ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | Not Applicable | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
141 Front Street Hamilton, Bermuda | HM 19 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Page | ||
Item 1. | ||
Unaudited Condensed Consolidated Balance Sheets as at June 30, 2017 and December 31, 2016 | ||
Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016 | ||
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2017 and 2016 | ||
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
CERTIFICATIONS |
As at June 30, 2017 | As at December 31, 2016 | ||||||
ASSETS | |||||||
Investments: | |||||||
Fixed income securities, available for sale at fair value (amortized cost — $5,437.9 and $5,620.1) | $ | 5,497.3 | $ | 5,664.6 | |||
Fixed income securities, trading at fair value (amortized cost — $1,338.3 and $1,264.8) | 1,357.5 | 1,265.7 | |||||
Equity securities, trading at fair value (cost — $569.5 and $554.3) | 658.7 | 584.7 | |||||
Short-term investments, available for sale at fair value (amortized cost — $41.9 and $145.3) | 41.9 | 145.3 | |||||
Short-term investments, trading at fair value (amortized cost — $73.7 and $185.4) | 73.7 | 185.4 | |||||
Catastrophe bonds, trading at fair value (cost — $28.3 and $42.5) | 28.3 | 42.5 | |||||
Other investments, equity method | 3.9 | 12.1 | |||||
Total investments | 7,661.3 | 7,900.3 | |||||
Cash and cash equivalents (including $165.5 and $291.3 within consolidated variable interest entities) | 1,228.4 | 1,273.8 | |||||
Reinsurance recoverables | |||||||
Unpaid losses | 779.4 | 560.7 | |||||
Ceded unearned premiums | 464.1 | 255.2 | |||||
Receivables | |||||||
Underwriting premiums | 1,614.1 | 1,399.4 | |||||
Other | 106.1 | 95.5 | |||||
Funds withheld | 89.9 | 73.1 | |||||
Deferred policy acquisition costs | 364.6 | 358.4 | |||||
Derivatives at fair value | 22.1 | 7.2 | |||||
Receivables for securities sold | 13.6 | 1.6 | |||||
Office properties and equipment | 85.3 | 83.8 | |||||
Tax recoverable | 7.2 | 0.5 | |||||
Other assets | 1.0 | 1.0 | |||||
Intangible assets and goodwill | 79.4 | 79.6 | |||||
Total assets | $ | 12,516.5 | $ | 12,090.1 |
As at June 30, 2017 | As at December 31, 2016 | ||||||
LIABILITIES | |||||||
Insurance reserves | |||||||
Losses and loss adjustment expenses | $ | 5,571.4 | $ | 5,319.9 | |||
Unearned premiums | 1,981.5 | 1,618.6 | |||||
Total insurance reserves | 7,552.9 | 6,938.5 | |||||
Payables | |||||||
Reinsurance premiums | 316.7 | 345.3 | |||||
Deferred taxation | 4.4 | 6.1 | |||||
Accrued expenses and other payables | 352.8 | 469.2 | |||||
Liabilities under derivative contracts | 8.6 | 18.4 | |||||
Total payables | 682.5 | 839.0 | |||||
Loan notes issued by variable interest entities, at fair value | 110.8 | 115.0 | |||||
Long-term debt | 549.4 | 549.3 | |||||
Total liabilities | $ | 8,895.6 | $ | 8,441.8 | |||
Commitments and contingent liabilities (see Note 16) | — | — | |||||
SHAREHOLDERS’ EQUITY | |||||||
Ordinary shares: | |||||||
59,844,075 shares of par value 0.15144558¢ each (December 31, 2016 - 59,774,464) | $ | 0.1 | $ | 0.1 | |||
Preference shares: | |||||||
11,000,000 5.95% shares of par value 0.15144558¢ each (December 31, 2016 — 11,000,000) | — | — | |||||
Nil 7.401% shares of par value 0.15144558¢ each (December 31, 2016 — 5,327,500) | — | — | |||||
6,400,000 7.250% shares of par value 0.15144558¢ each (December 31, 2016 — 6,400,000) | — | — | |||||
10,000,000 5.625% shares of par value 0.15144558¢ each (December 31, 2016 — 10,000,000) | — | — | |||||
Non-controlling interest | 1.6 | 1.4 | |||||
Additional paid-in capital | 1,125.2 | 1,259.6 | |||||
Retained earnings | 2,516.2 | 2,392.3 | |||||
Accumulated other comprehensive income, net of taxes | (22.2 | ) | (5.1 | ) | |||
Total shareholders’ equity | 3,620.9 | 3,648.3 | |||||
Total liabilities and shareholders’ equity | $ | 12,516.5 | $ | 12,090.1 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Net earned premium | $ | 562.0 | $ | 680.8 | $ | 1,143.1 | $ | 1,343.9 | |||||||
