Q2 2011 EARNINGS CONFERENCE CALL Aspen Insurance Holdings Limited July 28, 2011 AHL: NYSE Exhibit 99.3 |
AHL: NYSE 2 SAFE HARBOR DISCLOSURE This slide presentation is for information purposes only. It should be read in conjunction with our financial supplement posted on our website on the Investor Relations page and with other documents filed or to be filed shortly by Aspen Insurance Holdings Limited (the “Company” or “Aspen”) with the U.S. Securities and Exchange Commission. Non-GAAP Financial Measures In presenting Aspen's results, management has included and discussed certain "non-GAAP financial measures", as such term is defined in Regulation G. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain Aspen's results of operations in a manner that allows for a more complete understanding of the underlying trends in Aspen's business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP. The reconciliation of such non-GAAP financial measures to their respective most directly comparable GAAP financial measures in accordance with Regulation G is included Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995: This presentation contains, and Aspen's earnings conference call will contain, written or oral "forward-looking statements" within the meaning of the U.S. federal securities laws. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "expect," "intend," "plan," "believe," “do not believe,” “aim,” "project," "anticipate," "seek," "will," "estimate," "may," "continue," “guidance,” and similar expressions of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements. Aspen believes these factors include, but are not limited to: 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 and any intervening legislative or governmental action; the effectiveness of our loss limitation methods; changes in the total industry losses, or our share of total industry losses, resulting from past events 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; 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 Company, Inc. (“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. For a more detailed description of these uncertainties and other factors, please see the "Risk Factors" section in Aspen's Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission on February 25, 2011. Aspen undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. In addition, any estimates relating to loss events involve the exercise of considerable judgment in the setting of reserves and reflect a combination of ground-up evaluations, information available to date from brokers and cedants, market intelligence, initial tentative loss reports and other sources. The actuarial range of reserves and management's best estimate represents a distribution from our internal capital model for reserving risk based on our then current state of knowledge and explicit and implicit assumptions relating to the incurred pattern of claims, the expected ultimate settlement amount, inflation and dependencies between lines of business. Due to the complexity of factors contributing to the losses and the preliminary nature of the information used to prepare these estimates and reserves, there can be no assurance that Aspen’s ultimate losses will remain within the stated amounts. herein or in the financial supplement, as applicable, which can be obtained from the Investor Relations section of Aspen's website at www.aspen.bm. |
