Aspen Insurance Holdings reports second-quarter net income after tax of $130.8 million, up from $40.1 million reported in Q2 2013.

The specialty insurer and reinsurer saw a jump in gross written premiums to $779.3 million in the quarter, compared to $687.3 million for the same period a year ago. The corresponding jump in net earned premiums—to $616.2 million from $544 million—more than offset a slight up tic in losses and loss-adjustment expenses ($337.1 million compared to $333.4 million in Q2 2013), and underwriting income was reported at $66.7 million compared to $15.7 million.

Net investment income inched up to $46.1 million from $45.9 million, and all told, operating income before tax jumped to $107.5 million from $54.7 million.

Aspen's combined ratio improved to 90.1 compared to 97.1 in 2013's second quarter. Net favorable development on prior-year loss reserves of $31.8 million (compared to $27.4 million a year ago) shaved 5.2 points off of the combined ratio.

Net catastrophe losses dropped to $22.1 million compared to $58.7 million in last year's second quarter.

For the first half of the year, Aspen reports net income after tax of $251.2 million, up from $131.9 million in the first half of 2013.

Chris O'Kane, CEO, says in a statement, “Aspen's strong, high-quality results fort he second quarter and first half of 2014 demonstrate the benefits of the investments we have made in our business, our operating focus and our successful strategy to manage a dynamic market.”

He credits the results to “top-line growth, sound underwriting, impressive performance in our reinsurance business and increasing scale” in the company's U.S. insurance platform.

Stern Agee analysts Dan Farrell and Nitin Chhabra say Aspen's underwriting results are in line with guidance, and that Aspen's reported operating earnings per share of $1.40 is slightly above recent guidance range.

Gross written premiums were within the company's guidance, Stern Agee adds, but net written premium was lower.

Aviation war-risk rates should rise

In a conference call, O'Kane noted headwinds in the market, namely continued low investment returns and rate pressure in some insurance and reinsurance lines. He said, “Within insurance, aviation and energy property are the most profoundly affected.” But he noted the recent Malaysia Airlines losses should put “meaningful upwards pressrue on the aviation war accounts.” He says Aspen will push for increases of 100% for primary aviation war risks. For reinsurance, aviation war risk rate increases could be in the 200%-300% range.

But O'Kane said he doesn't expect the rate increases for war risks to spread to primary avation hull risks.

Special Reports /

Aspen's Q2 net income soars; CEO says aviation war-risk rates set to rise

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