Net investment income | 47.4 | 48.0 | 95.1 | 97.5 | |||||||||||
Realized and unrealized investment gains | 49.0 | 45.1 | 100.2 | 110.7 | |||||||||||
Other income | 3.6 | (0.5 | ) | 7.2 | 0.9 | ||||||||||
Total revenues | 662.0 | 773.4 | 1,345.6 | 1,553.0 | |||||||||||
Expenses | |||||||||||||||
Losses and loss adjustment expenses | 346.1 | 442.2 | 674.3 | 799.6 | |||||||||||
Amortization of deferred policy acquisition costs | 96.3 | 126.7 | 210.0 | 256.9 | |||||||||||
General, administrative and corporate expenses | 119.9 | 116.4 | 241.2 | 236.2 | |||||||||||
Interest on long-term debt | 7.4 | 7.4 | 14.8 | 14.8 | |||||||||||
Change in fair value of derivatives | (17.6 | ) | 0.4 | (20.7 | ) | 7.6 | |||||||||
Change in fair value of loan notes issued by variable interest entities | 3.3 | (0.5 | ) | 6.2 | 3.9 | ||||||||||
Realized and unrealized investment losses | 7.0 | 8.3 | 12.0 | 28.9 | |||||||||||
Net realized and unrealized foreign exchange losses | 20.6 | 5.3 | 29.5 | 21.0 | |||||||||||
Other expenses | 2.0 | 1.0 | 2.0 | 1.0 | |||||||||||
Total expenses | 585.0 | 707.2 | 1,169.3 | 1,369.9 | |||||||||||
Income from operations before income tax | 77.0 | 66.2 | 176.3 | 183.1 | |||||||||||
Income tax expense | (1.2 | ) | (1.3 | ) | (4.0 | ) | (3.8 | ) | |||||||
Net income | $ | 75.8 | $ | 64.9 | $ | 172.3 | $ | 179.3 | |||||||
Amount attributable to non-controlling interest | (0.1 | ) | (0.4 | ) | (0.2 | ) | (0.2 | ) | |||||||
Net income attributable to Aspen Insurance Holdings Limited’s ordinary shareholders | $ | 75.7 | $ | 64.5 | $ | 172.1 | $ | 179.1 | |||||||
Other Comprehensive Income: | |||||||||||||||
Available for sale investments: | |||||||||||||||
Reclassification adjustment for net realized gains on investments included in net income | $ | (0.8 | ) | $ | (1.1 | ) | $ | (1.8 | ) | $ | (5.3 | ) | |||
Change in net unrealized gains on available for sale securities held | 13.7 | 43.3 | 16.7 | 132.5 | |||||||||||
Net change from current period hedged transactions | 2.4 | (2.9 | ) | 3.7 | (5.0 | ) | |||||||||
Change in foreign currency translation adjustment | (27.6 | ) | (3.1 | ) | (44.8 | ) | (16.6 | ) | |||||||
Other comprehensive income, gross of tax | (12.3 | ) | 36.2 | (26.2 | ) | 105.6 | |||||||||
Tax thereon: | |||||||||||||||
Reclassification adjustment for net realized gains on investments included in net income | — | 0.1 | 0.2 | 0.6 | |||||||||||
Change in net unrealized gains on available for sale securities held | (1.1 | ) | (5.1 | ) | (1.2 | ) | (13.7 | ) | |||||||
Net change from current period hedged transactions | (0.4 | ) | 0.5 | (0.5 | ) | 1.2 | |||||||||
Change in foreign currency translation adjustment | 6.3 | 1.3 | 10.6 | 3.8 | |||||||||||
Total tax on other comprehensive income | 4.8 | (3.2 | ) | 9.1 | (8.1 | ) | |||||||||
Other comprehensive (loss)/income net of tax | (7.5 | ) | 33.0 | (17.1 | ) | 97.5 | |||||||||
Total comprehensive income attributable to Aspen Insurance Holdings Limited’s ordinary shareholders | $ | 68.2 | $ | 97.5 | $ | 155.0 | $ | 276.6 | |||||||
Per Share Data | |||||||||||||||
Weighted average number of ordinary share and share equivalents | |||||||||||||||
Basic | 59,966,358 | 60,705,028 | 59,914,797 | 60,771,601 | |||||||||||
Diluted | 61,022,981 | 62,192,142 | 61,095,817 | 62,263,209 | |||||||||||
Basic earnings per ordinary share adjusted for preference share dividends | $ | 1.09 | $ | 0.91 | $ | 2.48 | $ | 2.64 | |||||||
Diluted earnings per ordinary share adjusted for preference share dividends | $ | 1.07 | $ | 0.89 | $ | 2.43 | $ | 2.57 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Ordinary shares | |||||||
Beginning and end of the period | $ | 0.1 | $ | 0.1 | |||
Preference shares | |||||||
Beginning and end of the period | — | — | |||||
Non-controlling interest | |||||||
Beginning of the period | 1.4 | 1.3 | |||||
Net change attributable to non-controlling interest for the period | 0.2 | 0.2 | |||||
End of the period | 1.6 | 1.5 | |||||