AHL: NYSE FINANCIAL HIGHLIGHTS: Q2 2011 AHL: NYSE 3 (US$ in millions, except per share data) (*) Note: See Aspen's quarterly financial supplement for a reconciliation of operating income to net income, average equity to closing shareholders’ equity and diluted book value per share to basic book value per share in the Investor Relations section of Aspen's website at www.aspen.bm Quarter Ended June 30 2011 2010 Change Gross Written Premiums 582.2 545.4 6.7% Net Written Premiums 525.7 538.8 (2.4%) Net Earned Premiums 459.8 479.9 (4.2%) Underwriting Income / (Loss) (22.9) 62.8 (136.5%) Net Investment Income 58.6 57.5 1.9% Net Income / (Loss) after Tax 10.2 108.9 (90.6%) Financial Ratios Loss Ratio 71.0% 57.7% - Expense Ratio 34.0% 29.2% - Combined Ratio 105.0% 86.9% - Annualized Operating ROE* 4.4% 15.6% - Operating EPS* 0.36 1.23 (70.7%) Diluted Book Value per Share* 37.43 36.96 1.3% |
AHL: NYSE FINANCIAL HIGHLIGHTS: H1 2011 AHL: NYSE 4 (US$ in millions, except per share data) (*) Note: See Aspen's quarterly financial supplement for a reconciliation of operating income to net income, average equity to closing shareholders’ equity and diluted book value per share to basic book value per share in the Investor Relations section of Aspen's website at www.aspen.bm Six Months Ended June 30 2011 2010 Change Gross Written Premiums 1,253.5 1,248.2 0.4% Net Written Premiums 1,035.3 1,118.9 (7.5%) Net Earned Premiums 912.2 947.5 (3.7%) Underwriting Income (242.2) 14.6 NM Net Investment Income 114.1 116.9 (2.4%) Net Income after Tax (141.5) 127.2 (211.2%) Financial Ratios Loss Ratio 93.8% 69.2% - Expense Ratio 32.8% 29.2% - Combined Ratio 126.6% 98.4% - Annualized Operating ROE* (11.4%) 7.8% - Operating EPS* (1.98) 1.24 (259.7%) Diluted Book Value per Share* 37.43 36.96 1.3% |
AHL: NYSE GROWTH IN BOOK VALUE PER SHARE AND NET INCOME ROE AHL: NYSE 5 (*) Note: See Aspen's quarterly financial supplement for a reconciliation of average equity to closing shareholders’ equity and diluted book value per share to basic book value per share in the Investor Relations section of Aspen's website at www.aspen.bm 0 5 10 15 20 25 30 35 40 45 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -30% -20% -10% 0% 10% 20% 30% 40% BVPS(LH Scale) Annualized Net Income ROE (RH Scale)* 2006 2007 2009 2008 2010 2011 |
AHL: NYSE BUSINESS PERFOMANCE AND MARKET OUTLOOK : Q2 2011 Information reflecting Aspen’s portfolios as at June 30, 2011 Key located on page 21 6 Reinsurance Q3'10 Q4'10 Q1'11 Q2'11 Q3'10 Q4'10 Q1'11 Q2'11 Q3'10 Q4'10 Q1'11 Q2'11 Q3'10 Q4'10 Q1'11 Q2'11 Q3'10 Q4'10 Q1'11 Q2'11 Q3'10 Q4'10 Q1'11 Q2'11 Property Catastrophe Reinsurance Other Property Reinsurance Casualty Reinsurance Specialty Reinsurance Insurance Property Insurance Casualty Insurance Marine, Energy & Transportation Insurance Financial & Professional Lines Insurance Marine Hull Aviation Information Reflecting Aspen's Current InforcePortfolios as 30th June 2011 Specie Financial Institutions Professional Lines Insurance (UK) Financial & Political Risks Insurance Professional Indemnity Insurance (US) Excess Casualty Insurance US Casualty E&S Insurance MEC Liability Energy Property UK Commercial Property & Construction Agriculture US Property (E&S) UK Liability Insurance US Casualty Treaty Global Casualty Facultative Credit and Surety Reinsurance Specialty Reinsurance Treaty Catastrophe Treaty Risk Excess Treaty Pro Rata Global Property Facultative International Casualty Treaty Terms & Conditions 4 Volume change 5 Outlook 6 Performance 1 Absolute Pricing 2 Relative Price Movement 3 *MEC - Marine, Energy & Construction 1 - 12 months rolling RORAC 2 - Ratio In force Actual to Technical (or modelled) price 3 - Relative Price Movement for all in-force renewed contracts 4 - Terms and Conditions 5 - Change in rolling GWP for last 4 quarters vs. rolling GWP from previous 4 quarters 6 - Outlook (Absolute Pricing * Forecast Relative Price Movement) |
AHL: NYSE FINANCIAL HIGHLIGHTS: GROUP SUMMARY Q2 2011 AHL: NYSE 7 Reinsurance 51.5 44.6 80.7 70.9 79.5 91.2 93.0 59.9 0 100 200 300 400 Q2 2010 Q2 2011 Property Catastrophe Casualty Other Property Specialty 283.3 288.0 Total 283.3 288.0 262.1 294.2 0 200 400 600 800 Q2 2010 Q2 2011 Aspen Re Aspen Insurance 545.4 582.2 Insurance 69.3 73.6 44.7 32.9 118.1 130.3 57.4 30.0 0 100 200 300 400 Q2 2010 Q2 2011 Property Casualty Marine, Energy and Transportation Financial and Professional Lines 262.1 294.2 |
