Aspen Insurance Holdings Limited
Richard Houghton
Chief Financial Officer
September 2007
Exhibit 99.1
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 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.
Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:
This presentation contains 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,” “project,” “anticipate,” “seek,” “will,” “estimate,” “may,” , “guidance”, “continue,” and similar expressions of a future or forward-looking nature.
In addition, any estimates relating to loss events involve the exercise of considerable judgment 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. Due to the complexity of factors contributing to the losses and the preliminary nature of the information used to prepare estimates relating to the UK floods, there can be no assurance that Aspen’s ultimate losses associated with these floods will remain within the stated amount.
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: changes in the total industry losses resulting from the UK and Australian floods and Hurricanes Katrina, Rita and Wilma and the actual number of Aspen’s insureds incurring losses from these events; with respect to the UK and Australian floods and Hurricanes Katrina, Rita and Wilma, Aspen’s reliance on loss reports received from cedants and loss adjustors, Aspen’s reliance on industry loss estimates and those generated by modeling techniques, the impact of these events on Aspen’s reinsurers, any changes in Aspen’s reinsurers’ credit quality, the amount and timing of reinsurance recoverables and reimbursements actually received by Aspen from its reinsurers and the overall level of competition and the related demand and supply dynamics as contracts come up for renewal; the impact that our future operating results, capital position and rating agency and other considerations have on the execution of any capital management initiatives; the impact of any capital management activities on our financial condition; the impact of acts of terrorism and related legislation and acts of war; the possibility of greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events than our underwriting, reserving or investment practices have anticipated; evolving interpretive issues with respect to coverage as a result of Hurricanes Katrina, Rita and Wilma and any other events such as the UK floods; the level of inflation in repair costs due to limited availability of labor and materials after catastrophes; the effectiveness of Aspen’s loss limitation methods; changes in the availability, cost or quality of reinsurance or retrocessional coverage, which may affect our decision to purchase such coverage; the reliability of, and changes in assumptions to, catastrophe pricing, accumulation and estimated loss models; loss of key personnel; a decline in our operating subsidiaries’ ratings with Standard & Poor’s, A.M. Best Company or Moody’s Investors Service; changes in general economic conditions including inflation, foreign currency exchange rates, interest rates and other factors that could affect our investment portfolio; the number and type of insurance and reinsurance contracts that we wrote at the January 1st and other renewal periods in 2007 and the premium rates available at the time of such renewals within our targeted business lines; increased competition on the basis of pricing, capacity, coverage terms or other factors; decreased demand for Aspen’s insurance or reinsurance products and cyclical downturn of the industry; changes in governmental regulations, interpretations or tax laws in jurisdictions where Aspen conducts business; proposed and future changes to insurance laws and regulations, including with respect to U.S. state- and other government-sponsored reinsurance funds and primary insurers; Aspen or its Bermudian subsidiary becoming subject to income taxes in the United States or the United Kingdom; the effect on insurance markets, business practices and relationships of ongoing litigation, investigations and regulatory activity by the New York State Attorney General’s office and other authorities concerning contingent commission arrangements with brokers and bid solicitation activities. For a more detailed description of these uncertainties and other factors, please see the “Risk Factors” section in Aspen’s Annual Reports on Form 10-K as filed with the U.S. Securities and Exchange Commission on February 22, 2007. 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.
2
Contents
Aspen at a Glance
The Aspen Story
How have we diversified?
How do we manage?
Risk
Investments
Balance Sheet
How do we view the market?
What are we delivering?
Appendices
3
3%
3%
11%
51%
1%
25%
6%
Asia & Australia
Europe
UK
US & Canada
Worldwide Ex US
Worldwide inc US
Other
24%
26%
17%
33%
Prop Re
Casualty Re
Specialty Lines
Insurance
Aspen at a Glance
Underwriting Segment (GWP)
Geographical split of GWP**
*Shareholders’ equity plus long-term debt
** By location of cedant
$2.25bn market cap (August 30, 2007)
$2.2bn common equity and $2.8bn total capital* (June 30, 2007)
Over 450 employees in Bermuda, UK, US, France and Switzerland
Ratings of A (S&P), A2 (Moody’s) and A / A- (AM Best, for Aspen UK and Aspen Bermuda)
$1.9bn Gross Written Premium (GWP) in 2006
100% = $1.8bn
4
100% = $1.8bn
12 months: July 1, 2006 – June 30, 2007
12 months: July 1, 2006 – June 30, 2007
The Aspen Story
How do we shape our business?
