Aspen Insurance Holdings Ltd. (NYSE:AHL) Q2 2018 Earnings Conference Call - Final Transcript

Aug 02, 2018 • 08:00 am ET

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Aspen Insurance Holdings Ltd. (NYSE:AHL) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to the Aspen Insurance Holdings Limited Second Quarter 2018 Earnings Conference Call. Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Mark Jones, IR. Please go ahead.

Executive
Mark Jones

Thanks, Andrew, and good morning everyone. On today's call we have Chris O'Kane, CEO and Scott Kirk, CFO. Last night we issued our press release announcing Aspen's financial results for the second quarter of 2018. This press release, as well as corresponding supplementary financial information, can be found on our website at www.aspin.com.

(Forward-Looking Cautionary Statements)

With that I'll now turn the call over to Chris O'Kane.

Executive
Chris O'Kane

Thank you Mark. Good morning everyone. There is a tremendous amount of work being undertaking at Aspen to enhance both our financial and operational performance. This was reflected in our operating earnings of $0.80 per diluted ordinary share and our annualized operating ROE of 8.4% in the second quarter. We have a very good business with significant upside potential and we are actively and aggressively executing our plan to deliver improved results. I want to spend a few minutes on that before Scott discusses those results.

We have continued the successful repositioning of Aspen Insurance. We had a second successful record quarter in terms of top line, delivering more than $0.5 billion of premium. With continued support from our distribution partners and clients, the insurance team continued to find good opportunities, as reflected in the 8% increase in gross written premium recorded in the quarter. The lines we have targeted for growth are performing very well. They grew by 15% in the second quarter, primarily reflecting good underlying performance of Accident & Health from excess casualty and crisis management, environmental, as well as professional and related lines. Overall, the targeted growth lines, which account for almost half of our total insurance premiums, generated an accident year ex cat loss ratio of 55%, in line with its five-year trailing average for these same lines.

There are some other lines, chiefly pieces of our US property and also our energy books where we're now seeing the impact of remedial actions that have been taken. The downstream energy book, helped also by improved market conditions, reported an accident year ex cat loss ratio in the low-20s this quarter. In US property, we continue to (inaudible) parts of the book we don't want and re-underwrite business that we do want to keep. With the changes we've made, the US property is on the way to becoming a very attractive line of business again.

We also made substantial reductions to our PMLs in this area. The business that we have renewed so far this year has an average rate increase of 10%. The current book is subject to a 61% quota share and so, as the book improves further we anticipate retaining more of it starting in 2019.

Another important and successful part of our operation is business we write on the Lloyd's platform. Approximately $480 million or