Additional paid-in capital | |||||||
Beginning of the period | 1,259.6 | 1,075.3 | |||||
New ordinary shares issued | 0.4 | 1.9 | |||||
Ordinary shares repurchased and cancelled | (10.0 | ) | (43.5 | ) | |||
Preference shares redeemed and cancelled | (133.2 | ) | — | ||||
Preference shares redemption (1) | 2.4 | — | |||||
Share-based compensation (2) | 6.0 | 6.8 | |||||
End of the period | 1,125.2 | 1,040.5 | |||||
Retained earnings | |||||||
Beginning of the period | 2,392.3 | 2,283.6 | |||||
Net income for the period | 172.3 | 179.3 | |||||
Dividends on ordinary shares | (27.6 | ) | (26.2 | ) | |||
Dividends on preference shares | (21.0 | ) | (18.9 | ) | |||
Preference shares redemption (1) | (2.4 | ) | — | ||||
Net change attributable to non-controlling interest for the period | (0.2 | ) | (0.2 | ) | |||
Share-based payment (3) | 2.8 | — | |||||
End of the period | 2,516.2 | 2,417.6 | |||||
Accumulated other comprehensive income: | |||||||
Cumulative foreign currency translation adjustments, net of taxes: | |||||||
Beginning of the period | (27.1 | ) | 0.6 | ||||
Change for the period, net of income tax | (34.2 | ) | (12.8 | ) | |||
End of the period | (61.3 | ) | (12.2 | ) | |||
Loss on derivatives, net of taxes: | |||||||
Beginning of the period | (0.5 | ) | (1.2 | ) | |||
Net change from current period hedged transactions | 3.2 | (3.8 | ) | ||||
End of the period | 2.7 | (5.0 | ) | ||||
Unrealized appreciation on investments, net of taxes: | |||||||
Beginning of the period | 22.5 | 60.2 | |||||
Change for the period, net of taxes | 13.9 | 114.1 | |||||
End of the period | 36.4 | 174.3 | |||||
Total accumulated other comprehensive (loss)/income, net of taxes | (22.2 | ) | 157.1 | ||||
Total shareholders’ equity | $ | 3,620.9 | $ | 3,616.8 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows (used in)/from operating activities: | |||||||
Net income | $ | 172.3 | $ | 179.3 | |||
Proportion due to non-controlling interest | (0.2 | ) | (0.2 | ) | |||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
Depreciation and amortization | 27.4 | 23.1 | |||||
Share-based compensation | 6.0 | 6.8 | |||||
Realized and unrealized investment (gains) | (100.2 | ) | (110.7 | ) | |||
Realized and unrealized investment losses | 12.0 | 28.9 | |||||
Change in fair value of loan notes issued by variable interest entities | 6.2 | 3.9 | |||||
Net realized and unrealized investment foreign exchange losses | (8.7 | ) | 79.9 | ||||
Net change from current period hedged transactions | 3.2 | (3.8 | ) | ||||
Changes in: | |||||||
Insurance reserves: | |||||||
Losses and loss adjustment expenses | 166.4 | 189.4 | |||||
Unearned premiums | 339.5 | 212.3 | |||||
Reinsurance recoverables: | |||||||
Unpaid losses | (212.6 | ) | (48.7 | ) | |||
Ceded unearned premiums | (207.5 | ) | (55.7 | ) | |||
Other receivables | (9.3 | ) | (27.5 | ) | |||
Deferred policy acquisition costs | (2.2 | ) | (47.9 | ) | |||
Reinsurance premiums payable | (18.5 | ) | 47.8 | ||||
Funds withheld | (16.8 | ) | (10.0 | ) | |||
Premiums receivable | (213.3 | ) | (287.0 | ) | |||
Deferred taxes | (1.7 | ) | 14.9 | ||||
Income tax payable | 4.3 | 6.9 | |||||
Accrued expenses and other payables | (22.0 | ) | 32.4 | ||||
Fair value of derivatives and settlement of liabilities under derivatives | (24.7 | ) | 3.8 | ||||
Long-term debt and loan notes issued by variable interest entities | (4.1 | ) | 1.2 | ||||
Other assets | — | 3.1 | |||||
Net cash (used in)/from operating activities | $ | (104.5 | ) | $ | 242.2 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from/(used in) investing activities: | |||||||
(Purchases) of fixed income securities — Available for sale | $ | (847.6 | ) | $ | (1,191.6 | ) | |
(Purchases) of fixed income securities — Trading | (556.0 | ) | (414.4 | ) | |||
Proceeds from sales and maturities of fixed income securities — Available for sale | 1,039.9 | 1,188.1 | |||||
Proceeds from sales and maturities of fixed income securities — Trading | 497.3 | 300.9 | |||||