Diversified book, insurance and reinsurance
Multi platform, multi product approach
Focus on growth in book value per share rather than top line
Evolution through organic growth
Deliver products where we are rewarded for specialised knowledge and
execution, not for scale
Well Chosen Businesses, Well Managed
5
How do we deliver?
Underwriting for profit
Proactive risk management
Prudent investment approach
Capital management
Well-managed Diversification
* 2003 Specialty lines includes QQS of Wellington Syndicate 2020
** By location of cedant
Targeted Growth in Specialty Lines And Improved Spread of Risk
Gross Written Premiums
6
Property Reinsurance �� Casualty Reinsurance
Specialty Lines Insurance
41%
8%
23%
28%
100% = $1.6bn
24%
26%
17%
33%
FY 2004
100% = $1.8bn
3%
3%
3%
11%
51%
1%
25%
6%
12 months
July 1, 2006 – June 30, 2007
Geographical split of GWP**
100% = $1.8bn
12 months
July 1, 2006 – June 30, 2007
Asia & Australia
US & Canada
Other
Europe
Worldwide ex US
UK
Worldwide inc US
Profitable Expansion into New / Adjacent Lines
2003
2004
2005
2007
Specialty
Reinsurance
Aviation
Marine
US Casualty Re
US Excess &
Surplus lines
Aspen Re*
America
Aviation
Insurance
Marine
Insurance
Energy
Insurance
International
Property
Facultative
2006
Professional
Indemnity**
Development of Aspen’s GWP
7
0
500
1000
1500
2000
2500
3000
2002
2003
2004
2005
2006
2007
Year
2006 Line
2005 Lines
2004 Lines
2003 Lines
Original Lines
* Businesses shown for first year of meaningful premium contribution
** Underwriting commences September 2007
Selection Criteria
Availability of proven underwriting
talent
Underwriting and operational fit
Within management’s expertise
Diversification has Added over $1,070m GWP in New Lines Since 2003
GWP $m
Aspen
Insurance
Market Positioning – Well Balanced and Diversified
Insurance
Reinsurance
Long-Tail
Short-Tail
Note: Business mix as of 2006
Source: Credit Suisse company filings, Wall Street research, FactSet as of 8/16/07
= Market Cap < $3 BN
= Market Cap between $3 BN - $6 BN
= Market Cap > $6 BN
= Class of ’05 (Private)
8
How Do We Manage Risk?
Strong ERM framework
Core strategic enabler
Upgraded significantly in 2006/2007
Recognised as an Aspen strength by S&P
Risk managed through
Setting risk appetite
Purchase of reinsurance/retro as appropriate and other capital market
instruments for balance sheet and earnings protection
- Cat bonds
- ILWs
- Credit protection
9
Managing Extreme Events – Natural Catastrophe
Group Aggregate
Cat Risk Appetite
Single Loss
Appetite
US
wind
Cal
quake
Europe
wind
Japan
New
Madrid
quake
Cat Risk
Appetite
Key zonal control tolerances
Total Risk Capital
2005
2006
2007
2005
2006
2007
20%
17.5%
17.5%
35%
25%
25%
-250bp
-1000bp
1-in-250 Tolerance
(% of Surplus)
1-in-100 Tolerance
(% of Surplus)
10
Reduced Exposure to Natural Catastrophes – Net AEP*
Significant Reduction in Exposure to Natural Catastrophes Post 2005 At All Return Periods
* Aggregate Exceedance Probability (excludes inwards reinstatement premiums, includes outwards reinstatement premiums, net of tax)
Note: For net figures applied 2007 reinsurance / retro program to reflect our previous exposure versus our current structure
Note that assumptions have been made to bring prior periods, modelled in old RMS versions, in line with RMS version 6.
