459.3 | $ | 1,262.6 | $ | 860.0 | $ | 59.4 | $ | 2,641.3 | ||||||||||||||
Ratios | ||||||||||||||||||||||||
Loss ratio | 39.7 | % | 69.9 | % | 51.7 | % | 55.1 | % | 53.1 | % | ||||||||||||||
Policy acquisition expense ratio | 21.1 | % | 14.6 | % | 17.7 | % | 20.1 | % | 18.1 | % | ||||||||||||||
Operating and administrative expense ratio | 11.8 | % | 10.1 | % | 11.3 | % | 23.1 | % | 11.8 | % | ||||||||||||||
Expense ratio | 32.9 | % | 24.7 | % | 29.0 | % | 43.2 | % | 29.9 | % | ||||||||||||||
Combined ratio | 72.6 | % | 94.6 | % | 80.7 | % | 98.3 | % | 83.0 | % | ||||||||||||||
F-24
Table of Contents
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Australia/Asia | $ | 84.4 | $ | 70.4 | $ | 22.9 | ||||||
Caribbean | 2.5 | 3.1 | 2.9 | |||||||||
Europe | 78.8 | 102.8 | 79.4 | |||||||||
United Kingdom | 131.6 | 188.2 | 198.8 | |||||||||
United States & Canada (1) | 924.5 | 926.7 | 855.0 | |||||||||
Worldwide excluding United States (2) | 150.6 | 112.8 | 119.3 | |||||||||
Worldwide including United States (3) | 659.8 | 553.3 | 482.8 | |||||||||
Others | 34.9 | 44.4 | 57.4 | |||||||||
Total | $ | 2,067.1 | $ | 2,001.7 | $ | 1,818.5 | ||||||
(1) | “United States and Canada” comprises individual policies that insure risks specifically in the United States and/or Canada, but not elsewhere. | |
(2) | “Worldwide excluding the United States” comprises individual policies that insure risks wherever they may be across the world but specifically excludes the United States. | |
(3) | “Worldwide including the United States” comprises individual policies that insure risks wherever they may be across the world but specifically includes the United States. |
6. | Investments |
As at December 31, 2009 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Cost or | Unrealized | Unrealized | Fair | |||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. Government Securities | $ | 492.1 | $ | 17.4 | $ | (2.0 | ) | $ | 507.5 | |||||||
U.S. Agency Securities | 368.6 | 20.7 | (0.2 | ) | 389.1 | |||||||||||
Municipal Securities | 20.0 | — | (0.5 | ) | 19.5 | |||||||||||
Corporate Securities | 2,178.1 | 90.3 | (3.8 | ) | 2,264.6 | |||||||||||
Foreign Government Securities | 509.9 | 13.9 | (1.5 | ) | 522.3 | |||||||||||
Asset-backed Securities | 110.0 | 5.1 | — | 115.1 | ||||||||||||
Non-agency Residential Mortgage-backed Securities | 34.2 | 8.6 | (0.6 | ) | 42.2 | |||||||||||
Non-agency Commercial Mortgage-backed Securities | 178.5 | 2.5 | (1.0 | ) | 180.0 | |||||||||||
Agency Mortgage-backed Securities | 1,172.9 | 40.2 | (3.5 | ) | 1,209.6 | |||||||||||
Total fixed income | $ | 5,064.3 | $ | 198.7 | $ | (13.1 | ) | $ | 5,249.9 | |||||||
F-25
Table of Contents
As at December 31, 2008 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Cost or | Unrealized | Unrealized | Fair | |||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. Government Securities | $ | 601.3 | $ | 49.9 | $ | (0.5 | ) | $ | 650.7 | |||||||
U.S. Agency Securities | 356.6 | 36.7 | (0.2 | ) | 393.1 | |||||||||||
Municipal Securities | 7.7 | 0.3 | — | 8.0 | ||||||||||||
Corporate Securities | 1,426.0 | 29.0 | (30.5 | ) | 1,424.5 | |||||||||||
Foreign Government Securities | 363.6 | 20.9 | — | 384.5 | ||||||||||||
Asset-backed Securities | 218.1 | — | (12.6 | ) | 205.5 | |||||||||||
Non-agency Residential Mortgage-backed Securities | 80.0 | 0.4 | (24.1 | ) | 56.3 | |||||||||||
Non-agency Commercial Mortgage-backed Securities | 253.9 | — | (34.7 | ) | 219.2 | |||||||||||
Agency Mortgage-backed Securities | 1,058.5 | 33.2 | (0.4 | ) | 1,091.3 | |||||||||||
Total fixed income | $ | 4,365.7 | $ | 170.4 | $ | (103.0 | ) | $ | 4,433.1 | |||||||
As at December 31, 2009 | ||||||||||||
Average | ||||||||||||
Amortized | Fair | Ratings by | ||||||||||
Cost or Cost | Value | Maturity | ||||||||||
(Amounts in millions) | ||||||||||||
Due one year or less | $ | 296.4 | $ | 301.4 | AA | |||||||
Due after one year through five years | 2,057.1 | 2,133.2 | AA+ | |||||||||
Due after five years through ten years | 1,094.2 | 1,143.5 | AA− | |||||||||
Due after ten years | 121.0 | 124.9 | AA | |||||||||
Subtotal | 3,568.7 | 3,703.0 | ||||||||||
Non-agency Residential mortgage-backed securities | 34.2 | 42.2 | BBB− | |||||||||
Non-agency Commercial mortgage-backed securities | 178.5 | 180.0 | AAA | |||||||||
Agency mortgage-backed securities | 1,172.9 | 1,209.6 | AAA | |||||||||
Other asset-backed securities | 110.0 | 115.1 | AAA | |||||||||
Total | $ | 5,064.3 | $ | 5,249.9 | ||||||||
F-26
Table of Contents
As at December 31, 2008 | ||||||||||
Amortized | Average | |||||||||
Cost or | Fair | Ratings by | ||||||||
Cost | Value | Maturity | ||||||||
(Amounts in millions) | ||||||||||
Due one year or less | $ | 324.0 | $ | 328.9 | AA+ | |||||
Due after one year through five years | 1,373.2 | 1,426.0 | AA+ | |||||||
Due after five years through ten years | 905.4 | 940.9 | AA | |||||||
Due after ten years | 152.6 | 165.0 | AA+ | |||||||
Subtotal | 2,755.2 | 2,860.8 | ||||||||
Non-agency Residential mortgage-backed securities | 80.0 | 56.3 | AAA | |||||||
Non-agency Commercial mortgage-backed securities | 253.9 | 219.2 | AAA | |||||||
Agency mortgage-backed securities | 1,058.5 | 1,091.3 | AAA | |||||||
Other asset-backed securities | 218.1 | 205.5 | AAA | |||||||
Total | $ | 4,365.7 | $ | 4,433.1 | ||||||
As at December 31, 2009 | ||||||||||||||||
Cost or | Gross | Gross | Estimated | |||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. Government Securities | $ | 7.3 | $ | — | $ | (0.8 | ) | $ | 6.5 | |||||||
U.S. Agency Securities | 0.4 | — | — | 0.4 | ||||||||||||
Municipal Securities | 1.8 | — | — | 1.8 | ||||||||||||
Corporate Securities | 313.2 | 16.6 | (0.4 | ) | 329.4 | |||||||||||
Foreign Government Securities | 4.8 | 0.2 | — | 5.0 | ||||||||||||
Asset Backed Securities | 5.0 | — | — | 5.0 | ||||||||||||
Total fixed income | $ | 332.5 | $ | 16.8 | $ | (1.2 | ) | $ | 348.1 | |||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||
Cost | Carrying Value | Cost | Carrying Value | |||||||||||||
($ in millions) | ||||||||||||||||
Investment funds | $ | — | $ | — | $ | 311.3 | $ | 286.9 | ||||||||
Cartesian Iris 2009A L.P. | 25.0 | 27.3 | — | — | ||||||||||||
Total other investments | $ | 25.0 | $ | 27.3 | $ | 311.3 | $ | 286.9 | ||||||||
F-27
Table of Contents
F-28
Table of Contents
As at December 31, 2009 | ||||||||||||||||||||||||
0-12 months | Over 12 months | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | value | Loss | Value | Loss | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
U.S. Government Securities | $ | 121.2 | $ | (2.0 | ) | $ | — | $ | — | $ | 121.2 | $ | (2.0 | ) | ||||||||||
U.S. Agency Securities | 9.9 | (0.2 | ) | — | — | 9.9 | (0.2 | ) | ||||||||||||||||