(Purchases) of equity securities — Trading | (70.1 | ) | (118.5 | ) | |||
Net proceeds of catastrophe bonds — Trading | 13.8 | 33.5 | |||||
Proceeds from sales of equity securities — Trading | 58.9 | 107.4 | |||||
(Purchases) of short-term investments — Available for sale | (33.2 | ) | (81.6 | ) | |||
Proceeds from sales of short-term investments — Available for sale | 138.4 | 139.7 | |||||
(Purchases) of short-term investments — Trading | (21.3 | ) | (5.0 | ) | |||
Proceeds from sales of short-term investments — Trading | 135.2 | 1.8 | |||||
Net change in (payable)/receivable for securities (purchased)/sold | 20.9 | (7.6 | ) | ||||
Net (purchases) of equipment | (17.6 | ) | (18.5 | ) | |||
Sale of investment | 9.3 | — | |||||
Payments for acquisitions and investments, net of cash acquired | (2.3 | ) | (52.7 | ) | |||
Net cash from/(used in) investing activities | 365.6 | (118.5 | ) | ||||
Cash flows (used in) financing activities: | |||||||
Proceeds from the issuance of ordinary shares, net of issuance costs | 0.4 | 1.9 | |||||
Ordinary shares repurchased | (10.0 | ) | (43.5 | ) | |||
Preference share redemption | (133.2 | ) | — | ||||
Repayment of long-term debt issued by Silverton | (114.1 | ) | (89.0 | ) | |||
Dividends paid on ordinary shares | (27.6 | ) | (26.2 | ) | |||
Dividends paid on preference shares | (21.0 | ) | (18.9 | ) | |||
Cash paid for tax withholding purposes (1) | (9.1 | ) | — | ||||
Net cash (used in) financing activities | (314.6 | ) | (175.7 | ) | |||
Effect of exchange rate movements on cash and cash equivalents | 8.1 | (8.7 | ) | ||||
Decrease in cash and cash equivalents | (45.4 | ) | (60.7 | ) | |||
Cash and cash equivalents at beginning of period | 1,273.8 | 1,099.5 | |||||
Cash and cash equivalents at end of period | $ | 1,228.4 | $ | 1,038.8 | |||
Supplemental disclosure of cash flow information: | |||||||
Net cash paid (received) during the period for income tax | $ | (2.6 | ) | $ | (2.6 | ) | |
Cash paid during the period for interest | $ | 14.8 | $ | 14.5 |
1. | History and Organization |
2. | Basis of Preparation |
3. | Reclassifications from Accumulated Other Comprehensive Income |
Amount Reclassified from AOCI | ||||||||||
Details about the AOCI Components | Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Affected Line Item in the Unaudited Condensed Consolidated Statement of Operations | |||||||
($ in millions) | ||||||||||
Available for sale securities: | ||||||||||
Realized gains on sale of securities | $ | 3.3 | $ | 2.4 | Realized and unrealized investment gains | |||||
Realized (losses) on sale of securities | (2.5 | ) | (1.3 | ) | Realized and unrealized investment losses | |||||
0.8 | 1.1 | Income from operations before income tax | ||||||||
Tax on net realized gains of securities | — | (0.1 | ) | Income tax expense | ||||||
$ | 0.8 | $ | 1.0 | Net income | ||||||
Realized derivatives: | ||||||||||
Net realized (losses) on settled derivatives | $ | 0.9 | $ | (1.4 | ) | General, administrative and corporate expenses | ||||
Tax on settled derivatives | (0.2 | ) | 0.5 | Income tax expense | ||||||
$ | 0.7 | $ | (0.9 | ) | Net income | |||||
Total reclassifications from AOCI to the statement of operations, net of income tax | $ | 1.5 | $ | 0.1 | Net income |
Amount Reclassified from AOCI | ||||||||||
Details about the AOCI Components | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | Affected Line Item in the Unaudited Condensed Consolidated Statement of Operations | |||||||
($ in millions) | ||||||||||
Available for sale securities: | ||||||||||
Realized gains on sale of securities | $ | 5.6 | $ | 9.5 | Realized and unrealized investment gains | |||||
Realized (losses) on sale of securities | (3.8 | ) | (4.2 | ) | Realized and unrealized investment losses | |||||
1.8 | 5.3 | Income from operations before income tax | ||||||||
Tax on net realized gains of securities | (0.2 | ) | (0.6 | ) | Income tax expense | |||||
$ | 1.6 | $ | 4.7 | Net income | ||||||
