10-Q 1 ahlq32013doc.htm 10-Q AHL Q3 2013 Doc
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 ____________________________________________________________
Form 10-Q
 ____________________________________________________________
 
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2013
Or
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-31909 
  ____________________________________________________________
ASPEN INSURANCE HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)
 
  ____________________________________________________________
 
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)
Registrant’s telephone number, including area code
(441) 295-8201
____________________________________________________________
  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
ý
 
Accelerated filer
 
¨
 
 
 
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨   No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of November 1, 2013, there were 65,623,898 outstanding ordinary shares, with a par value of 0.15144558¢ per ordinary share, outstanding.



INDEX
 
 
 
Page
 
Item 1.
 
 
 
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2013 and 2012
 
 
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
 

2


PART I
FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

ASPEN INSURANCE HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As at September 30, 2013 and December 31, 2012
($ in millions, except share and per share amounts)
 
 
 
As at September 30, 2013
 
As at December 31, 2012
ASSETS
 
 
 
 
Investments:
 
 
 
 
Fixed income maturities, available for sale at fair value
(amortized cost — $5,388.2 and $5,228.5)
 
$
5,544.9

 
$
5,557.3

Fixed income maturities, trading at fair value
(amortized cost — $713.1 and $431.6)
 
718.6

 
456.1

Equity securities, available for sale at fair value
(cost — $128.7 and $174.0)
 
163.2

 
200.1

Equity securities, trading at fair value
(cost — $260.4 and $Nil)
 
278.3

 

Short-term investments, available for sale at fair value
(amortized cost — $150.3 and $431.5)
 
148.3

 
431.5

Short-term investments, trading at fair value
(amortized cost — $0.2 and $2.4)
 
0.2

 
2.4

Other investments, equity method
 
46.1

 
45.0

Total investments
 
6,899.6

 
6,692.4

Cash and cash equivalents
 
1,198.3

 
1,463.6

Reinsurance recoverables
 
 
 
 
Unpaid losses
 
442.2

 
499.0

Ceded unearned premiums
 
179.6

 
122.6

Receivables
 
 
 
 
Underwriting premiums
 
1,089.1

 
1,057.5

Other
 
76.3

 
68.5

Funds withheld
 
47.7

 
84.3

Deferred policy acquisition costs
 
262.1

 
223.0

Derivatives at fair value
 
5.6

 
2.0

Receivable for securities sold
 
5.9

 
0.2

Office properties and equipment
 
60.5

 
57.9

Tax recoverable
 
3.1

 
2.4

Other assets
 
13.1

 
18.2

Intangible assets
 
18.6

 
19.0

Total assets
 
$
10,301.7

 
$
10,310.6

See accompanying notes to unaudited condensed consolidated financial statements.


3


ASPEN INSURANCE HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As at September 30, 2013 and December 31, 2012
($ in millions, except share and per share amounts)
 
 
 
As at September 30, 2013
 
As at December 31, 2012
LIABILITIES
 
 
 
 
Insurance reserves
 
 
 
 
Losses and loss adjustment expenses
 
$
4,715.6

 
$
4,779.7

Unearned premiums
 
1,334.6

 
1,120.8

Total insurance reserves
 
6,050.2

 
5,900.5

Payables
 
 
 
 
Reinsurance premiums
 
178.4

 
154.1

Deferred taxation
 
17.7

 
11.8

Accrued expenses and other payables
 
282.8

 
249.3

Liabilities under derivative contracts
 
2.3

 
7.4

Total payables
 
481.2

 
422.6

Long-term debt
 
499.2

 
499.1

Total liabilities
 
$
7,030.6

 
$
6,822.2

Commitments and contingent liabilities (see Note 15)
 

 

SHAREHOLDERS’ EQUITY
 
 
 
 
Ordinary shares:
 
 
 
 
65,700,665 shares of par value 0.15144558¢ each
(December 31, 2012 — 70,753,723)
 
$
0.1

 
0.1

Preference shares:
 
 
 
 
11,000,000 5.950% shares of par value 0.15144558¢ each
(December 31, 2012 — Nil)
 

 

5.625% shares of par value 0.15144558¢ each
(December 31, 2012 — 4,600,000)
 

 

5,327,500 7.401% shares of par value 0.15144558¢ each
(December 31, 2012 — 5,327,500)
 

 

6,400,000 7.250% shares of par value 0.15144558¢ each
(December 31, 2012 — 6,400,000)
 

 

Non-controlling interest
 
(0.1
)
 
0.2

Additional paid-in capital
 
1,297.6

 
1,516.7

Retained earnings
 
1,714.4

 
1,544.0

Accumulated other comprehensive income, net of taxes
 
259.1

 
427.4

Total shareholders’ equity
 
3,271.1

 
3,488.4

Total liabilities and shareholders’ equity
 
$
10,301.7

 
$
10,310.6

See accompanying notes to unaudited condensed consolidated financial statements.