Municipal Securities | 15.1 | (0.5 | ) | — | — | 15.1 | (0.5 | ) | ||||||||||||||||
Foreign Government Securities | 113.2 | (1.5 | ) | — | — | 113.2 | (1.5 | ) | ||||||||||||||||
Corporate Securities | 319.5 | (3.6 | ) | 20.0 | (0.2 | ) | 339.5 | (3.8 | ) | |||||||||||||||
Asset-backed Securities | 0.5 | — | — | — | 0.5 | — | ||||||||||||||||||
Agency Mortgage-backed Securities | 307.5 | (3.5 | ) | 1.2 | — | 308.7 | (3.5 | ) | ||||||||||||||||
Non-agency Residential Mortgage-backed Securities | — | — | 6.5 | (0.6 | ) | 6.5 | (0.6 | ) | ||||||||||||||||
Non-agency Commercial Mortgage-backed Securities | 14.6 | (0.1 | ) | 43.8 | (0.9 | ) | 58.4 | (1.0 | ) | |||||||||||||||
Total | $ | 901.5 | $ | (11.4 | ) | $ | 71.5 | $ | (1.7 | ) | $ | 973.0 | $ | (13.1 | ) | |||||||||
As at December 31, 2008 | ||||||||||||||||||||||||
0-12 months | Over 12 months | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | value | Loss | Value | Loss | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
U.S. Government Securities | $ | 7.4 | $ | (0.4 | ) | $ | 1.0 | (0.1 | ) | $ | 8.4 | $ | (0.5 | ) | ||||||||||
U.S. Agency Securities | 11.4 | (0.2 | ) | — | — | 11.4 | (0.2 | ) | ||||||||||||||||
Corporate Securities | 326.8 | (19.0 | ) | 192.0 | (11.5 | ) | 518.8 | (30.5 | ) | |||||||||||||||
Asset-backed Securities | 190.4 | (11.1 | ) | 15.0 | (1.5 | ) | 205.4 | (12.6 | ) | |||||||||||||||
Non-agency Residential Mortgage-backed Securities | 55.9 | (24.0 | ) | 0.4 | (0.1 | ) | 56.3 | (24.1 | ) | |||||||||||||||
Non-agency Commercial Mortgage-backed Securities | 114.2 | (97.2 | ) | 105.0 | (27.5 | ) | 219.2 | (34.7 | ) | |||||||||||||||
Agency Mortgage-backed Securities | 42.3 | (0.4 | ) | — | — | 42.3 | (0.4 | ) | ||||||||||||||||
Total | $ | 748.4 | $ | (62.3 | ) | $ | 313.4 | $ | (40.7 | ) | $ | 1,061.8 | $ | (103.0 | ) | |||||||||
F-29
Table of Contents
December 31, 2009 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Fixed income maturities available for sale, at fair value | $ | 1,029.8 | $ | 4,205.2 | $ | 14.9 | ||||||
Short-term investments available for sale, at fair value | 293.1 | 75.1 | — | |||||||||
Fixed income maturities, trading at fair value | 11.6 | 336.5 | — | |||||||||
Short-term investments, trading at fair value | — | 3.5 | — | |||||||||
Derivatives at fair value | — | — | 6.7 | |||||||||
Total | $ | 1,334.5 | $ | 4,620.3 | $ | 21.6 | ||||||
F-30
Table of Contents
December 31, 2008 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Fixed income maturities available for sale, at fair value | $ | 1,035.2 | $ | 3,395.1 | $ | 2.8 | ||||||
Short-term investments available for sale, at fair value | 141.2 | 83.7 | — | |||||||||
Derivatives at fair value | — | — | 11.8 | |||||||||
Total | $ | 1,176.4 | $ | 3,478.8 | $ | 14.6 | ||||||
Twelve Months Ended December 31, 2009 | ||||||||||||
Fixed Maturity | Derivatives at | |||||||||||
Investments | Fair Value | Total | ||||||||||
($ in millions) | ||||||||||||
Level 3 assets as of January 1, 2009 | $ | 2.8 | $ | 11.8 | $ | 14.6 | ||||||
Securities transferred in/(out) of Level 3 | 14.0 | — | 14.0 | |||||||||
Total unrealized gains or (losses): | ||||||||||||
Included in earnings | — | (7.4 | ) | (7.4 | ) | |||||||
Included in comprehensive income | 3.8 | — | 3.8 | |||||||||
Settlements | — | (2.7 | ) | (2.7 | ) | |||||||
Other | — | 5.0 | 5.0 | |||||||||
Sales | (5.7 | ) | — | (5.7 | ) | |||||||
Level 3 assets as of December 31, 2009 | $ | 14.9 | $ | 6.7 | $ | 21.6 | ||||||
Twelve Months Ended December 31, 2008 | ||||||||||||
Fixed Maturity | Derivatives at | |||||||||||
Investments | Fair Value | Total | ||||||||||
($ in millions) | ||||||||||||
Level 3 assets as of January 1, 2008 | $ | — | $ | 17.3 | $ | 17.3 | ||||||
Securities transferred in/(out) of Level 3 | 3.9 | — | 3.9 | |||||||||
Total unrealized gains or (losses): | ||||||||||||
Included in earnings | (0.1 | ) | (5.5 | ) | (5.6 | ) | ||||||
Included in comprehensive income | (1.0 | ) | — | (1.0 | ) | |||||||
Settlements | — | — | — | |||||||||
Sales | — | — | — | |||||||||
Level 3 assets as of December 31, 2008 | $ | 2.8 | $ | 11.8 | $ | 14.6 | ||||||
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December 31, 2009 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Liabilities under derivative contracts: | ||||||||||||
Credit insurance contract | $ | — | $ | — | $ | 9.2 | ||||||
December 31, 2008 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
($ in millions) | ||||||||||||
Liabilities under derivative contracts: | ||||||||||||
Credit insurance contract | $ | — | $ | — | $ | 11.1 | ||||||
Twelve Months | Twelve Months | |||||||
Ended | Ended | |||||||
December 31, 2009 | December 31, 2008 | |||||||
($ in millions) | ($ in millions) | |||||||
Beginning Balance | $ | 11.1 | $ | 19.0 | ||||
Fair value changes included in earnings | (0.7 | ) | (4.1 | ) | ||||
Settlements | (6.2 | ) | (3.8 | ) | ||||
Purchases/Premiums | 5.0 | — | ||||||
Ending Balance | $ | 9.2 | $ | 11.1 | ||||
7. | Investment Transactions |
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Purchase of fixed maturity investments | $ | 2,927.2 | $ | 2,627.0 | $ | 2,864.6 | ||||||
Proceeds from sales and maturities of fixed maturity investments | (1,898.9 | ) | (2,358.8 | ) | (2,402.7 | ) | ||||||
Net (sales)/purchases of other investments | (235.5 | ) | 177.2 | 360.0 | ||||||||
Net (sales)/purchases of short-term investments | 99.8 | 24.3 | (407.0 | ) | ||||||||
Net purchases | $ | 892.6 | $ | 469.7 | $ | 414.9 | ||||||
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Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Fixed income maturities | $ | 223.1 | $ | 204.5 | $ | 200.9 | ||||||
Other investments | 19.8 | (97.3 | ) | 44.5 | ||||||||
Short-term investments | 5.6 | 32.0 | 53.6 | |||||||||
Net investment income | $ | 248.5 | $ | 139.2 | $ | 299.0 | ||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Pre-tax realized investment gains and losses | ||||||||||||
Short-term investments, fixed maturities & other investments | ||||||||||||
Gross realized gains | $ | 22.4 | $ | 12.1 | $ | 5.4 | ||||||
Gross realized (losses) | (11.0 | ) | (60.0 | ) | (18.5 | ) | ||||||
Total pre-tax realized investment gains (losses) | 11.4 | (47.9 | ) | (13.1 | ) | |||||||
Change in unrealized gains and (losses) | ||||||||||||
Fixed maturities | 118.2 | 25.7 | 90.2 | |||||||||
Short-term investments | — | (0.5 | ) | 0.9 | ||||||||
Total change in pre-tax unrealized gains | 118.2 | 25.2 | 91.1 | |||||||||
Change in taxes | (16.4 | ) | (5.9 | ) | (16.8 | ) | ||||||
Total change in unrealized gains, net of tax | $ | 101.8 | $ | 19.3 | $ | 74.3 | ||||||
8. | Reinsurance |
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Twelve Months | Twelve Months | Twelve Months | ||||||||||
