Aspen ups GPW 17% Q1, but suffers 5.7 ratio point margin slide

Global re/insurance group Aspen increased Q1 gross written premium by nearly 17%, but suffered a 18% decline in adjusted underwriting income as loss cost well outpaced the Q1 premium earn-in. 

“We benefited from continuing favourable trading conditions in many of our classes of business achieving 17% growth in year over year gross written premium,” management said in its comment to highlight the growth side. 

That increase included a risk adjusted rate change and “adequacy metrics on the aggregate portfolio that were better than planned.”

But underwriting income of $90 million was down 26% from the prior year period as a mild 4% gain in net earned premium was dwarfed by a 12.7% increase in loss cost and adjustment expense to $384.5 million. Mark the combined ratio up 5.7 points to 86.6%. 

That loss cost included $32.4 million in cat losses, highlighted by an unspecified hit from the Baltimore Bridge incident which management nonetheless called “within expectations given the size of this industry event.” A 2.5% increase in Q1 cat losses left the cat loss ratio flat at 4.9%.

The decline in margin came chiefly on prior year development. Excluding the impact of an LPT deal designed to neutralise the era pre-2020, PYD turned neutral versus mild favourable development in Q1 2023. Management cited "a modest provision" for losses on policies exposed to credit risk.

The impact of the loss portfolio transfer agreement with Enstar - measuring deferral of a portion of loss recoveries on pre-2019 years - took even more vis-a-vis the prior year earnings tally, adding 0.3 ratio points versus a 1.8 point reduction in Q1 2023.  

Current accident year net losses and loss expenses, in turn, rose 7.1% and added 1.5 points to the combined ratio.

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