Realized derivatives: | ||||||||||
Net realized (losses) on settled derivatives | $ | 1.2 | $ | (2.5 | ) | General, administrative and corporate expenses | ||||
Tax on settled derivatives | (0.2 | ) | 0.5 | Income tax expense | ||||||
$ | 1.0 | $ | (2.0 | ) | Net income | |||||
Total reclassifications from AOCI to the statement of operations, net of income tax | $ | 2.6 | $ | 2.7 | Net income |
4. | Earnings per Ordinary Share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
($ in millions, except share and per share amounts) | |||||||||||||||
Net income | $ | 75.8 | $ | 64.9 | $ | 172.3 | $ | 179.3 | |||||||
Preference share dividends | (10.5 | ) | (9.4 | ) | (21.0 | ) | (18.9 | ) | |||||||
Change in redemption value (1) | — | — | (2.4 | ) | — | ||||||||||
Net amount attributable to non-controlling interest | (0.1 | ) | (0.4 | ) | (0.2 | ) | (0.2 | ) | |||||||
Basic and diluted net income available to ordinary shareholders | $ | 65.2 | $ | 55.1 | $ | 148.7 | $ | 160.2 | |||||||
Ordinary shares: | |||||||||||||||
Basic weighted average ordinary shares | 59,966,358 | 60,705,028 | 59,914,797 | 60,771,601 | |||||||||||
Weighted average effect of dilutive securities (2) | 1,056,623 | 1,487,114 | 1,181,020 | 1,491,608 | |||||||||||
Total diluted weighted average ordinary shares | 61,022,981 | 62,192,142 | 61,095,817 | 62,263,209 | |||||||||||
Earnings per ordinary share: | |||||||||||||||
Basic | $ | 1.09 | $ | 0.91 | $ | 2.48 | $ | 2.64 | |||||||
Diluted | $ | 1.07 | $ | 0.89 | $ | 2.43 | $ | 2.57 |
(1) | The $2.4 million deduction from net income in 2017 is attributable to the reclassification from additional paid-in capital to retained earnings representing the difference between the capital raised upon issuance of the 7.401% Perpetual Non-Cumulative Preference Shares, net of issuance costs, and the final redemption costs of $133.2 million. |
(2) | Dilutive securities consist of employee restricted share units and performance shares associated with the Company’s long-term incentive plan, employee share purchase plans and director restricted share units as described in Note 14. |
Dividend | Payable on: | Record Date: | |||||
Ordinary shares | $ | 0.24 | August 29, 2017 | August 14, 2017 | |||
5.95% preference shares | $ | 0.3719 | October 1, 2017 | September 15, 2017 | |||
5.625% preference shares | $ | 0.3516 | October 1, 2017 | September 15, 2017 |
5. | Segment Reporting |
Three Months Ended June 30, 2017 | ||||||||||||
Reinsurance | Insurance | Total | ||||||||||
($ in millions) | ||||||||||||
Underwriting Revenues | ||||||||||||
Gross written premiums | $ | 335.6 | $ | 486.5 | $ | 822.1 | ||||||
Net written premiums | 285.5 | 293.2 | 578.7 | |||||||||
Gross earned premiums | 320.6 | 429.1 | 749.7 | |||||||||
Net earned premiums | 272.7 | 289.3 | 562.0 | |||||||||
Underwriting Expenses | ||||||||||||
Losses and loss adjustment expenses | 152.6 | 193.5 | 346.1 | |||||||||
Amortization of deferred policy acquisition costs | 53.4 | 42.9 | 96.3 | |||||||||
General and administrative expenses | 40.7 | 65.7 | 106.4 | |||||||||
Underwriting income | $ | 26.0 | $ | (12.8 | ) | 13.2 | ||||||
Corporate expenses | (11.4 | ) | ||||||||||
Non-operating expenses | (2.1 | ) | ||||||||||
Net investment income | 47.4 | |||||||||||
Realized and unrealized investment gains | 49.0 | |||||||||||
Realized and unrealized investment losses | (7.0 | ) | ||||||||||
Change in fair value of loan notes issued by variable interest entities | (3.3 | ) | ||||||||||
Change in fair value of derivatives | 17.6 | |||||||||||
Interest expense on long term debt | (7.4 | ) | ||||||||||
Net realized and unrealized foreign exchange losses | (20.6 | ) | ||||||||||
Other income | 3.6 | |||||||||||
Other expenses | (2.0 | ) | ||||||||||
Income before tax | $ | 77.0 | ||||||||||
Net reserves for loss and loss adjustment expenses | $ | 2,445.0 | $ | 2,347.0 | $ | 4,792.0 | ||||||
Ratios | ||||||||||||
Loss ratio | 56.0 | % | 66.9 | % | 61.6 | % | ||||||