Ended | Ended | Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Premiums written: | ||||||||||||
Direct | $ | 641.6 | $ | 624.6 | $ | 681.1 | ||||||
Assumed | 1,425.4 | 1,377.1 | 1,137.4 | |||||||||
Ceded | (230.3 | ) | (166.2 | ) | (217.1 | ) | ||||||
Net premiums written | $ | 1,836.8 | $ | 1,835.5 | $ | 1,601.4 | ||||||
Premiums earned: | ||||||||||||
Direct | $ | 616.2 | $ | 505.1 | $ | 692.9 | ||||||
Assumed | 1,419.2 | 1,384.0 | 1,210.4 | |||||||||
Ceded | (212.4 | ) | (187.4 | ) | (169.7 | ) | ||||||
Net premiums earned | $ | 1,823.0 | $ | 1,701.7 | $ | 1,733.6 | ||||||
Insurance losses and loss adjustment expenses: | ||||||||||||
Direct | $ | 432.0 | $ | 357.0 | $ | 609.9 | ||||||
Assumed | 617.5 | 876.8 | 378.9 | |||||||||
Ceded | (101.4 | ) | (114.3 | ) | (69.0 | ) | ||||||
Net insurance losses and loss adjustment expense | $ | 948.1 | $ | 1,119.5 | $ | 919.8 | ||||||
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Table of Contents
9. | Derivative Financial Instruments |
Derivatives Not | ||||||||||||||||||||
Designated as | Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Hedging Instruments | Notional | Balance Sheet | Balance Sheet | |||||||||||||||||
Under ASC 815 | Amount | Location | Fair Value | Location | Fair Value | |||||||||||||||
($ in millions) | ($ in millions) | ($ in millions) | ||||||||||||||||||
Credit insurance contract | $ | 452.4 | Derivatives at fair value | $ | 6.7 | Liabilities under derivatives | $ | 9.2 |
Derivatives Not | ||||||||||||||||||||
Designated as | Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Hedging Instruments | Notional | Balance Sheet | Balance Sheet | |||||||||||||||||
Under ASC 815 | Amount | Location | Fair Value | Location | Fair Value | |||||||||||||||
($ in millions) | ($ in millions) | ($ in millions) | ||||||||||||||||||
Credit insurance contract | $ | 452.4 | Derivatives at fair value | $ | 9.1 | Liabilities under derivatives | $ | 11.1 | ||||||||||||
Foreign Exchange Contract | $ | 18.8 | Derivatives at fair value | $ | 2.7 |
Amount of Gain/(Loss) | ||||||||||
Recognized in Income | ||||||||||
Twelve Months Ended | ||||||||||
Derivatives Not Designated as | December 31, | December 31, | ||||||||
Hedging Instruments Under ASC 815 | Location of Gain/(Loss) Recognized in Income | 2009 | 2008 | |||||||
($ millions) | ||||||||||
Credit Insurance Contract | Change in Fair Value of Derivatives | $ | (8.0 | ) | $ | (7.8 | ) | |||
Foreign Exchange Contract | Net Foreign Exchange Gains and Losses | $ | 1.8 | $ | (0.8 | ) |
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10. | Reserves For Losses And Adjustment Expenses |
As at | As at | As at | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Provision for losses and LAE at start of year | $ | 3,070.3 | $ | 2,946.0 | $ | 2,820.0 | ||||||
Less reinsurance recoverable | (283.3 | ) | (304.7 | ) | (468.3 | ) | ||||||
Net loss and LAE at start of year | 2,787.0 | 2,641.3 | 2,351.7 | |||||||||
Net loss and loss expenses (disposed) acquired | (10.0 | ) | (15.4 | ) | 11.0 | |||||||
Provision for losses and LAE for claims incurred: | ||||||||||||
Current year | 1,032.5 | 1,203.0 | 1,027.2 | |||||||||
Prior years | (84.4 | ) | (83.5 | ) | (107.4 | ) | ||||||
Total incurred | 948.1 | 1,119.5 | 919.8 | |||||||||
Losses and LAE payments for claims incurred: | ||||||||||||
Current year | (131.6 | ) | (205.2 | ) | (110.5 | ) | ||||||
Prior years | (677.0 | ) | (534.2 | ) | (585.1 | ) | ||||||
Total paid | (808.6 | ) | (739.4 | ) | (695.6 | ) | ||||||
Foreign exchange (gains)/losses | 93.1 | (219.0 | ) | 54.4 | ||||||||
Net losses and LAE reserves at year end | 3,009.6 | 2,787.0 | 2,641.3 | |||||||||
Plus reinsurance recoverable on unpaid losses at end of year | 321.5 | 283.3 | 304.7 | |||||||||
Loss and LAE reserves at December 31, 2009, 2008 and 2007 | $ | 3,331.1 | $ | 3,070.3 | $ | 2,946.0 | ||||||
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11. | Income Taxes |
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
Income tax on income | $ | 60.8 | $ | 36.4 | $ | 85.0 | ||||||
Income tax/(recovery) on other comprehensive income | 16.1 | 5.9 | 16.8 | |||||||||
Total income tax | $ | 76.9 | $ | 42.3 | $ | 101.8 | ||||||
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Twelve Months Ended December 31, 2009 | ||||||||||||||||
Income | Current | Deferred | Total | |||||||||||||
Before Tax | Income Taxes | Income Taxes | Income Taxes | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. | $ | (13.6 | ) | $ | — | $ | — | $ | — | |||||||
Non-U.S. | 548.3 | 45.3 | 15.5 | 60.8 | ||||||||||||
Total | $ | 534.7 | $ | 45.3 | $ | 15.5 | $ | 60.8 | ||||||||
Twelve Months Ended December 31, 2008 | ||||||||||||||||
Income | Current | Deferred | Total | |||||||||||||
Before Tax | Income Taxes | Income Taxes | Income Taxes | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. | $ | (10.8 | ) | $ | — | $ | — | $ | — | |||||||
Non-U.S. | 151.0 | 12.2 | 24.2 | 36.4 | ||||||||||||
Total | $ | 140.2 | $ | 12.2 | $ | 24.2 | $ | 36.4 | ||||||||
Twelve Months Ended December 31, 2007 | ||||||||||||||||
Income | Current | Deferred | Total | |||||||||||||
Before Tax | Income Taxes | Income Taxes | Income Taxes | |||||||||||||
($ in millions) | ||||||||||||||||
U.S. | $ | 0.2 | $ | — | $ | — | $ | — | ||||||||
Non-U.S. | 573.8 | 76.2 | 8.8 | 85.0 | ||||||||||||
Total | $ | 574.0 | $ | 76.2 | $ | 8.8 | $ | 85.0 | ||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Income Tax Reconciliation | ||||||||||||
Expected tax provision at weighted average rate | $ | 53.4 | $ | 36.3 | $ | 105.6 | ||||||
Prior year adjustment | (3.7 | ) | (2.4 | ) | (20.5 | ) | ||||||
Valuation provision on U.S. deferred tax assets | 4.6 | 3.2 | (0.1 | ) | ||||||||
Other | 6.5 | (0.7 | ) | — | ||||||||
Total income tax expense | $ | 60.8 | $ | 36.4 | $ | 85.0 | ||||||
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12. | Deferred Taxation |
As at | As at | |||||||
December 31, 2009 | December 31, 2008 | |||||||
($ in millions) | ||||||||
Deferred tax assets: | ||||||||
Share options | $ | 6.3 | $ | 4.5 | ||||
Operating loss carry forwards | 13.3 | 9.0 | ||||||
Insurance reserves | 1.7 | 2.3 | ||||||
Other temporary differences | 7.3 | 3.8 | ||||||
Total gross deferred tax assets | 28.6 | 19.6 | ||||||
Less valuation allowance | (16.6 | ) | (12.0 | ) | ||||
Net deferred tax assets | $ | 12.0 | $ | 7.6 | ||||
Deferred tax liabilities: | ||||||||
Insurance equalization provision reserves | $ | (61.0 | ) | $ | (52.8 | ) | ||
Intangible assets | (0.6 | ) | (0.6 | ) | ||||
Unrealized gains on investments | (32.8 | ) | (12.7 | ) | ||||
Deferred policy acquisition costs | (1.2 | ) | — | |||||
Other temporary differences | (0.3 | ) | (5.1 | ) | ||||