4


ASPEN INSURANCE HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
($ in millions, except share and per share amounts)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2013
 
2012
 
2013
 
2012
Revenues
 
 
 
 
 
 
 
 
Net earned premium
 
$
544.3

 
$
516.2

 
$
1,599.2

 
$
1,525.0

Net investment income
 
45.0

 
48.6

 
139.2

 
153.8

Realized and unrealized investment gains
 
23.6

 
13.2

 
54.3

 
29.3

Other income
 
1.6

 
4.8

 
3.6

 
9.0

Total revenues
 
614.5

 
582.8

 
1,796.3

 
1,717.1

Expenses
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
290.2

 
255.0

 
892.3

 
801.1

Amortization of deferred policy acquisition costs
 
110.5

 
103.1

 
322.3

 
301.2

General, administrative and corporate expenses
 
98.9

 
90.7

 
273.2

 
259.0

Interest on long-term debt
 
7.7

 
7.8

 
23.2

 
23.2

Change in fair value of derivatives
 
(6.6
)
 
4.9

 
0.5

 
24.0

Realized and unrealized investment losses
 
5.9

 
2.4

 
28.0

 
8.2

Net realized and unrealized foreign exchange losses/(gains)
 
(2.4
)
 
(4.5
)
 
7.1

 
0.5

Other expenses
 

 
0.3

 
0.6

 
1.9

Total expenses
 
504.2

 
459.7

 
1,547.2

 
1,419.1

Income from operations before income tax
 
110.3

 
123.1

 
249.1

 
298.0

Income tax expense
 
(2.9
)
 
(8.0
)
 
(9.8
)
 
(19.6
)
Net income
 
$
107.4

 
$
115.1

 
$
239.3

 
$
278.4

Add: Loss attributable to non-controlling interest
 
0.3

 

 
0.3

 
0.3

Net income attributable to Aspen Insurance Holdings Limited’s ordinary shareholders
 
$
107.7

 
$
115.1

 
$
239.6

 
$
278.7

Other Comprehensive Income:
 
 
 
 
 
 
 
 
Available for sale investments:
 
 
 
 
 
 
 
 
Reclassification adjustment for net realized losses/(gains) on investments included in net income
 
$
(8.3
)
 
$
5.0

 
$
(20.7
)
 
$
5.2

Change in net unrealized gains on available for sale securities held
 
4.8

 
27.2

 
(138.6
)
 
52.0

Amortization of loss on derivative contract
 

 
0.2

 
0.2

 
0.3

Change in foreign currency translation adjustment
 
3.4

 
(4.9
)
 
(21.0
)
 
(15.8
)
Other comprehensive income, gross of tax
 
(0.1
)
 
27.5

 
(180.1
)
 
41.7

Tax thereon:
 
 
 
 
 
 
 
 
Reclassification adjustment for net realized losses on investments included in net income
 
0.1

 

 
0.5

 

Change in net unrealized gains on available for sale securities held
 
(0.4
)
 
(1.1
)
 
11.3

 
(0.9
)
Total tax on other comprehensive income
 
(0.3
)
 
(1.1
)
 
11.8

 
(0.9
)
Other comprehensive income, net of tax
 
(0.4
)
 
26.4

 
(168.3
)
 
40.8

Total comprehensive income attributable to Aspen Insurance Holdings Limited’s ordinary shareholders
 
$
107.3

 
$
141.5

 
$
71.3

 
$
319.5

Per Share Data
 
 
 
 
 
 
 
 
Weighted average number of ordinary share and share equivalents
 
 
 
 
 
 
 
 
Basic
 
66,716,202

 
71,129,102

 
67,302,857

 
71,125,664

Diluted
 
68,561,515

 
73,397,796

 
69,959,474

 
73,703,038

Basic earnings per ordinary share adjusted for preference share dividends
 
$
1.47

 
$
1.50

 
$
3.06

 
$
3.60

Diluted earnings per ordinary share adjusted for preference share dividends
 
$
1.43

 
$
1.45

 
$
2.95

 
$
3.47

See accompanying notes to unaudited condensed consolidated financial statements.