Policy acquisition expense ratio | 19.6 | 14.8 | 17.1 | |||||||||
General and administrative expense ratio | 14.9 | 22.7 | 21.3 | (1) | ||||||||
Expense ratio | 34.5 | 37.5 | 38.4 | |||||||||
Combined ratio | 90.5 | % | 104.4 | % | 100.0 | % |
(1) | The general and administrative expense ratio in the total column includes corporate and non-operating expenses. |
Three Months Ended June 30, 2016 | ||||||||||||
Reinsurance | Insurance | Total | ||||||||||
( $ in millions) | ||||||||||||
Underwriting Revenues | ||||||||||||
Gross written premiums | $ | 332.6 | $ | 469.1 | $ | 801.7 | ||||||
Net written premiums | 306.8 | 418.0 | 724.8 | |||||||||
Gross earned premiums | 329.8 | 454.7 | 784.5 | |||||||||
Net earned premiums | 299.4 | 381.4 | 680.8 | |||||||||
Underwriting Expenses | ||||||||||||
Losses and loss adjustment expenses | 181.1 | 261.1 | 442.2 | |||||||||
Amortization of deferred policy acquisition costs | 50.7 | 76.0 | 126.7 | |||||||||
General and administrative expenses | 39.1 | 57.2 | 96.3 | |||||||||
Underwriting income/(loss) | $ | 28.5 | $ | (12.9 | ) | 15.6 | ||||||
Corporate expenses | (20.1 | ) | ||||||||||
Net investment income | 48.0 | |||||||||||
Realized and unrealized investment gains | 45.1 | |||||||||||
Realized and unrealized investment losses | (8.3 | ) | ||||||||||
Change in fair value of loan notes issued by variable interest entities | 0.5 | |||||||||||
Change in fair value of derivatives | (0.4 | ) | ||||||||||
Interest expense on long term debt | (7.4 | ) | ||||||||||
Net realized and unrealized foreign exchange losses | (5.3 | ) | ||||||||||
Other income | (0.5 | ) | ||||||||||
Other expenses | (1.0 | ) | ||||||||||
Income before tax | $ | 66.2 | ||||||||||
Net reserves for loss and loss adjustment expenses | $ | 2,474.6 | $ | 2,296.5 | $ | 4,771.1 | ||||||
Ratios | ||||||||||||
Loss ratio | 60.5 | % | 68.5 | % | 65.0 | % | ||||||
Policy acquisition expense ratio | 16.9 | 19.9 | 18.6 | |||||||||
General and administrative expense ratio | 13.1 | 15.0 | 17.1 | (1) | ||||||||
Expense ratio | 30.0 | 34.9 | 35.7 | |||||||||
Combined ratio | 90.5 | % | 103.4 | % | 100.7 | % |
(1) | The general and administrative expense ratio in the total column includes corporate expenses. |
Six Months Ended June 30, 2017 | ||||||||||||
Reinsurance | Insurance | Total | ||||||||||
($ in millions) | ||||||||||||
Underwriting Revenues | ||||||||||||
Gross written premiums | $ | 900.9 | $ | 919.2 | $ | 1,820.1 | ||||||
Net written premiums | 733.7 | 531.2 | 1,264.9 | |||||||||
Gross earned premiums | 648.2 | 852.8 | 1,501.0 | |||||||||
Net earned premiums | 550.2 | 592.9 | 1,143.1 | |||||||||
Underwriting Expenses | ||||||||||||
Losses and loss adjustment expenses | 295.7 | 378.6 | 674.3 | |||||||||
Amortization of deferred policy acquisition costs | 112.9 | 97.1 | 210.0 | |||||||||
General and administrative expenses | 84.6 | 127.5 | 212.1 | |||||||||
Underwriting income | $ | 57.0 | $ | (10.3 | ) | 46.7 | ||||||
Corporate expenses | (24.8 | ) | ||||||||||
Non-operating expenses | (4.3 | ) | ||||||||||
Net investment income | 95.1 | |||||||||||
Realized and unrealized investment gains | 100.2 | |||||||||||
Realized and unrealized investment losses | (12.0 | ) | ||||||||||
Change in fair value of loan notes issued by variable interest entities | (6.2 | ) | ||||||||||
Change in fair value of derivatives | 20.7 | |||||||||||
Interest expense on long term debt | (14.8 | ) | ||||||||||
Net realized and unrealized foreign exchange losses | (29.5 | ) | ||||||||||
Other income | 7.2 | |||||||||||
Other expense | (2.0 | ) | ||||||||||
Income before tax | $ | 176.3 | ||||||||||
Net reserves for loss and loss adjustment expenses | $ | 2,445.0 | $ | 2,347.0 | $ | 4,792.0 | ||||||
Ratios | ||||||||||||
Loss ratio | 53.7 | % | 63.9 | % | 59.0 | % | ||||||
Policy acquisition expense ratio | 20.5 | 16.4 | 18.4 | |||||||||
General and administrative expense ratio | 15.4 | 21.5 | 21.1 | (1) | ||||||||
Expense ratio | 35.9 | 37.9 | 39.5 | |||||||||