Total gross deferred liabilities | (95.9 | ) | (71.2 | ) | ||||
Net deferred liability | $ | (83.9 | ) | $ | (63.6 | ) | ||
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Table of Contents
13. | Capital Structure |
As at December 31, 2009 | As at December 31, 2008 | |||||||||||||||
Number | U.S. $000 | Number | U.S. $000 | |||||||||||||
Authorized Share Capital | ||||||||||||||||
Ordinary Shares 0.15144558¢ per share | 969,629,030 | 1,469 | 969,629,030 | 1,469 | ||||||||||||
Non-Voting Shares 0.15144558¢ per share | 6,787,880 | 10 | 6,787,880 | 10 | ||||||||||||
Preference Shares 0.15144558¢ per share | 100,000,000 | 152 | 100,000,000 | 152 | ||||||||||||
Issued Share Capital | ||||||||||||||||
Issued ordinary shares of 0.15144558¢ per share | 83,327,594 | 126 | 81,506,503 | 123 | ||||||||||||
Issued preference shares of 0.15144558¢ each with a liquidation preference of $50 per share | 4,600,000 | 7 | 4,600,000 | 7 | ||||||||||||
Issued preference shares of 0.15144558¢ each with a liquidation preference of $25 per share | 5,327,500 | 8 | 8,000,000 | 12 | ||||||||||||
Total issued share capital | 141 | 142 | ||||||||||||||
Additional paid in capital ($ in millions) | 1,763.0 | 1,754.8 | ||||||||||||||
F-40
Table of Contents
Number of | ||||
Shares | ||||
Shares in issue at December 31, 2006 | 87,788,375 | |||
Share transactions in 2007: | ||||
Shares issued to the Names’ Trust upon the exercise of investor options | 7,381 | |||
Shares issued to Wellington Investment Holdings (Jersey) Limited upon the exercise of investor options | 426,083 | |||
Shares issued to employees under the share incentive plan | 852,677 | |||
Repurchase of shares from the Names’ Trust | (44,013 | ) | ||
Repurchase of shares from shareholders | (3,519,830 | ) | ||
Shares in issue at December 31, 2007 | 85,510,673 | |||
Share transactions in 2008: | ||||
Shares issued to the Names’ Trust upon the exercise of investor options | 3,369 | |||
Shares issued to employees under the share incentive plan | 224,263 | |||
Repurchase of shares from the Names’ Trust | (11,447 | ) | ||
Repurchase of shares from shareholders(1) | (4,220,355 | ) | ||
Shares in issue at December 31, 2008 | 81,506,503 | |||
Share transactions in 2009: | ||||
Shares issued to the Names’ trust upon exercise of investor options | 3,056 | |||
Shares issued to employees under the share incentive plan | 598,035 | |||
Shares issued through registered public offerings | 1,220,000 | |||
Shares in issue at December 31, 2009 | 83,327,594 | |||
(1) | 139,555 shares were acquired and cancelled on March 20, 2008 in accordance with the accelerated share repurchase contract described below and 4,080,800 were acquired and cancelled on May 19, 2008 through a privately-negotiated transaction with the last of our founding shareholders, Candover Partners Limited and its affiliates and the trustee to a Candover employee trust. |
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Table of Contents
14. | Statutory Requirements and Dividends Restrictions |
F-42
Table of Contents
U.S. | Lloyd’s | Bermuda | U.K. | |||||||||||||
($ in millions) | ||||||||||||||||
Required statutory capital and surplus | 14.0 | 220.0 | 831.0 | 236.0 | ||||||||||||
Statutory capital and surplus | 86.0 | 220.0 | 1,620.0 | 1,211.0 |
15. | Retirement Plans |
16. | Share Based Payments |
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Table of Contents
At December 31, 2009 | At December 31, 2008 | |||||||||||||||||||||||
Options | Options | Exercise | ||||||||||||||||||||||
Option Holder | Outstanding | Exercisable | Outstanding | Exercisable | Price | Expiration | ||||||||||||||||||
Names’ Trustee (Appleby Services (Bermuda) Ltd) | 1,276,180 | 1,276,180 | 1,285,522 | 1,285,522 | $ | 19.90 | (1) | June 21, 2012 |
(1) | Exercise price at December 15, 2009 being the most recent exercise date. Exercise price at any date is the amount in U.S. Dollars converted at an average exchange rate over afive-day period from an underlying price of £10 per share increased by 5% per annum from June 21, 2002 to date of exercise, less the amount of any prior dividend or distribution per share. |
Weighted Average | Remaining | |||||||||||||||||||
Options | Fair Value at | Contractual | ||||||||||||||||||
Option Holder | Outstanding | Exercisable | Exercise Price | Grant Date | Time | |||||||||||||||
2003 Option grants | 2,078,365 | 2,078,365 | $ | 16.20 | $ | 5.31 | 3 yrs 8 mths | |||||||||||||
2004 Option grants | 139,686 | 139,686 | $ | 24.44 | $ | 5.74 | 5 yrs | |||||||||||||
2006 Option grants February 16 | 625,964 | 625,964 | $ | 23.65 | $ | 6.99 | 6 yrs 2 mths | |||||||||||||
2006 Option grants August 4 | — | — | $ | 23.19 | $ | 4.41 | 6 yrs 8 mths | |||||||||||||
2007 Option grants May 4 | 468,657 | — | $ | 27.28 | $ | 6.13 | 4 yrs 4 mths | |||||||||||||
2007 Option grants October 22 | 15,198 | — | $ | 27.52 | $ | 5.76 | 4 yrs 9 mths |
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Table of Contents
Options | ||||||||
Option Holder | Exercised | Forfeited | ||||||
2003 Option grants | 1,099,860 | 705,805 | ||||||
2004 Option grants | 85,604 | 274,823 | ||||||
2005 Option grants | — | 525,881 | ||||||
2006 Option grants | 52,500 | 536,184 | ||||||
2007 Option grants | — | 138,984 |
December 31, | December 31, | December 31, | ||||||||||
Option Holder | 2009 | 2008 | 2007 | |||||||||
2003 Option grants | $ | (1.8 | ) | $ | 0.8 | $ | 1.5 | |||||
2006 Option grants | $ | (1.4 | ) | $ | 1.6 | $ | 2.1 | |||||
2007 Option grants | $ | 1.2 | $ | 1.2 | $ | 1.1 |
Grant date | ||||||||||||||||||||||||
October 22, | May 4, | August 4, | February 16, | December 23, | August 20, | |||||||||||||||||||
2007 | 2007 | 2006 | 2006 | 2004 | 2003(1) | |||||||||||||||||||
Per share weighted average fair value | $ | 5.76 | $ | 6.14 | $ | 4.41 | $ | 6.99 | $ | 5.74 | $ | 5.31 | ||||||||||||
Risk free interest rate | 4.09% | 4.55% | 5.06% | 4.66% | 3.57% | 4.70% | ||||||||||||||||||
Dividend yield | 2.1% | 2.2% | 2.6% | 2.7% | 0.5% | 0.6% | ||||||||||||||||||
Expected life | 5 years | 5 years | 5 years | 5 years | 5 years | 7 years | ||||||||||||||||||
Share price volatility | 20.28% | 23.76% | 19.33% | 35.12% | 19.68% | 0% | ||||||||||||||||||
Foreign currency volatility | — | — | — | — | 9.40% | 9.40% |
(1) | The 2003 options had a price volatility of zero. The minimum value method was utilized because the Company was unlisted on the date that the options were issued. Foreign currency volatility of 9.40% was applied as the exercise price was initially in British Pounds and the share price of the Company is in U.S. Dollars. |
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Table of Contents
As at December 31, 2009 Restricted Share Units | ||||||||||||||||
