Up-for-sale Bermudian Aspen defied analyst expectations to book a $63mn profit for the first quarter after receiving a boost from higher reserve releases and lower cat losses than it reported time last year.
But the results also highlighted its strategic de-risking as it rapidly increased its reinsurance buying to “control volatility” which may drag on its earnings potential.
Nonetheless, the $0.91 per share result was notably ahead of the $0.84 that five analysts surveyed by financial news site MarketWatch had expected.
The first three months of 2018 was also the first time in the (re)insurer’s 16-year history that it booked quarterly premiums in excess of $1bn.
That was because of a 14 percent increase in insurance premiums, which climbed to $493.3mn, and a 10.3 percent hike in reinsurance revenues which were $623.5mn for the period
The picture for net written premiums was completely different as the carrier considerably upped reinsurance spend after last year, which was dogged by $561.9mn of catastrophe losses.
In its first quarter results Aspen said that it retained only 42.7 percent of reinsurance risks, down from 55 percent during the same period in 2017, and 68.2 percent of reinsurance premium, down from 79.3 percent.
Net catastrophe losses in the first quarter dipped to $24.2mn down from the $29.1mn it reported this time last year. Meanwhile reserve releases were up by 43.9 percent at $37.7mn.
Nevertheless, the combined ratio deteriorated slightly to 97.8 percent, up from the 97 percent it reported this time last year.
Aspen CEO Chris O’Kane said: “The first quarter of 2018 was the first in Aspen’s history in which we wrote more than a billion dollars of premium.
“Our strong results include gross written premium growth across both Aspen Re and Aspen Insurance as a result of our targeted growth strategy,” he went on.
“Both segments generated underwriting profits, we improved our total expense ratio and we continue to implement our operational effectiveness and efficiency program.”
The programme added $11.8mn of expenses in the first quarter.
Book value - a crucial figure for any up-for-sale carrier - shrank 3.5 percent largely because of realised and unrealised investment losses.