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2004-08
2005-02
2005-08
2006-02
2006-08
2007-03
2007-06
Date
Annual
Cat Loss
in USD m
Mean
1 in 10
1 in 25
1 in 50
1 in 100
1 in 250
Group Net AEP, Combined All Perils
“As-If” to RMS v6
11
Risk Distribution: Distribution of ROAE
Result of 50,000 simulations of the 2007 year net income using Aspen DFA model
Risks modelled include underwriting (cat and non cat), reserving, market and credit
Note that the figures shown are the result of assumptions made within our DFA model, many of which are subject to uncertainty which could lead to actual results varying considerably from those indicated by the model.
(more than)
12
0.00%
0.50%
1.00%
Probability
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Return on average equity
June and July UK Flood Losses
June 2007 UK Floods
Impacted Northern England – mainly urban and
commercial
Q2 07 reserved $23.5 million
- $17.0 million from property reinsurance
- $6.5 million UK commercial property insurance
Estimate consistent with a market loss of GBP1.5
billion or $3 billion
July 2007 UK Floods
Impacted areas of Central and Southern England –
primarily rural and residential
RMS and ABI indicate July floods will be less severe than
June floods
Property catastrophe reinsurance account designed to
respond to events of much greater severity than the July
floods
Impact on Aspen currently estimated at less than half of
June floods
13
22%
17%
32%
8%
10%
2%
9%
Govt
Agency
AAA
AA+/AA/AA-
A+/A/A-
BBB+/BBB/BBB-
NR - FOHF
$1,616
$2,736
$3,689
$4,681
$5,058
2003
2004
2005
2006
1H 2007
How Do We Manage Our Investments?
25%
4%
20%
9%
16%
6%
13%
21%
6%
3%
22%
3%
23%
28%
0%
5%
10%
15%
20%
25%
30%
35%
Govt
Agency
MBS
Corp
ABS
FOHF
Cash/ST
Jun 07
Dec 06
3.0%
3.5%
4.0%
4.5%
5.0%
Q404
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Q107
Q207
Fixed Income portfolio book yield
Total Investments have increased
Investment Yield improving
Asset Class Diversification
Credit Ratings very strong
Prudent Investment Management and Investment Income Increasing Component of
Total Return
14
How has Recent Market Turbulence Affected Aspen?
Fund of Hedge Funds performance
No direct sub-prime exposure in fixed income portfolio
Fixed income portfolio average credit rating of AA+ as of July 31, 2007
$487m investment – 9% of portfolio
Multi manager, multi strategy,
conservative approach
Equity like return with bond like
volatility
Performance
H1 2007: 8.4%
July 2007: 1.1%
August 2007 (estimate): -2.9%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
HFRI FOF: Conservative Index
Lehman Agg
S&P500
Aspen FOHF weighted
15
Cumulative returns
How Do We Manage our Balance Sheet?
Efficient Capital Management
16
Further preference shares
issued Q4 2006
Buy back program: $200m out
of $300m completed
Strong balance sheet with
opportunity for further leverage
837
1,091
1,096
1,693
1,698
1,503
1,515
208
385
147
227
457
646
200
230
430
430
249
249
249
249
249
41
40
0
500
1,000
1,500
2,000
2,500
3,000
2002
2003
2004
2005
Q2 2006
2006
Q2 2007
$ mil
Common share capital
Retained earnings inc OCI and issue costs
Preference shares
debt
Active balance sheet management to deliver capital and tax efficiency
Current Market Conditions by Segment
Ratings pressure acute in UK Commercial and UK Liability insurance; expected to
continue through 2007
E&S Property rates still attractive but exhibited modest declines during 2007 reflecting
increased competition
E&S Casualty rates declining; expected to continue for remainder of 2007
Insurance
Aviation competition remains strong; rates expected to fall further in 2007
Rate increases on Marine Liability and Marine Hull
Slight rate decreases on Specialty Reinsurance
Energy Physical Damage Insurance declining but still strong
Specialty
Lines
Rates marginally down across the segment
International casualty rates continuing to fall
US casualty rates declining having remained flat for the first half of 2007
Casualty
Reinsurance
US cat pricing remains strong despite reductions from last year’s highs; pricing
expected to weaken over the remainder of the year
Rates declining on risk excess and pro rata
Rates on non-US business exhibiting modest declines
Property
Reinsurance
Comment
Trend
Market
Conditions
Line
= 12 month rate trend positive
= 12 month rate trend neutral
= 12 month rate trend slightly downwards
= 12 month rate trend downwards
= Absolute rate levels attractive
= Absolute rate levels mixed
= Absolute rate levels very challenging
Key
17
Resulting in improving ROAE
15.9%
14.0%
18.5%
15.6%
21.7%
-11.7%
2003
2004
2005
2006
1H 2006
1H 2007
As well as increasing investment income
contribution...