Combined ratio | 89.6 | % | 101.8 | % | 98.5 | % |
(1) | The general and administrative expense ratio in the total column includes corporate and non-operating expenses. |
Six Months Ended June 30, 2016 | ||||||||||||
Reinsurance | Insurance | Total | ||||||||||
( $ in millions) | ||||||||||||
Underwriting Revenues | ||||||||||||
Gross written premiums | $ | 850.2 | $ | 927.2 | $ | 1,777.4 | ||||||
Net written premiums | 756.3 | 768.2 | 1,524.5 | |||||||||
Gross earned premiums | 636.6 | 900.3 | 1,536.9 | |||||||||
Net earned premiums | 579.7 | 764.2 | 1,343.9 | |||||||||
Underwriting Expenses | ||||||||||||
Losses and loss adjustment expenses | 315.6 | 484.0 | 799.6 | |||||||||
Amortization of deferred policy acquisition costs | 110.1 | 146.8 | 256.9 | |||||||||
General and administrative expenses | 83.2 | 115.8 | 199.0 | |||||||||
Underwriting income | $ | 70.8 | $ | 17.6 | 88.4 | |||||||
Corporate expenses | (37.2 | ) | ||||||||||
Net investment income | 97.5 | |||||||||||
Realized and unrealized investment gains | 110.7 | |||||||||||
Realized and unrealized investment losses | (28.9 | ) | ||||||||||
Change in fair value of loan notes issued by variable interest entities | (3.9 | ) | ||||||||||
Change in fair value of derivatives | (7.6 | ) | ||||||||||
Interest expense on long term debt | (14.8 | ) | ||||||||||
Net realized and unrealized foreign exchange losses | (21.0 | ) | ||||||||||
Other income | 0.9 | |||||||||||
Other expenses | (1.0 | ) | ||||||||||
Income before tax | $ | 183.1 | ||||||||||
Net reserves for loss and loss adjustment expenses | $ | 2,474.6 | $ | 2,296.5 | $ | 4,771.1 | ||||||
Ratios | ||||||||||||
Loss ratio | 54.4 | % | 63.3 | % | 59.5 | % | ||||||
Policy acquisition expense ratio | 19.0 | 19.2 | 19.1 | |||||||||
General and administrative expense ratio | 14.4 | 15.2 | 17.6 | (1) | ||||||||
Expense ratio | 33.4 | 34.4 | 36.7 | |||||||||
Combined ratio | 87.8 | % | 97.7 | % | 96.2 | % |
(1) | The general and administrative expense ratio in the total column includes corporate expenses. |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||
($ in millions) | ($ in millions) | ||||||||||||||
Fixed income securities — Available for sale | $ | 33.9 | $ | 36.5 | $ | 67.8 | $ | 73.1 | |||||||
Fixed income securities — Trading | 10.4 | 7.9 | 20.5 | 15.3 | |||||||||||
Short-term investments — Available for sale | 0.2 | 0.2 | 0.3 | 0.3 | |||||||||||
Short-term investments — Trading | 0.3 | — | 0.5 | — | |||||||||||
Cash and cash equivalents | 1.3 | 0.9 | 2.0 | 1.4 | |||||||||||
Equity securities — Trading | 3.7 | 5.5 | 8.9 | 12.4 | |||||||||||
Catastrophe bonds — Trading | 0.4 | 0.5 | 0.8 | 1.1 | |||||||||||
Total | $ | 50.2 | $ | 51.5 | $ | 100.8 | $ | 103.6 | |||||||
Investment expenses | (2.8 | ) | (3.5 | ) | (5.7 | ) | (6.1 | ) | |||||||
Net investment income | $ | 47.4 | $ | 48.0 | $ | 95.1 | $ | 97.5 |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||
($ in millions) | ($ in millions) | ||||||||||||||
Available for sale: | |||||||||||||||
Fixed income securities — gross realized gains | $ | 3.3 | $ | 2.1 | $ | 5.5 | $ | 9.2 | |||||||
Fixed income securities — gross realized (losses) | (2.4 | ) | (1.3 | ) | (3.7 | ) | (3.7 | ) | |||||||
Short-term investments — gross realized gains | — | 0.2 | 0.1 | 0.2 | |||||||||||
Short-term investments — gross realized (losses) | — | (0.1 | ) | — | (0.1 | ) | |||||||||
Cash and cash equivalents — gross realized gains | — | 0.1 | — | 0.1 | |||||||||||
Cash and cash equivalents — gross realized (losses) | (0.1 | ) | 0.2 | (0.1 | ) | (0.5 | ) | ||||||||
Other-than-temporary impairments | (0.1 | ) | — | (0.4 | ) | — | |||||||||
Trading: | |||||||||||||||
Fixed income securities — gross realized gains | 3.5 | 4.0 | 5.3 | 5.2 | |||||||||||
Fixed income securities — gross realized (losses) | (0.4 | ) | (0.6 | ) | (2.4 | ) | (6.4 | ) | |||||||
Short-term investments — gross realized gains | 0.1 | — | 0.1 | — | |||||||||||
