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Aspen Insurance Beats Earnings on Higher Premiums - Analyst Blog
Aspen Insurance Holdings Ltd.
) reported fourth-quarter 2013 operating net income of $1.13 per
share, which beat the Zacks Consensus Estimate of $1.12 by a
penny. The number, however, rebounded substantially from the
prior-year quarter's operating net loss of 15 cents a share.
Including net realized and unrealized exchange losses and net realized and unrealized gains on investments, this property and casualty insurer reported net income of $1.21 per share for the quarter, which compared favorably with 9 cents of net loss reported in the year-ago quarter.
The bottom-line surge was driven by strong growth in net premiums earned at the Insurance segment.
Gross premiums written increased 4.9% during the quarter to $604.4 million. Higher gross written premiums in the Insurance segment drove the overall improvement which was, however, partially offset by lower premiums written at the Reinsurance segment.
Aspen Insurance's net investment income amounted to $47.2 million, down 7.6% year over year.
Total underwriting expenses of Aspen Insurance stood at $526 million in the fourth quarter, reflecting a year-over-year decline of 12.8%. The decrease was attributable to lower losses and loss adjustment expenses and partially offset by higher policy acquisition expenses (up 10.7% year over year) and general, administrative and corporate expenses (up 6.7%).
Underwriting income of Aspen Insurance grossed $55.8 million in the reported quarter compared to underwriting loss reported in the previous-year quarter. The significant improvement was driven by better underwriting income result at the Reinsurance segment partially offset by weak results at the Insurance segment.
Combined ratio improved 1610 basis points (bps) year over year to 91.9% during the fourth quarter.
Reinsurance: $176.2 million of gross written premiums during the reported quarter declined 9.4% year over year due to prior-year reinstatement premiums of $21 million related to the outbreak of the super-storm Sandy in 2012.
This segment's underwriting income during the quarter under review totaled $118 million against $21.4 million of underwriting loss reported in the year-ago quarter. The improvement was primarily attributable to significantly lower losses and loss adjustment expenses partially offset by lower net earned premiums.
Combined ratio of 58.6% improved 4850 bps year over year due to higher prior-year loss reserve development.
Insurance: $428.2 million of gross written premiums during the reported quarter improved 12.2% year over year due to growth in Casualty and Financial and Professional lines of business.
This segment of Aspen Insurance witnessed an underwriting loss of $62.2 million during the quarter, wider than an underwriting loss of $10.7 million in the prior-year quarter. The wider loss was mainly attributable to higher loss and loss adjustment expenses.
Combined ratio also deteriorated 1740 bps year over year to 121.6%.
Full-Year 2013 Highlights
For full-year 2013, Aspen Insurance reported operating net income of $3.88 per share, up 14.8% from the 2012 number. Better capital management, increasing investment returns and also optimization of business portfolio drove bottom-line growth.
Including net realized and unrealized exchange losses and gains on investment, Aspen Insurance reported net income of $329.3 million for 2013, up 17.4% year over year.
Net earned premium of $2.17 billion during 2013 was 4.2% than that of 2012.
Aspen Insurance exited the third quarter with total assets of $10.23 billion, down 0.8% compared to the 2012-end level.
As of Sep 30, total cash and cash equivalents of Aspen Insurance amounted to $1.29 billion, decreasing 11.6% from the end of 2012.
Aspen Insurance's long-term debt of $549 million as of Dec 31, 2013 was 10% higher than the 2012-end level.
Aspen Insurance's total shareholders' equity amounted to approximately $3.35 billion, sliding almost 4% from the end of 2012.
Aspen Insurance reported operating return on average equity of 9.7% for 2013 comparing favorable with 8.5% reported in 2012.
Share Repurchase Update
During 2013, Aspen Insurance repurchased 8.5 million of its shares for $309.6 million. Additionally, since the beginning of 2014, the company has bought back shares worth $22.1 million.
Assuming normal loss experience, current interest rate environment and pre-tax catastrophe loss of $185 million per annum, Aspen Insurance expects its operating return on equity to be 10% in 2014, in line with its previously issued guidance.
Performance of Other Stocks
Among other property and casualty insurers, ACE Limited ( ACE ) reported operating net earnings of $2.39 per share in the fourth quarter of 2013, surpassing the Zacks Consensus Estimate by 19.5%. Moreover, earnings surged nearly 67% on a year-over-year basis.
American Financial Group Inc. ( AFG ) reported fourth-quarter operating earnings per share of $1.28, which comfortably beat the Zacks Consensus Estimate of $1.23. On a year-over-year basis, earnings soared 91%.
The Travelers Companies Inc. ( TRV ) reported operating net earnings of $2.68 per share in the fourth quarter, surpassing the Zacks Consensus Estimate by 23.5%. Moreover, earnings improved nearly fourfold on a year-over-year basis.
Aspen Insurance presently carries a Zacks Rank #3 (Hold).
ACE LIMITED (ACE): Free Stock Analysis Report
AMER FINL GROUP (AFG): Free Stock Analysis Report
ASPEN INS HLDGS (AHL): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
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