$178
$204
-$259
$296
$118
$143
$68
$121
$94
$30
$204
$146
2003
2004
2005
2006
1H 2006
1H 2007
Underwriting Income
Investment Income
Profitability has increased substantially...
$152
$195
$378
$164
$237
($178)
2003
2004
2005
2006
1H 2006
1H 2007
Due to strong underwriting...
25%
25%
27%
29%
31%
28%
53%
59%
90%
55%
56%
53%
2003
2004
2005
2006
1H 2006
1H 2007
Expense Ratio
Loss Ratio
Financial Performance
($ in millions)
18
Delivering Results
($ in millions – Net Income)
Note: Reconciliation of average equity to closing shareholders’ equity is provided in our quarterly financial supplements available in the
Financial Results section of the Investor Relations page of Aspen’s website, www.aspen.bm
10%
12%
14%
16%
18%
20%
22%
24%
Q1
Q2
Q3
Q4
Q1
Q2
ROAE %
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
Annualised ROAE
Diluted BV Per Share**
Growth in ROAE* and Book Value Per Share
06
07
Annualised ROAE >18% Over Last 6 Quarters, 26.6% Growth in BVPS
19
* Reconciliation of average equity to closing shareholders’ equity is provided in our quarterly financial supplements available in the Financial
Results section of the Investor Relations page of Aspen’s website, www.aspen.bm
** See Aspen's quarterly financial supplement for a reconciliation of diluted book value per share to basic book value per share. Aspen's financial supplement can be obtained from the Investor Relations section of Aspen's website at www.aspen.bm
$ Diluted
B/V Per Share
Aspen’s Operations are Recognized in the Market
Received ERM rating of ‘Strong’ by S&P. Only AXA and ING hold higher ratings than Aspen in Europe
July 2007
First non – Lloyd’s Member to implement Lloyd’s Market Peer-to-Peer trading capabilities
June 2007
Financial Sector Technology Magazine, April 2007
“Best Use of Information Technology in the Insurance Sector” for CATman, Aspen’s
proprietary risk management tool
Ranked # 1: reaction to issues as they arise; highly responsive
AON Semi – Annual UK Insurance Survey, Q2 2007
Willis Quality Index & Carrier Survey, Spring 2007
Top 1% for Policy Administrator Top 5% for Claims Capability
Top 10% Global Specialties Underwriting Capabilities Top 10% for Service
“Best Global Reinsurance Company for Specialty Lines”
Reactions Magazine, August 2007
20
Conclusion
Well managed diversified portfolio
Focus on book value per share growth
Effective enterprise risk management core strategic enabler
Strong, quality, improving returns
BVPS up over 26% over last 6 quarters
Annualised ROAE over 18% over last 6 quarters
21
2007 Guidance
Full 2007 Year Outlook
$145 million
(full year)
16% to 19%
$250 – $270 million
83% – 88%
Approx 9% of GEP*
$1.8 billion + 5%
August 7, 2007
$145 million
(full year)
16% to 19%
$250 – $270 million
83% – 88%
6% – 8% of GWP
$1.8 billion + 5%
Q2 07 Earnings Call
Q4 06 Earnings Call
$135 million
(full year)
16% to 19%
$230 – $250 million
83% – 88%
6% – 8% of GWP
$1.9 billion + 5%
Tax Rate
Assumed Average Cat-Load
Investment Income
Combined Ratio
% Premium Ceded
GWP
Implied ROE of 16% - 20%
22
* Metric changed from percent of GWP to percent of GEP to reflect that the company has purchased multi year retrocessional policies and believes that a comparison with earned premiums is more appropriate than written premium for guidance purposes. This change in the ceded premium metric does not impact our current ROE guidance.