Equity securities — gross realized gains | 4.4 | 9.3 | 8.9 | 15.2 | |||||||||||
Equity securities — gross realized (losses) | (3.6 | ) | (6.5 | ) | (5.0 | ) | (18.0 | ) | |||||||
Catastrophe bonds | (0.1 | ) | — | (0.1 | ) | (0.2 | ) | ||||||||
Net change in gross unrealized gains | 38.5 | 29.4 | 79.4 | 80.8 | |||||||||||
Other investments: | |||||||||||||||
Gross realized and unrealized (loss) in MVI | (0.1 | ) | — | (0.1 | ) | — | |||||||||
Gross realized (loss)/gain in Chaspark | (0.8 | ) | — | 0.9 | — | ||||||||||
Gross realized and unrealized (loss) in Bene | (0.2 | ) | — | (0.2 | ) | — | |||||||||
Total net realized and unrealized investment gains recorded in the statement of operations | $ | 42.0 | $ | 36.8 | $ | 88.2 | $ | 81.8 | |||||||
Change in available for sale net unrealized gains: | |||||||||||||||
Fixed income securities | 12.9 | 42.2 | 14.9 | 127.2 | |||||||||||
Total change in pre-tax available for sale unrealized gains | 12.9 | 42.2 | 14.9 | 127.2 | |||||||||||
Change in taxes | (1.1 | ) | (5.0 | ) | (1.0 | ) | (13.1 | ) | |||||||
Total change in net unrealized gains, net of taxes, recorded in other comprehensive income | $ | 11.8 | $ | 37.2 | $ | 13.9 | $ | 114.1 |
As at June 30, 2017 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | ||||||||||||
($ in millions) | |||||||||||||||
U.S. government | $ | 1,218.3 | $ | 9.2 | $ | (6.7 | ) | $ | 1,220.8 | ||||||
U.S. agency | 74.4 | 1.1 | — | 75.5 | |||||||||||
Municipal | 30.8 | 2.0 | — | 32.8 | |||||||||||
Corporate | 2,469.3 | 44.7 | (10.6 | ) | 2,503.4 | ||||||||||
Non-U.S. government-backed corporate | 92.3 | 0.5 | (0.2 | ) | 92.6 | ||||||||||
Non-U.S. government | 516.9 | 9.7 | (0.7 | ) | 525.9 | ||||||||||
Asset-backed | 48.7 | 0.2 | — | 48.9 | |||||||||||
Non-agency commercial mortgage-backed | 4.3 | — | — | 4.3 | |||||||||||
Agency mortgage-backed | 982.9 | 17.4 | (7.2 | ) | 993.1 | ||||||||||
Total fixed income securities — Available for sale | 5,437.9 | 84.8 | (25.4 | ) | 5,497.3 | ||||||||||
Total short-term investments — Available for sale | 41.9 | — | — | 41.9 | |||||||||||
Total | $ | 5,479.8 | $ | 84.8 | $ | (25.4 | ) | $ | 5,539.2 |
As at December 31, 2016 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | ||||||||||||
($ in millions) | |||||||||||||||
U.S. government | $ | 1,207.9 | $ | 9.4 | $ | (11.2 | ) | $ | 1,206.1 | ||||||
U.S. agency | 117.7 | 1.9 | — | 119.6 | |||||||||||
Municipal | 23.2 | 1.6 | (0.4 | ) | 24.4 | ||||||||||
Corporate | 2,566.9 | 39.6 | (20.0 | ) | 2,586.5 | ||||||||||
Non-U.S. government-backed corporate | 89.2 | 0.7 | (0.1 | ) | 89.8 | ||||||||||
Non-U.S. government | 477.7 | 11.8 | (0.8 | ) | 488.7 | ||||||||||
Asset-backed | 62.6 | 0.4 | — | 63.0 | |||||||||||
Non-agency commercial mortgage-backed | 12.3 | 0.3 | — | 12.6 | |||||||||||
Agency mortgage-backed | 1,062.6 | 19.6 | (8.3 | ) | 1,073.9 | ||||||||||
Total fixed income securities — Available for sale | 5,620.1 | 85.3 | (40.8 | ) | 5,664.6 | ||||||||||
Total short-term investments — Available for sale | 145.3 | — | — | 145.3 | |||||||||||
Total | $ | 5,765.4 | $ | 85.3 | $ | (40.8 | ) | $ | 5,809.9 |
As at June 30, 2017 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | ||||||||||||
($ in millions) | |||||||||||||||
U.S. government | $ | 112.4 | $ | 0.7 | $ | (0.3 | ) | $ | 112.8 | ||||||
Municipal | 5.7 | — | — | 5.7 | |||||||||||
Corporate | 882.5 | 16.1 | (2.7 | ) | 895.9 | ||||||||||
Bonds backed by Non-U.S government | 2.0 | — | — | 2.0 | |||||||||||
Non-U.S. government | 180.8 | 6.3 | (0.6 | ) | 186.5 | ||||||||||
Asset-backed | 12.2 | — | — | 12.2 | |||||||||||
Agency mortgage-backed | 142.7 | 0.4 | (0.7 | ) | 142.4 | ||||||||||
Total fixed income securities — Trading | 1,338.3 | 23.5 | (4.3 | ) | 1,357.5 | ||||||||||
Total short-term investments — Trading | 73.7 | — | — | 73.7 | |||||||||||
Total equity securities — Trading | 569.5 | 99.4 | (10.2 | ) | 658.7 | ||||||||||
Total catastrophe bonds — Trading | 28.3 | — | — | 28.3 | |||||||||||
Total | $ | 2,009.8 |