Amount | Amount | Amount | Amount | |||||||||||||
RSU Holder | Granted | Vested | Forfeited | Outstanding | ||||||||||||
2004 Grants | 95,850 | 95,850 | — | — | ||||||||||||
2005 Grants | 48,913 | 47,793 | 1,120 | — | ||||||||||||
2006 Grants | 184,356 | 184,356 | — | — | ||||||||||||
2007 Grants | 120,387 | 86,082 | — | 34,305 | ||||||||||||
2008 Grants | 67,290 | 16,039 | 19,185 | 32,066 | ||||||||||||
2009 Grants | 97,389 | — | — | 97,389 |
As at December 31, 2009 | ||||||||||||||||
Performance Share Awards | ||||||||||||||||
Amount | Amount | Amount | Amount | |||||||||||||
Performance Share Holder | Granted | Earned | Forfeited | Outstanding | ||||||||||||
2004 Grants | 150,074 | 25,187 | 124,887 | — | ||||||||||||
2005 Grants | 131,227 | — | 131,227 | — | ||||||||||||
2006 Grants | 317,954 | 196,187 | 121,767 | — | ||||||||||||
2007 Grants | 439,203 | 150,698 | 166,830 | 121,675 | ||||||||||||
2008 Grants | 587,095 | 181,301 | 219,000 | 186,794 | ||||||||||||
2009 Grants | 928,152 | 501,388 | 7,329 | 419,435 |
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F-47
Table of Contents
Twelve Months Ended | ||||||||
December 31, 2009 | ||||||||
Weighted Average | ||||||||
Number of | Grant Date | |||||||
Shares | Fair Value | |||||||
Outstanding performance share awards, beginning of period | 513,895 | $ | 24.85 | |||||
Granted | 928,152 | $ | 22.23 | |||||
Earned | (669,221 | ) | $ | 22.79 | ||||
Forfeited | (44,922 | ) | $ | 24.12 | ||||
Outstanding performance share awards, end of period | 727,904 | $ | 23.19 | |||||
F-48
Table of Contents
Options | Exercise | Fair Value at | Remaining | |||||||||||||||||
Option Holder | Outstanding | Exercisable | Price | Grant Date | Contractual Time | |||||||||||||||
Non-Employee Directors — 2006 Option grants (May 25) | 17,740 | 17,740 | $ | 21.96 | $ | 4.24 | 6 yrs 5 months | |||||||||||||
Non-Employee Directors — 2007 Option grants (July 30) | 4,024 | — | $ | 24.76 | $ | 4.97 | 7 yrs 7 months |
Grant Date | ||||||||
July 30, 2007 | May 25, 2006 | |||||||
Per share weighted average fair value | $ | 4.97 | $ | 4.24 | ||||
Risk-free interest rate | 4.64 | % | 4.85 | % | ||||
Dividend yield | 2.4 | % | 2.7 | % | ||||
Expected life | 5 years | 5 years | ||||||
Share price volatility | 19.55 | % | 20.05 | % |
As at December 31, 2009 | ||||||||||||||||
Restricted Share Units | ||||||||||||||||
Amount | Amount | Amount | Amount | |||||||||||||
Granted | Vested | Forfeited | Outstanding | |||||||||||||
Non-Employee Directors — 2007 | 15,915 | 12,532 | 3,383 | — | ||||||||||||
Non-Employee Directors — 2008 | 16,151 | 16,151 | — | — | ||||||||||||
Non-Employee Directors — 2009 | 25,320 | 14,768 | — | 10,552 | ||||||||||||
Chairman — 2007 | 7,380 | 4,920 | — | 2,460 | ||||||||||||
Chairman — 2008 | 7,651 | 2,551 | — | 5,100 | ||||||||||||
Chairman — 2009 | 8,439 | — | — | 8,439 |
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Table of Contents
Twelve Months Ended | ||||||||
December 31, 2009 | ||||||||
Number of | Weighted Average | |||||||
Option activity | Options | Exercise Price | ||||||
Outstanding options, beginning of period | 5,052,475 | $ | 19.40 | |||||
Exercised | (338,259 | ) | $ | 17.44 | ||||
Forfeited or expired | (88,402 | ) | $ | 24.81 | ||||
Outstanding options, end of period | 4,625,814 | $ | 19.67 | |||||
Exercisable options, end of period | 4,120,195 | $ | 18.78 | |||||
Twelve Months Ended | ||||||||
December 31, 2009 | ||||||||
Weighted Average | ||||||||
Number of | Grant Date | |||||||
Restricted share unit activity | Shares | Fair Value | ||||||
Outstanding restricted stock, beginning of period | 172,101 | $ | 26.64 | |||||
Granted | 131,148 | $ | 24.50 | |||||
Vested | (93,753 | ) | $ | 26.58 | ||||
Forfeited | (19,185 | ) | $ | 24.46 | ||||
Outstanding restricted stock, end of period | 190,311 | $ | 25.49 | |||||
17. | Intangible Assets |
As at December 31, | As at December 31, | |||||||||||||||
2009 | 2008 | |||||||||||||||
Insurance | Insurance | |||||||||||||||
Cost and net book value | Trade Mark | Licenses | Trade Mark | Licenses | ||||||||||||
($ in millions) | ||||||||||||||||
Beginning and end of year | $ | 1.6 | $ | 6.6 | $ | 1.6 | $ | 6.6 | ||||||||
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18. | Commitments and Contingencies |
As at December 31, | As at December 31, | |||||||
2009 | 2008 | |||||||
($ in millions) | ||||||||
Assets held in multi-beneficiary trusts | $ | 1,448.4 | $ | 1,345.6 | ||||
Assets held in single-beneficiary trusts | 55.7 | 54.0 | ||||||
Letters of credit issued under our revolving credit facilities (1) | — | 84.6 | ||||||
Secured letters of credit (2) | 528.3 | 422.4 | ||||||
Total | $ | 2,032.4 | $ | 1,906.6 | ||||
Total as % of cash and invested assets | 30.1 | % | 33.1 | % | ||||
(1) | These letters of credit are not secured by cash or securities, though they are secured by a pledge of the shares of certain of the Company’s subsidiaries under a pledge agreement. | |
(2) | As of December 31, 2009, the Company had funds on deposit of $667.1 million and £18.8 million (December 31, 2008 — $604.6 million and £25.3 million) as collateral for the secured letters of credit. |
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Later | ||||||||||||||||||||||||||||
As at December 31, 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | Years | Total | |||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Operating Lease Obligations | 7.8 | 7.4 | 6.5 | 6.4 | 6.5 | 20.8 | 55.4 |
Later | ||||||||||||||||||||||||||||
As at December 31, 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | Years | Total | |||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Operating Lease Obligations | 6.6 | 6.7 | 6.3 | 5.4 | 5.4 | 24.8 | 55.2 |
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19. | Concentrations of credit risk |
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Gross Written Premiums in the | ||||||||||||
Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Broker | % | % | % | |||||||||
Aon Corporation (1) | 23.1 | 16.0 | 17.1 | |||||||||
Marsh & McLennan Companies, Inc. | 14.6 | 18.0 | 18.4 | |||||||||
Benfield Group Limited (1) | — | 7.4 | 12.7 | |||||||||
Willis Group Holdings, Ltd. | 14.2 | 14.5 | 10.8 | |||||||||
Others (2) | 48.1 | 44.1 | 41.0 | |||||||||
Total | 100.0 | 100.0 | 100.0 | |||||||||
Gross written premiums ($ millions) | $ | 2,067.1 | $ | 2,001.7 | $ | 1,818.5 | ||||||
(1) | Benfield Group Limited was an independent company prior to its acquisition by Aon Corporation on November 28, 2008 and is therefore shown separately in 2008 and 2007 in the above table. | |
(2) | No other individual broker accounted for more than 10% of gross written premiums. |
