Aspen Insurance Holdings in Bermuda reported net income of $114.7 million Friday, with a 58 percent jump in investment income helping to push up the bottom line.
Overall, bottom line net income grew 13 percent from $101.8 million in last year's second quarter.
On a per-share basis, second-quarter net income was $1.19 in 2007, compared with $1.01 for the same quarter in 2006.
While underwriting income fell to $52.4 million in second-quarter 2007, compared with $79.0 million in second-quarter 2006, net investment income jumped to $78.8 million from $49.9 million.
Gross written premiums fell 3.6 percent to $503.5 million, while net written premiums dropped 16.3 percent to $418.5 million. Executives attributed the decline in gross written premiums to softening rates, explaining that there was a greater drop in net written premiums because Aspen took advantage of market conditions to purchase additional retrocessional coverage during the quarter.
The second-quarter combined ratio deteriorated 6.8 points to 88.4 from 81.6.
During a conference call Friday, Chief Executive Officer Chris O'Kane noted that net income for the quarter equated to an annualized return on equity of 20.4 percent. He said he believed the strong performance to be "representative of the results our business is capable of delivering."
Mr. O'Kane also said that second-quarter results included a provision of $23.5 million for floods in the United Kingdom in June, adding that it is premature to estimate the July loss figure, where the greatest part of Aspen's exposure is from its property-catastrophe reinsurance book, "which is designed to respond to events of much greater severity than the June floods."
Of the $23.5 million total for June, $17 million related to property reinsurance and the remainder to property insurance, he said.
Chief Financial Officer Richard Houghton noted that Aspen released $80 million of reserves during second-quarter 2007, principally from its insurance and specialty books. In the same quarter last year, Aspen released just $28 million in prior-year loss reserves.
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