5


ASPEN INSURANCE HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY
($ in millions)
 
 
Nine Months Ended September 30,
 
 
2013
 
2012
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
 
0.2

 
0.3

Net (loss) attributable to non-controlling interest for the period
 
(0.3
)
 
(0.3
)
Dividends due to non-controlling interest
 

 
(0.1
)
End of the period
 
(0.1
)
 
(0.1
)
Additional paid-in capital
 
 
 
 
Beginning of the period
 
1,516.7

 
1,385.0

New ordinary shares issued
 
16.7

 
21.5

Ordinary shares repurchased and cancelled
 
(294.9
)
 
(51.9
)
Preference shares issued
 
270.4

 
154.5

PIERS redeemed and cancelled
 
(230.0
)
 

PIERS redemption (1)
 
7.1

 

Share-based compensation
 
11.6

 
12.8

End of the period
 
1,297.6

 
1,521.9

Retained earnings
 
 
 
 
Beginning of the period
 
1,544.0

 
1,341.6

Net income for the period
 
239.3

 
278.4

Dividends on ordinary shares
 
(36.0
)
 
(35.1
)
Dividends on preference shares
 
(26.1
)
 
(22.6
)
PIERS redemption (1)
 
(7.1
)
 

Net loss attributable to non-controlling interest for the period
 
0.3

 
0.3

End of the period
 
1,714.4

 
1,562.6

Accumulated other comprehensive income:
 
 
 
 
Cumulative foreign currency translation adjustments, net of taxes:
 
 
 
 
Beginning of the period
 
112.7

 
124.2

Change for the period, net of income tax
 
(21.0
)
 
(15.8
)
End of the period
 
91.7

 
108.4

Loss on derivatives, net of taxes:
 
 
 
 
Beginning of the period
 
(0.5
)
 
(0.7
)
Reclassification to interest payable
 
0.2

 
0.3

End of the period
 
(0.3
)
 
(0.4
)
Unrealized appreciation on investments, net of taxes:
 
 
 
 
Beginning of the period
 
315.2

 
305.4

Change for the period, net of taxes
 
(147.5
)
 
56.3

End of the period
 
167.7

 
361.7

Total accumulated other comprehensive income, net of taxes
 
259.1

 
469.7

 
 
 
 
 
Total shareholders’ equity
 
$
3,271.1

 
$
3,554.2

 
(1) 
The $7.1 million reclassification from additional paid-in capital to retained earnings is the difference between the capital raised upon issuance of the Perpetual Preferred Income Equity Replacement Securities (“PIERS”), net of the original issuance costs, and the final redemption of the PIERS in the amount of $230.0 million.
See accompanying notes to unaudited condensed consolidated financial statements.

6


ASPEN INSURANCE HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
 
 
 
Nine Months Ended September 30,
 
 
2013
 
2012
Cash flows from operating activities:
 
 
 
 
Net income
 
$
239.3

 
$
278.4

Proportion due to non-controlling interest
 
0.3

 
0.3

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
 
Depreciation and amortization
 
27.3

 
31.1

Share-based compensation
 
11.6

 
12.8

Realized and unrealized investment (gains)
 
(54.3
)
 
(29.3
)
Realized and unrealized investment losses
 
28.0

 
8.2

Net realized and unrealized investment foreign exchange losses
 
11.5

 
1.6

Loss on derivative contracts
 
0.2

 
0.3

Changes in:
 
 
 
 
Insurance reserves:
 
 
 
 
Losses and loss adjustment expenses
 
(46.3
)
 
69.5

Unearned premiums
 
212.5

 
261.1

Reinsurance recoverables:
 
 
 
 
Unpaid losses
 
54.8

 
(32.8
)
Ceded unearned premiums
 
(57.6
)
 
(62.7
)
Other receivables
 
7.2

 
(3.4
)
Deferred policy acquisition costs
 
(39.1
)
 
(46.7
)
Reinsurance premiums payable
 
26.3

 
(85.1
)
Funds withheld
 
36.6

 
11.2

Premiums receivable
 
(39.3
)
 
(105.2
)
Deferred taxes
 
7.8

 
(2.9
)
Income tax payable
 
(4.1
)
 
14.5

Accrued expenses and other payable
 
33.2

 
30.2

Fair value of derivatives and settlement of liabilities under derivatives
 
(8.4
)
 
(2.2
)
Long-term debt
 
0.1

 
0.1

Intangible assets
 
(0.1
)
 

Other assets
 
(14.5
)
 
(3.9
)
Net cash generated by operating activities
 
$
433.0

 
$
345.1

See accompanying notes to unaudited condensed consolidated financial statements.