20. | Other Comprehensive Income |
For the Twelve Months Ended | ||||||||||||
December 31, 2009 | ||||||||||||
Pre-Tax | Income Tax Effect | After Tax | ||||||||||
($ in millions) | ||||||||||||
Other Comprehensive Income/(Loss) | ||||||||||||
Unrealized gains on investments | $ | 118.2 | $ | (16.4 | ) | $ | 101.8 | |||||
Loss on derivatives | 0.2 | — | 0.2 | |||||||||
Change in currency translation | 15.8 | — | 15.8 | |||||||||
Total other comprehensive income/(loss) | $ | 134.2 | $ | (16.4 | ) | $ | 117.8 | |||||
For the Twelve Months Ended | ||||||||||||
December 31, 2008 | ||||||||||||
Income Tax Effect | ||||||||||||
Pre-Tax | ($ in millions) | After Tax | ||||||||||
Other Comprehensive Income/(Loss) | ||||||||||||
Unrealized gains on investments | $ | 25.2 | $ | (5.9 | ) | $ | 19.3 | |||||
Loss on derivatives | 0.2 | — | 0.2 | |||||||||
Change in currency translation | 7.4 | — | 7.4 | |||||||||
Total other comprehensive income/(loss) | $ | 32.8 | $ | (5.9 | ) | $ | 26.9 | |||||
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For the Twelve Months Ended | ||||||||||||
December 31, 2007 | ||||||||||||
Pre-Tax | Income Tax Effect | After Tax | ||||||||||
($ in millions) | ||||||||||||
Other Comprehensive Income/(Loss) | ||||||||||||
Unrealized gains on investments | $ | 91.1 | $ | (16.8 | ) | $ | 74.3 | |||||
Loss on derivatives | 0.2 | — | 0.2 | |||||||||
Change in currency translation | 21.1 | — | 21.1 | |||||||||
Total other comprehensive income/(loss) | $ | 112.4 | $ | (16.8 | ) | $ | 95.6 | |||||
21. | Credit Facility and Senior Notes |
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Payments Due By Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Contractual Basis | Total | 1 year | 1-3 Years | 3-5 Years | 5 years | |||||||||||||||
($ in millions) | ||||||||||||||||||||
Long-Term Debt Obligations | 249.6 | — | — | 249.6 | — |
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22. | Unaudited Quarterly Financial Data |
Twelve Months Ended December 31, 2009 | ||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||||||
2009 | 2009 | 2009 | 2009 | Full Year | ||||||||||||||||
($ in millions except for per share amounts) | ||||||||||||||||||||
Gross written premium | $ | 636.8 | $ | 534.3 | $ | 490.3 | $ | 405.7 | $ | 2,067.1 | ||||||||||
Gross earned premium | 493.2 | 491.3 | 522.2 | 528.7 | 2,035.4 | |||||||||||||||
Net earned premium | 447.3 | 428.6 | 470.9 | 476.2 | 1,823.0 | |||||||||||||||
Losses and loss adjustment expenses | (250.8 | ) | (234.7 | ) | (235.1 | ) | (227.5 | ) | (948.1 | ) | ||||||||||
Policy acquisition, operating and admin expenses | (127.1 | ) | (140.7 | ) | (143.3 | ) | (175.4 | ) | (586.5 | ) | ||||||||||
Underwriting income | $ | 69.4 | $ | 53.2 | $ | 92.5 | $ | 73.3 | $ | 288.4 | ||||||||||
Net investment income | 59.2 | 72.2 | 58.9 | 58.2 | 248.5 | |||||||||||||||
Interest expense | (3.9 | ) | (4.0 | ) | (3.9 | ) | (3.8 | ) | (15.6 | ) | ||||||||||
Other (expense) income | (2.7 | ) | 0.7 | 1.1 | 0.9 | — | ||||||||||||||
Total other operating revenue | $ | 52.6 | $ | 68.9 | $ | 56.1 | $ | 55.3 | $ | 232.9 | ||||||||||
Operating income/(loss) before tax | $ | 122.0 | $ | 122.1 | $ | 148.6 | $ | 128.6 | $ | 521.3 | ||||||||||
Net exchange gains/(losses) | (2.3 | ) | 3.1 | 7.9 | (6.7 | ) | 2.0 | |||||||||||||
Net realized investment gains (losses) | (12.0 | ) | 3.5 | 12.3 | 3.8 | 11.4 | ||||||||||||||
Income before tax | $ | 107.5 | $ | 130.0 | $ | 171.1 | $ | 126.1 | $ | 534.7 | ||||||||||
Income taxes | (16.1 | ) | (19.6 | ) | (25.3 | ) | 0.2 | (60.8 | ) | |||||||||||
Net income after tax | $ | 91.4 | $ | 110.4 | $ | 145.8 | $ | 126.3 | $ | 473.9 | ||||||||||
Ordinary Shares | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Weighted average ordinary shares | 81,534,704 | 82,940,270 | 83,056,587 | 83,239,074 | 82,698,325 | |||||||||||||||
Diluted | ||||||||||||||||||||
Weighted average ordinary shares | 81,534,704 | 82,940,270 | 83,056,587 | 83,239,074 | 82,698,325 | |||||||||||||||
Weighted average effect of dilutive securities | 2,037,148 | 2,705,862 | 2,936,702 | 3,172,155 | 2,628,887 | |||||||||||||||
Total | 83,571,852 | 85,646,132 | 85,993,289 | 86,411,229 | 85,327,212 | |||||||||||||||
Earnings per ordinary shares | ||||||||||||||||||||
Basic | $ | 1.42 | $ | 1.26 | $ | 1.69 | $ | 1.45 | $ | 5.82 | ||||||||||
Diluted | $ | 1.39 | $ | 1.22 | $ | 1.63 | $ | 1.40 | $ | 5.64 | ||||||||||
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Twelve Months Ended December 31, 2008 | ||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||||||
2008 | 2008 | 2008 | 2008 | Full Year | ||||||||||||||||
($ in millions except per share amounts) | ||||||||||||||||||||
Gross written premium | $ | 596.2 | $ | 528.8 | $ | 441.3 | $ | 435.4 | $ | 2,001.7 | ||||||||||
Gross earned premium | 427.3 | 440.4 | 482.9 | 538.5 | 1,889.1 | |||||||||||||||
Net earned premium | 391.6 | 397.3 | 434.2 | 478.6 | 1,701.7 | |||||||||||||||
Losses and loss adjustment expenses | (207.2 | ) | (188.3 | ) | (413.4 | ) | (310.6 | ) | (1,119.5 | ) | ||||||||||
Policy acquisition, operating and admin expenses | (127.2 | ) | (122.1 | ) | (122.0 | ) | (136.1 | ) | (507.4 | ) | ||||||||||
Underwriting income/(loss) | $ | 57.2 | $ | 86.9 | $ | (101.2 | ) | $ | 31.9 | $ | 74.8 | |||||||||
Net investment income | 39.1 | 70.5 | 19.3 | 10.3 | 139.2 | |||||||||||||||
Interest expense | (3.9 | ) | (4.0 | ) | (3.8 | ) | (3.9 | ) | (15.6 | ) | ||||||||||
Other (expense) income | (2.2 | ) | — | 0.6 | (0.5 | ) | (2.1 | ) | ||||||||||||
Total other operating revenue | $ | 33.0 | $ | 66.5 | $ | 16.1 | $ | 5.9 | $ | 121.5 | ||||||||||
Operating income/(loss) before tax | $ | 90.2 | $ | 153.4 | $ | (85.1 | ) | $ | 37.8 | $ | 196.3 | |||||||||
Net exchange gains/(losses) | 4.3 | (5.0 | ) | (2.7 | ) | (4.8 | ) | (8.2 | ) | |||||||||||
Net realized investment losses | 1.0 | 0.8 | (58.1 | ) | 8.4 | (47.9 | ) | |||||||||||||
Income before tax | $ | 95.5 | $ | 149.2 | $ | (145.9 | ) | $ | 41.4 | $ | 140.2 | |||||||||
Income taxes | (14.3 | ) | (22.3 | ) | 19.8 | (19.6 | ) | (36.4 | ) | |||||||||||
Net income after tax | $ | 81.2 | $ | 126.9 | $ | (126.1 | ) | $ | 21.8 | $ | 103.8 | |||||||||
Ordinary Shares | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Weighted average ordinary shares | 85,510,759 | 83,513,097 | 81,375,969 | 81,485,424 | 82,962,882 | |||||||||||||||
Diluted | ||||||||||||||||||||
Weighted average ordinary shares | 85,510,759 | 83,513,097 | 81,375,969 | 81,485,424 | 82,962,882 | |||||||||||||||
Weighted average effect of dilutive securities | 2,446,077 | 2,497,582 | — | 1,938,214 | 2,569,220 | |||||||||||||||
Total | 87,956,836 | 86,010,679 | 81,375,969 | 83,423,638 | 85,532,102 | |||||||||||||||
