Background
Aspen Insurance UK Limited was established in London in June
2002 to serve the needs of the London and wider UK insurance market.
It is the largest business in the Aspen Group. The company trades under
the names of Aspen Insurance and Aspen Re,
writing a range of specialty insurance and reinsurance lines respectively.
At its launch, Aspen raised capital of £448 million (about $720
million) from an investor group led by Blackstone and Candover.
Aspen Insurance Limited, trading
as Aspen
Re,
was established in Bermuda in November 2002 to access the Bermuda market.
Licensed as a Class 4 insurer, it writes a significant book of property
treaty reinsurance, retrocession and structured risk solutions.
Aspen’s UK subsidiary started
trading in London in 2002. It is the largest independent reinsurance
company to be based in the London market.
Aspen Specialty Insurance Company, trading as Aspen Specialty,
was acquired in September 2003 and writes a focused book of property
and casualty surplus lines insurance business, principally through the
US wholesale surplus lines broker network. In August 2004, Aspen Specialty
opened additional offices in Georgia and Arizona.
Aspen Re America, Inc, trading as Aspen
Re,
offers both domestic property reinsurance capabilities and casualty facultative
reinsurance expertise. Property business protecting US cedents and buyers
on a treaty and excess of loss basis is written on behalf of Aspen Insurance
UK Limited out of the company’s Connecticut office, which was established
in January 2004.
Casualty facultative reinsurance business is written through reinsurance
intermediaries on behalf of Aspen Re by the company’s New Jersey
office, also established in January 2004. It also writes property facultative
business through its Illinois office, which opened in January 2005.
Spotlight – Diversification
In its first
full year as a public company, Aspen generated value for shareholders
by concentrating on the strategies that differentiate the company. Aspen
points to focused underwriting, diversification and conservative capital
management as drivers of its success. Strict adherence to these strategies
generated strong results for Aspen in 2004.
Aspen describes itself as a company “driven
by underwriting talent”.
It focuses on complex risks because these risks are more profitable,
less prone to cyclicality and play to the company’s technical capabilities.
The benefit of this underwriting strategy was evidenced by the company’s
2004 results, in a year that saw unprecedented catastrophe activity worldwide.
Diversification is another core component
of Aspen’s
strategy. The company remains diversified by class, line and geography.
In 2004, it diversified further into marine and aviation insurance. As
in its other lines, Aspen seeks opportunities where complexity and creativity
are rewarded.
Analysis
Throughout
2004, Aspen continued to diversify its book of business. In the last
couple of years the company has moved from a property reinsurance-dominated
portfolio with some casualty business to a more balanced portfolio covering
property and casualty and specialty reinsurance, as well as insurance
lines spanning property, casualty, marine and aviation.
At the end of the 2004 year, property reinsurance represented 41 percent
of gross written premiums, followed by casualty reinsurance at 28 percent,
with 23 percent from commercial property and liability insurance and
eight percent from its specialty insurance and reinsurance business.
Property
reinsurance continues to be Aspen’s single largest segment
by premium: in 2004 gross written premiums amounted to $649 million,
ahead by 16 percent on the $558 million written in 2003. The combined
ratio for the company’s property reinsurance segment was 86 percent
in 2004 (70 percent in 2003), in spite of the extensive damage caused
in the South East of the US by four major hurricanes and by a typhoon
in Japan.
In 2004, casualty
reinsurance gross written premiums were $447 million, about
28 percent of Aspen’s total. That compared to $292 million in
2003, or 22 percent of Aspen’s total gross written premium. The
combined ratio for casualty reinsurance was 92 percent, compared to
93 percent in 2003.
Aspen’s specialty
business is largely focused on the insurance and reinsurance
of marine, energy and aviation lines. In 2004 specialty lines contributed
$125 million in gross written premium (2003: $151 million). The company’s
2004 combined ratio for specialty lines was 60 percent (2003: 81 percent).
In 2003,
Aspen wrote a quota share of Lloyd’s Syndicate 2020, which is managed
by Wellington Underwriting plc., amounting to S$78 million of gross written
premium that year. Aspen opted not to renew this book in 2004 and continued
to build out its own capability in this area by adding teams in marine
and aviation.
Senior management
Chairman: Paul Myners
CEO: Chris O’Kane
COO: Sarah Davies
CFO: Julian Cusack
Financial data
(half-year to June 30, 2005)
Gross premiums written: $1.4 billion, up 33 percent
Net premiums earned: $0.8 billion, up 22 percent
Net income: $154 million, down 7 percent
Shareholders’ equity: $1.6 billion
Website
www.aspen.bm
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