AHL: NYSE FINANCIAL HIGHLIGHTS: GROUP SUMMARY H1 2011 8 Reinsurance 237.4 244.0 226.0 183.2 154.4 135.7 162.2 155.6 0 200 400 600 800 1000 YTD 2010 YTD 2011 Property Catastrophe Casualty Reinsurance Other Property Reinsurance Specialty Reinsurance 773.4 725.1 Insurance 106.0 112.2 81.9 52.5 228.7 254.1 58.2 109.6 0 200 400 600 YTD 2010 YTD 2011 Property Casualty Marine, Energy and Transportation Financial and Professional Lines 474.8 528.4 Total 528.4 725.1 773.4 474.8 0 500 1000 1500 YTD 2010 YTD 2011 Aspen Re Aspen Insurance 1,248.2 1,253.5 |
AHL: NYSE FINANCIAL HIGHLIGHTS: GROUP SUMMARY Q2 2011 Q2 2010 Q2 2011 9 Underwriting Revenues 545 6 539 480 582 56 526 460 0 200 400 600 800 GWP Premiums Ceded NWP NEP Expenses 277 78 52 10 417 326 87 14 483 56 0 200 400 600 Loss & Loss Expenses Acquisition Expenses General Admin Expenses Corporate Expenses Total Expenses Income 118 121 109 92 35 11 10 (6) -40 0 40 80 120 160 Operating Income Before Tax Income Before Tax Income After Tax Retained Income Contribution 63 58 (23) 59 -40 -20 0 20 40 60 80 Underwriting Income Net Investment Income |
Underwriting Revenues 1,248 129 1,119 948 1,254 219 1,035 912 0 200 400 600 800 1,000 1,200 1,400 GWP Premiums Ceded NWP NEP Expenses 656 162 95 20 933 855 168 109 1,154 22 0 400 800 1,200 1,600 Loss & Loss Expenses Acquisition Exp Admin Expenses Corporate Expenses Total Underwriting Expenses Income 125 141 127 92 (145) (157) (142) (174) -200 -100 0 100 200 Operating Income Before Tax Income Before Tax Income After Tax Retained Income Contribution 15 117 (242) 114 -300 -200 -100 0 100 200 Underwriting Income Net Investment Income AHL: NYSE FINANCIAL HIGHLIGHTS: GROUP SUMMARY H1 2011 H1 2010 H1 2011 10 General |
AHL: NYSE KEY PERFORMANCE METRICS: Q2 2011 AND H1 2011 Q2 2010 Q2 2011 H1 2010 H1 2011 11 Ratio Analysis 69.2 17.1 12.1 98.4 93.8 18.4 14.4 126.6 0 20 40 60 80 100 120 140 Loss Ratio Acquisition Expense Ratio General, Administrative and Corporate Expense Ratio Combined Ratio Ratio Analysis 57.7 16.2 13.0 86.9 71.0 18.9 15.1 105.0 0 20 40 60 80 100 120 Loss Ratio Acquisition Expense Ratio General, Administrative and Corporate Expense Ratio Combined Ratio |
AHL: NYSE RESULTS BY BUSINESS SEGMENT: Q2 2011 (*) Underwriting income is calculated as underwriting revenues, less underwriting expenses. Q2 2010 Q2 2011 GWP 283 262 288 294 240 250 260 270 280 290 300 Reinsurance Insurance Underwriting Income * 67 6 5 (14) -20 0 20 40 60 80 Reinsurance Insurance 12 |
AHL: NYSE RESULTS BY BUSINESS SEGMENT: H1 2011 (*) Underwriting income is calculated as underwriting revenues, less underwriting expenses. GWP 773 475 725 529 0 100 200 300 400 500 600 700 800 900 Reinsurance Insurance Underwriting Income * 27 5 8 (226) -240 -190 -140 -90 -40 10 60 Reinsurance Insurance 13 H1 2010 H1 2011 |
AHL: NYSE KEY PERFORMANCE METRICS: Q2 2011 14 Reinsurance (10.4)% (7.0)% 91 .4% 83.8% 24.2% -50% 0% 50% 100% 150% Q2 2010 Q2 2011 Prior year adj. Adj. AY Combined Ratio Catastrophe losses 76.8% 105.2% Insurance 5.3% (2.1)% 91.6% 94.9% 4.6% -50% 0% 50% 100% 150% Q2 2010 Q2 2011 Prior year adj. Adj. AY Combined Ratio Catastrophe losses 97.4% 96.9% Total (7.0)% (2.2)% 96.2 % 89.1% 15.8% -50% 0% 50% 100% 150% Q2 2010 Q2 2011 Prior year adj. Adj. AY Combined Ratio Catastrophe losses 105.0% 86.9% |
AHL: NYSE KEY PERFORMANCE METRICS: H1 2011 15 Reinsurance 86.2% 19.8% (6.9)% (8.9)% 82.5% 64.4% -50% 0% 50% 100% 150% H1 2010 H1 2011 Prior year adj. Adj. AY Combined Ratio Catastrophe losses 95.4% 141.7% Insurance 98.0% 95.4% 2.4% -50% 0% 50% 100% 150% H1 2010 H1 2011 Prior year adj. Adj. AY Combined Ratio Catastrophe losses 98.6% 97.8% Total 93.6% (3.3)% (5.9)% 89.7% 12.0% 38.9% -50% 0% 50% 100% 150% H1 2010 H1 2011 Prior year adj. Adj. AY Combined Ratio Catastrophe losses 126.6% 98.4% 2.4% (1.8%) |
