Editor's Note: This story has been corrected. A previousversion misreported that Aspen Insurance Holdings planned to exitthe U.S. property market. PC360 regrets the error.

Aspen Insurance Holdings' chief executive says the insurer isreducing its earthquake and wind exposure in the U.S. propertyinsurance market due to the volatility of catastrophe risks.

During a conference call with financial analysts on Friday,Aspen CEO Chris O'Kane said that while the company has takenmeasures to eliminate unprofitable lines of business, the currentpricing and economic environment requires additional measures toimprove the bottom line.

O'Kane said the company plans “a significant and controlledreduction” in its U.S. wind and earthquake exposure over the nexttwo years. He expects the move to free up $140 million incapital, which would be applied to the company's $500 million sharebuy-back program, announced earlier in the call, “unless other verycompelling opportunities emerge.”

There is no change of strategy for the Aspen Insurance U.S.Marine or Programs units and within Aspen's reinsurance segment,Aspen's risk appetite for catastrophe-related risk isunchanged.

O'Kane said the rest of Aspen's U.S. book remains highlyprofitable.

Aspen also plans to improve its investment portfolio withhigh-yield investment securities, said O'Kane.

The Hamilton, Bermuda-based company reported fourth-quarter netincome after tax of $2 million, down 84 percent, or $10 million,from Q4 2011. Gross-written premiums increased 26 percent, or by$118 million, to $576 million. The combined ratio in the quarterdropped 6.3 points to 108.

Insurance and reinsurance catastrophe losses in the quartertotaled $170 million, and include the effects of SuperstormSandy.

For the year, Aspen reported net income of $280 million,compared to net loss of $110 million in 2011. During the call,O'Kane said rates are increasing in the mid-single-digit-percentagerange. One exception was property exposure in the Northeast regionsaffected by Sandy, where 5-to-25 percent increases are expected bymid-year with tighter terms and conditions.

“We are seeing many of our teams enjoy the benefit of ratingtailwinds rather than the headwinds of recent times,” said O'Kane.“We have a very exciting plan and are energized about executingit.”