Appendix
Financial Highlights – Half Year 2007
* Annualised
¹ Reconciliation of Average Equity to closing shareholders’ equity is provided in our quarterly financial supplements available in the Financial Results section of the Investor Relations page of Aspen’s website at www.aspen.bm
23
Appendix
(US$ in millions, except per share data)
Six Months Ended June 30
2007
2006
% Change
Diluted Income Per Ordinary Share:
Net Income
$2.46
$1.61
52.8%
Operating Income ¹
$2.40
$1.57
52.9%
Gross Written Premiums
1,140.0
1,201.1
(5.1)
Net Written Premiums
973.6
952.0
2.3
Net Earned Premiums
890.2
831.6
7.0
Underwriting Income
142.9
117.7
21.4
Net Investment Income
146.3
94.4
55.0
Net Income after tax
$236.6
$163.6
44.6%
GAAP Ratios:
Loss Ratio
55.9%
54.8%
Expense Ratio
28.0%
31.0%
Combined Ratio
83.9%
85.8%
Full Year ROAE ¹
21.7%*
15.6%*
Book Value Per Ordinary Share
$24.49
$20.19
21.3%
Financial Highlights – Group Summary Q2
Income
124
127
102
84
129
131
115
95
0
40
80
120
160
200
Operating
Income
Before Tax
Income
Before Tax
Income After
Tax
Retained
Income
2006 Q2
2007 Q2
Underwriting Revenues
522
22
500
429
504
85
419
451
0
200
400
600
GWP
Premiums
Ceded
NWP
NEP
2006 Q2
2007 Q2
Underwriting Expenses
224
83
43
350
82
44
399
273
0
200
400
600
Losses &
Loss
Expenses
Acquisition
Exp
General &
Admin
Expenses
Total
Underwriting
Expenses
2006 Q2
2007 Q2
Underwriting Income
79
52
0
40
80
120
Underwriting Income
2006 Q2
2007 Q2
24
Appendix
$ms
$ms
$ms
$ms
Financial Highlights – Group Summary - Half Year
Income
202
205
164
128
275
278
237
196
0
40
80
120
160
200
240
280
320
Operating
Income
Before Tax
Income
Before Tax
Income After
Tax
Retained
Income
2006 H1
2007 H1
Underwriting Revenues
1201
249
952
832
1140
166
974
890
0
200
400
600
800
1,000
1,200
1,400
GWP
Premiums
Ceded
NWP
NEP
2006 H1
2007 H1
Underwriting Expenses
456
177
81
714
159
90
747
498
0
200
400
600
800
1000
Losses &
Loss
Expenses
Acquisition
Exp
General &
Admin
Expenses
Total
Underwriting
Expenses
2006 H1
2007 H1
Underwriting Income
118
143
0
40
80
120
160
Underwriting Income
2006 H1
2007 H1
25
Appendix
$ms
$ms
$ms
$ms
Results by Business Segment – Q2 2007
NWP
110
78
152
79
0
40
80
120
160
200
240
Property Re
Casualty Re
Specialty
Lines
P&C
Insurance
GWP
185
80
155
84
0
40
80
120
160
200
240
Property Re
Casualty Re
Specialty
Lines
P&C
Insurance
Income Contribution
79
52
0
40
80
Net Investment Income
Underwriting Profit
Underwriting Profit
32
7
8
5
0
20
40
Property Re
Casualty Re
Specialty
Lines
P&C
Insurance
26
Appendix
$ms
$ms
$ms
$ms
Results by Business Segment – Half Year 2007
NWP
287
295
279
113
0
40
80
120
160
200
240
280
320
Property Re
Casualty Re
Specialty
Lines
P&C
Insurance
GWP
372
303
311
154
0
40
80
120
160
200
240
280
320
360
400
Property Re
Casualty Re
Specialty
Lines
P&C
Insurance
Income Contribution
146
143
0
40
80
120
160
Net Investment Income
Underwriting Profit
Underwriting Profit
76
23
29
15
0
20
40
60
80
Property Re
Casualty Re
Specialty
Lines
P&C
Insurance
27
Appendix
$ms
$ms
$ms
$ms