AHL: NYSE FINANCIAL HIGHLIGHTS: TOTAL INVESTMENT RETURN – Q2 2011 16 58 6 82 146 59 10 121 - 52 0 30 60 90 120 150 180 Net Investment Income Realized Investment Gains/Losses Other-Than-Temporary Impairment Charges Movement in Unrealized Investment Gains/Losses Total Investment Return Q2 2010 Q2 2011 Annualized Total Investment Return for the Quarter of 6.5% |
AHL: NYSE FINANCIAL HIGHLIGHTS: TOTAL INVESTMENT RETURN – H1 2011 17 117 18 108 114 18 19 151 243 -50 0 50 100 150 200 250 300 Net Investment Income Realized Investment Gains/Losses Other-Than-Temporary Impairment Charges Movement in Unrealized Investment Gains/Losses Total Investment Return H1 2010 H1 2011 Annualized Total Investment Return for the Six Months of 4.1% |
AHL: NYSE FIXED INCOME PORTFOLIO BY ASSET TYPE (US$ in millions) ASSETS : INVESTMENT PORTFOLIO JUNE 30, 2011 TOTAL INVESTMENT PORTFOLIO AT MARKET VALUE 7,457.8 Short-term Securities 202.8 783.4 66.1 1,789.5 Equities 178.1 284.9 1,288.4 111.8 Cash and Cash Equivalents 1,074.1 754.4 107.2 559.9 193.5 Other Investments (Iris Re) 30.0 33.7 Q2 2011 1,485.0 1,822.7 1,461.7 2,688.4 Q1 2011 1,508.1 1,822.3 1,397.4 2,676.4 Unsecured Credit Municipal bonds Bonds backed by foreign government Foreign governments Non-Agency Rated Commercial Mortgage- backed securities Asset-backed securities FDIC Guaranteed Corporate bonds Foreign corporates Corporate bonds Agency Debentures Agency Rated Mortgage- backed securities (GNMA, FNMA, FHLB) U.S. Government Cash, Short-Term Securites and Other Government/Agency Structured Securities 18 |
AHL: NYSE ASPEN’S MODELLED WORLDWIDE NATURAL CATASTROPHE EXPOSURES – MAJOR PERIL ZONES 19 • 1 in 100 Year Tolerance: 17.5% of Total Shareholders’ Equity • 1 in 250 Year Tolerance: 25% of Total Shareholders’ Equity 16.3% 10.4% 10.1% 8.3% 3.8% 1.7% 0% 5% 10% 15% 20% US All Wind Japan All Perils European Wind California EQ US Pacific NW EQ US Eastern EQ 100 year return period as % of Total Shareholders' Equity 20.5% 13.7% 12.8% 12.3% 6.7% 6.3% 0% 5% 10% 15% 20% 25% US All Wind European Wind Japan All Perils California EQ US Pacific NW EQ US Eastern EQ 250 year return period as % of Total Shareholders' Equity Source: Aspen analysis using RMS v11.0 occurrence exceedance probability as at July 1, 2011 and Shareholders’ Equity of $3,104.6 million at June 30, 2011. US Wind is a blend of RMS v11 and AIR v12.5 weighted 50% for each model. European Wind remains based on RMS v10 given v11 for this peril has only just been released and is currently being tested |
AHL: NYSE 2011 GUIDANCE 20 Actual 2010 Results Initial Guidance Revised Guidance April 28, 2011 Revised Guidance July 28, 2011 Gross Written Premium $2.1 billion $2.1 billion ± 5% $2.1 billion ± 5% $2.1 billion ± 5% % Premium Ceded 9.3% of GEP 8% - 12% of GEP 10% -14% of GEP 11% -14% of GEP Combined Ratio 96.7% 93% -98% 105% - 110% 109% - 114% Tax Rate 8.1% 8% to 12% 8% to 12% 8% to 12% Remaining Cat-Load $181 million $170 million (assuming normal loss experience) $140 million (assuming normal loss experience) $110 million (assuming normal loss experience) February 8, 2011 |
AHL: NYSE BUSINESS PERFORMANCE AND MARKET OUTLOOK: KEY Key Performance Absolute Pricing Relative Price Movement Terms and Conditions Volume change Outlook 1 2 3 4 5 6 Excellent Excellent Significantly Up Excellent Significantly Up Excellent Good Good Up Good Up Good Satisfactory Satisfactory Flat Satisfactory Flat Satisfactory Of Concern Of Concern Down Of Concern Down Of Concern Unsatisfactory Unsatisfactory Significantly Down Unsatisfactory Significantly Down Unsatisfactory 21 |