Earnings per ordinary shares | ||||||||||||||||||||
Basic | $ | 0.87 | $ | 1.44 | $ | (1.63 | ) | $ | 0.18 | $ | 0.92 | |||||||||
Diluted | $ | 0.85 | $ | 1.39 | $ | (1.63 | ) | $ | 0.18 | $ | 0.89 | |||||||||
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Twelve Months Ended December 31, 2007 | ||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||||||
2007 | 2007 | 2007 | 2007 | Full Year | ||||||||||||||||
($ in millions except per share amounts) | ||||||||||||||||||||
Gross written premium | $ | 636.5 | $ | 503.5 | $ | 373.5 | $ | 305.0 | $ | 1,818.5 | ||||||||||
Gross earned premium | 474.0 | 482.1 | 473.1 | 474.1 | 1,903.3 | |||||||||||||||
Net earned premium | 439.0 | 451.2 | 419.7 | 423.7 | 1,733.6 | |||||||||||||||
Losses and loss adjustment expenses | (225.5 | ) | (272.7 | ) | (219.9 | ) | (201.7 | ) | (919.8 | ) | ||||||||||
Policy acquisition, operating and admin expenses | (123.0 | ) | (126.1 | ) | (134.7 | ) | (134.9 | ) | (518.7 | ) | ||||||||||
Underwriting income | $ | 90.5 | $ | 52.4 | $ | 65.1 | $ | 87.1 | $ | 295.1 | ||||||||||
Net investment income | 67.5 | 78.8 | 72.4 | 80.3 | 299.0 | |||||||||||||||
Interest expense | (4.2 | ) | (4.4 | ) | (4.2 | ) | (2.9 | ) | (15.7 | ) | ||||||||||
Other (expense) | (7.3 | ) | 1.9 | (2.7 | ) | (3.8 | ) | (11.9 | ) | |||||||||||
Total other operating revenue | $ | 56.0 | $ | 76.3 | $ | 65.5 | $ | 73.6 | $ | 271.4 | ||||||||||
Operating income before tax | $ | 146.5 | $ | 128.7 | $ | 130.6 | $ | 160.7 | $ | 566.5 | ||||||||||
Net exchange gains/(losses) | 5.5 | 8.0 | 9.2 | (2.1 | ) | 20.6 | ||||||||||||||
Net realized investment losses | (4.8 | ) | (5.6 | ) | (1.9 | ) | (0.8 | ) | (13.1 | ) | ||||||||||
Income before tax | $ | 147.2 | $ | 131.1 | $ | 137.9 | $ | 157.8 | $ | 574.0 | ||||||||||
Income tax | (25.3 | ) | (16.4 | ) | (20.7 | ) | (22.6 | ) | (85.0 | ) | ||||||||||
Net income after tax | $ | 121.9 | $ | 114.7 | $ | 117.2 | $ | 135.2 | $ | 489.0 | ||||||||||
Ordinary Shares | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Weighted average ordinary shares | 87,819,188 | 88,204,654 | 88,712,178 | 86,503,072 | 87,807,811 | |||||||||||||||
Diluted | ||||||||||||||||||||
Weighted average ordinary shares | 87,819,188 | 88,204,654 | 88,712,178 | 86,503,072 | 87,807,811 | |||||||||||||||
Weighted average effect of dilutive securities | 2,668,510 | 2,621,906 | 2,369,587 | 2,707,873 | 2,547,402 | |||||||||||||||
Total | 90,487,698 | 90,826,560 | 91,081,765 | 89,210,945 | 90,355,213 | |||||||||||||||
Earnings per ordinary shares | ||||||||||||||||||||
Basic | $ | 1.31 | $ | 1.22 | $ | 1.24 | $ | 1.48 | $ | 5.25 | ||||||||||
Diluted | $ | 1.27 | $ | 1.19 | $ | 1.21 | $ | 1.44 | $ | 5.11 | ||||||||||
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Page | ||||
S-2 | ||||
S-3 | ||||
S-4 | ||||
S-7 | ||||
S-8 | ||||
Schedule V — Valuation and Qualifying Accounts | S-9 |
S-1
Table of Contents
KPMG Audit Plc
London, United Kingdom
February 26, 2010
S-2
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S-3
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As at | As at | |||||||
December 31, 2009 | December 31, 2008 | |||||||
($ in millions, except per share amounts) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 33.5 | $ | 32.4 | ||||
Investments in subsidiaries | 2,747.2 | 2,536.9 | ||||||
Eurobond issued by subsidiary | 550.0 | 550.0 | ||||||
Intercompany funds due from affiliates | 233.1 | — | ||||||
Other assets | 11.4 | 19.6 | ||||||
Total Assets | $ | 3,575.2 | $ | 3,138.9 | ||||
LIABILITIES | ||||||||
Accrued expenses and other payables | 20.2 | 26.2 | ||||||
Intercompany funds due to affiliates | — | 84.1 | ||||||
Long-Term Debt | 249.6 | 249.5 | ||||||
Total Liabilities | $ | 269.8 | $ | 359.8 | ||||
SHAREHOLDERS’ EQUITY | ||||||||
Ordinary shares: 81,506,503 ordinary shares of 0.15144558¢ each (2008 — 85,510,673) | 0.1 | 0.1 | ||||||
Preference Shares: 4,600,000 5.625% shares of par value 0.15144558¢ each (2008 — 4,600,000) | — | — | ||||||
8,000,000 7.401% shares of par value 0.15144558¢ each (2008 — 8,000,000) | — | — | ||||||
Additional paid in capital | 1,763.0 | 1,754.8 | ||||||
Retained earnings | 1,285.0 | 884.7 | ||||||
Accumulated other comprehensive income, net of taxes | ||||||||
Unrealized gains on investments | 155.1 | 53.3 | ||||||
Loss on derivatives | (1.2 | ) | (1.4 | ) | ||||
Gains on foreign currency translation | 103.4 | 87.6 | ||||||
Total accumulated other comprehensive income | 257.3 | 139.5 | ||||||
Total Shareholders’ Equity | 3,305.4 | 2,779.1 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 3,575.2 | $ | 3,138.9 | ||||
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Table of Contents
For the Twelve Months Ended December 31, 2009, 2008 and 2007
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | ||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||
($ in millions) | ||||||||||||
Operating Activities: | ||||||||||||
Equity in net earnings of subsidiaries | $ | 65.6 | $ | 33.5 | $ | 353.1 | ||||||
Net investment income | — | 1.1 | 2.3 | |||||||||
Net realized and unrealized gains | 0.9 | — | — | |||||||||
Dividend income | 401.0 | 70.0 | 142.0 | |||||||||
Interest on Eurobond | 36.5 | 36.5 | 28.6 | |||||||||
Change in fair value of derivatives | (8.0 | ) | (7.8 | ) | (9.0 | ) | ||||||
Other income | 7.2 | 6.5 | 8.3 | |||||||||
Total Revenues | 503.2 | 139.8 | 525.3 | |||||||||
Expenses: | ||||||||||||
Operating and Administrative expenses | (13.7 | ) | (20.4 | ) | (20.7 | ) | ||||||
Interest expense | (15.6 | ) | (15.6 | ) | (15.6 | ) | ||||||
Income from operations before income tax | 473.9 | 103.8 | 489.0 | |||||||||
Income tax | — | — | — | |||||||||
Net Income | 473.9 | 103.8 | 489.0 | |||||||||
Other comprehensive income/(loss), net of taxes: | ||||||||||||
Change in unrealized losses on investments | 101.8 | 19.3 | 74.3 | |||||||||
Loss on derivatives reclassified to interest expense | 0.2 | 0.2 | 0.2 | |||||||||
Change in unrealized gains on foreign currency translation | 15.8 | 7.4 | 21.1 | |||||||||
Other comprehensive income | 117.8 | 26.9 | 95.6 | |||||||||
Comprehensive income | $ | 591.7 | $ | 130.7 | $ | 584.6 | ||||||
S-5
Table of Contents
For the Twelve Months Ended December 31, 2009, 2008 and 2007
Twelve Months | Twelve Months | Twelve Months | ||||||||||
Ended | Ended | Ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in millions) | ||||||||||||
Cash Flows Provided By Operating Activities: | ||||||||||||
Net income (excluding equity in net earnings of subsidiaries) | $ | 408.3 | $ | 70.3 | $ | 135.9 | ||||||
Adjustments: | ||||||||||||
Share based compensation expenses | 17.2 | 7.0 | 12.8 | |||||||||
Net realized and unrealized (gains) | (0.9 | ) | ||||||||||
Loss on derivative reclassified to interest expense | 0.2 | 0.2 | 0.1 | |||||||||
Change in other assets | 1.1 | 1.1 | 7.9 | |||||||||
Change in accrued expenses and other payables | — | 1.4 | (7.5 | ) | ||||||||
Change in intercompany activities | (317.2 | ) | 111.5 | 141.8 | ||||||||
Net cash generated by/(used in) operating activities | 108.7 | 191.5 | 291.0 | |||||||||
Cash Flows Used in Investing Activities: | ||||||||||||
Investment in subsidiaries | — | (0.8 | ) | — | ||||||||
(Purchase) of other investments | (25.0 | ) | — | — | ||||||||
Investment in Eurobond issued by subsidiary | — | — | (150.0 | ) | ||||||||
Net cash used for investing activities | — | (0.8 | ) | (150.0 | ) | |||||||
Cash Flows Used in Financing Activities: | ||||||||||||
Proceeds from the issuance of ordinary shares, net of issuance costs | 25.1 | 2.0 | 12.8 | |||||||||
Ordinary share repurchase | — | (100.3 | ) | (101.2 | ) | |||||||
Costs from the redemption of preference shares | (34.1 | ) | — | — | ||||||||
Dividends paid | (73.6 | ) | (77.9 | ) | (80.7 | ) | ||||||
Net cash (used in)/generated by financing activities | (82.6 | ) | (176.2 | ) | (169.1 | ) | ||||||
(Decrease)/increase in cash and cash equivalents | 1.1 | 14.5 | (28.1 | ) | ||||||||
Cash and cash equivalents — beginning of period | 32.4 | 17.9 | 46.0 | |||||||||
Cash and cash equivalents — end of period | $ | 33.5 | $ | 32.4 | $ | 17.9 | ||||||
S-6
Table of Contents
Net | ||||||||||||||||||||||||||||||||||||
Reserves | Net | Amortization | ||||||||||||||||||||||||||||||||||
Deferred | for Losses | Reserves | Losses and | of Deferred | Operating | |||||||||||||||||||||||||||||||
Policy | and Loss | for | Net | Loss | Policy | Net | and | |||||||||||||||||||||||||||||
Acquisition | Adjustment | Unearned | Net Premiums | Investment | Expenses | Acquisition | Premiums | Administrative | ||||||||||||||||||||||||||||
Year Ended December 31, 2009 | Costs | Expenses | Premiums | Earned | Income | Incurred | Costs | Written | Expenses | |||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||||
Property Reinsurance | $ | 44.4 | $ | 355.2 | $ | 221.9 | $ | 560.0 | $ | 121.7 | $ | 111.8 | $ | 591.1 | $ | 78.1 | ||||||||||||||||||||
Casualty Reinsurance | 26.6 | 1,512.5 | 165.7 | 435.7 | 293.4 | 82.7 | 410.0 | 42.8 | ||||||||||||||||||||||||||||
International Insurance | 79.9 | 992.4 | 353.3 | 726.1 | 443.6 | 122.6 | 723.4 | 98.3 | ||||||||||||||||||||||||||||
U.S. Insurance | 14.6 | 149.5 | 62.9 | 101.2 | 89.4 | 17.0 | 112.3 | 33.2 | ||||||||||||||||||||||||||||
Total | $ | 165.5 | $ | 3,009.6 | $ | 803.8 | $ | 1,823.0 | $ | 248.5 | $ | 948.1 | $ | 334.1 | $ | 1,836.8 | $ | 252.4 | ||||||||||||||||||
Net | Amortization | |||||||||||||||||||||||||||||||||||
Reserves | Net | of | ||||||||||||||||||||||||||||||||||
Deferred | for Losses | Reserves | Losses and | Deferred | Operating | |||||||||||||||||||||||||||||||
Policy | and Loss | for | Net | Loss | Policy | Net | and | |||||||||||||||||||||||||||||
Acquisition | Adjustment | Unearned | Net Premiums | Investment | Expenses | Acquisition | Premiums | Administrative | ||||||||||||||||||||||||||||
Year Ended December 31, 2008 | Costs | Expenses | Premiums | Earned | Income | Incurred | Costs | Written | Expenses | |||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||||
Property Reinsurance | $ | 41.7 | $ | 3 80.7 | $ | 222.1 | $ | 532.4 | $ | 314.7 | $ | 105.0 | $ | 564.1 | $ | 65.7 | ||||||||||||||||||||
Casualty Reinsurance | 26.0 | 1.308.8 | 172.7 | 413.5 | 272.2 | 65.4 | 412.90 | 43.2 | ||||||||||||||||||||||||||||
International Insurance | 68.3 | 1,003.7 | 322.8 | 661.8 | 473.5 | 113.4 | 757.8 | 74.4 | ||||||||||||||||||||||||||||
U.S. Insurance | 13.7 | 93.8 | 46.8 | 94.0 | 59.1 | 15.5 | 100.7 | 24.8 | ||||||||||||||||||||||||||||
Total | $ | 149.7 | $ | 2,787.0 | $ | 764.4 | $ | 1,701.7 | $ | 139.2 | $ | 1,119.5 | $ | 299.3 | $ | 1,835.5 | $ | 208.1 | ||||||||||||||||||
Net | Amortization | |||||||||||||||||||||||||||||||||||
Reserves | Net | of | ||||||||||||||||||||||||||||||||||
Deferred | for Losses | Reserves | Losses and | Deferred | Operating | |||||||||||||||||||||||||||||||
Policy | and Loss | for | Net | Loss | Policy | Net | and | |||||||||||||||||||||||||||||
Acquisition | Adjustment | Unearned | Net Premiums | Investment | Expenses | Acquisition | Premiums | Administrative | ||||||||||||||||||||||||||||
Year Ended December 31, 2007 | Costs | Expenses | Premiums | Earned | Income | Incurred | Costs | Written | Expenses | |||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||||
Property Reinsurance | $ | 41.9 | $ | 459.3 | $ | 182.1 | $ | 555.6 | — | $ | 220.7 | $ | 117.4 | $ | 495.0 | $ | 65.3 | |||||||||||||||||||
Casualty Reinsurance | 28.7 | 1,262.6 | 187.1 | 475.3 | — | 332.1 | 69.6 | 425.1 | 47.9 | |||||||||||||||||||||||||||
International Insurance | 52.7 | 860.0 | 270.3 | 597.2 | — | 308.9 | 105.7 | 590.1 | 67.2 | |||||||||||||||||||||||||||
U.S. Insurance | 10.6 | 59.4 | 41.1 | 105.5 | — | 58.1 | 21.2 | 91.2 | 24.4 | |||||||||||||||||||||||||||
Total | $ | 133.9 | $ | 2,641.3 | $ | 680.6 | $ | 1,733.6 | $ | 299.0 | $ | 919.8 | $ | 313.9 | $ | 1,601.4 | $ | 204.8 | ||||||||||||||||||
S-7
Table of Contents
Direct | Assumed | Ceded | Net Amount | |||||||||||||
($ in millions) | ||||||||||||||||
2009 | $ | 641.6 | $ | 1,425.4 | $ | (230.3 | ) | $ | 1,836.7 | |||||||
2008 | $ | 624.6 | $ | 1,377.1 | $ | (166.2 | ) | $ | 1,835.5 | |||||||
2007 | $ | 681.1 | $ | 1,137.4 | $ | (217.1 | ) | $ | 1,601.4 |
Percentage of | ||||||||||||||||||||
Assumed From | Amount | |||||||||||||||||||
Ceded to Other | Other | Assumed | ||||||||||||||||||
Gross Amount | Companies | Companies | Net Amount | to Net | ||||||||||||||||
($ in millions. except for percentages) | ||||||||||||||||||||
2009 | $ | 616.2 | $ | (212.4 | ) | $ | 1,419.2 | $ | 1,823.0 | 77.8 | % | |||||||||
2008 | $ | 505.1 | $ | (187.4 | ) | $ | 1,384.0 | $ | 1,701.7 | 81.3 | % | |||||||||
2007 | $ | 692.9 | $ | (169.7 | ) | $ | 1,210.4 | $ | 1,733.6 | 69.8 | % |
S-8
Table of Contents
Balance at | Charged to | Charged to | ||||||||||||||||||
Beginning of | Costs and | Other | Balance at | |||||||||||||||||
Year | Expenses | Accounts | Deductions | End of Year | ||||||||||||||||
2009 | ||||||||||||||||||||
Premiums receivable from underwriting activities | — | $ | 1.4 | — | — | $ | 1.4 | |||||||||||||
Reinsurance | $ | 0.2 | — | — | — | $ | 0.2 | |||||||||||||
2008 | ||||||||||||||||||||
Premiums receivable from underwriting activities | — | — | — | — | — | |||||||||||||||
Reinsurance | $ | 0.2 | — | — | — | $ | 0.2 | |||||||||||||
2007 | ||||||||||||||||||||
Premiums receivable from underwriting activities | — | — | — | — | — | |||||||||||||||
Reinsurance | $ | 0.2 | — | — | — | $ | 0.2 |
S-9