7


ASPEN INSURANCE HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
 
 
 
Nine Months Ended September 30,
 
 
2013
 
2012
Cash flows (used in) investing activities:
 
 
 
 
(Purchases) of fixed income maturities — Available for sale
 
$
(1,748.6
)
 
$
(1,057.1
)
(Purchases) of fixed income maturities — Trading
 
(555.5
)
 
(187.7
)
Proceeds from sales and maturities of fixed income maturities — Available for sale
 
1,564.4

 
989.7

Proceeds from sales and maturities of fixed income maturities — Trading
 
276.3

 
164.5

(Purchases) of equity securities — Available for sale
 
(2.5
)
 
(41.5
)
(Purchases) of equity securities — Trading
 
(275.4
)
 

Proceeds from sales of equity securities — Available for sale
 
61.8

 
35.9

Proceeds from sales of equity securities — Trading
 
15.1

 

Net (purchases)/sales of short-term investments
 
275.7

 
(190.4
)
Net change in (payable)/receivable for securities sold
 
5.6

 
19.3

Purchase of equipment
 
(10.1
)
 
(19.9
)
Net cash (used in) investing activities
 
(393.2
)
 
(287.2
)
 
 
 
 
 
Cash flows (used in)/from financing activities:
 
 
 
 
Proceeds from the issuance of ordinary shares, net of issuance costs
 
16.7

 
21.5

Proceeds from the issuance of preference shares, net of issuance costs
 
270.4

 
154.5

PIERS repurchased and cancelled
 
(230.0
)
 

Ordinary shares repurchased
 
(294.9
)
 
(51.9
)
Dividends paid on ordinary shares
 
(36.0
)
 
(35.1
)
Dividends paid on preference shares
 
(26.1
)
 
(22.6
)
Net cash (used in)/from financing activities
 
(299.9
)
 
66.4

 
 
 
 
 
Effect of exchange rate movements on cash and cash equivalents
 
(5.2
)
 
10.8

 
 
 
 
 
Increase/(decrease) in cash and cash equivalents
 
(265.3
)
 
135.1

Cash and cash equivalents at beginning of period
 
1,463.6

 
1,239.1

Cash and cash equivalents at end of period
 
$
1,198.3

 
$
1,374.2

 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
Net cash paid during the period for income tax
 
$
7.3

 
$
6.4

Cash paid during the period for interest
 
$
22.5

 
$
22.5

See accompanying notes to unaudited condensed consolidated financial statements.

8


ASPEN INSURANCE HOLDINGS LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
1.
History and Organization
Aspen Insurance Holdings Limited (“Aspen Holdings”) was incorporated on May 23, 2002 and holds subsidiaries that provide insurance and reinsurance on a worldwide basis. Its principal operating subsidiaries are Aspen Insurance UK Limited (“Aspen U.K.”), Aspen Bermuda Limited (“Aspen Bermuda”), Aspen Specialty Insurance Company (“Aspen Specialty”), Aspen American Insurance Company (“AAIC”) and Aspen Underwriting Limited (corporate member of Lloyd’s Syndicate 4711, “AUL”) (collectively, the “Operating Subsidiaries”). We have also established Aspen Capital Management, Ltd and other related entities (“ACM”) which will be used to leverage our existing franchise and underwriting expertise to offer investors access to diversified products. References to the “Company”, “we”, “us” or “our” refer to Aspen Holdings or Aspen Holdings and its subsidiaries.

2.
Basis of Preparation
The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ended December 31, 2013. The unaudited condensed consolidated financial statements include the accounts of Aspen Holdings and its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.
The balance sheet as at December 31, 2012 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2012 contained in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (File No. 001-31909).
Assumptions and estimates made by management have a significant effect on the amounts reported within the unaudited condensed consolidated financial statements. The most significant of these relate to losses and loss adjustment expenses, the value of investments, reinsurance recoverables and the fair value of derivatives. All material assumptions and estimates are regularly reviewed and adjustments made as necessary, but actual results could be significantly different from those expected when the assumptions or estimates were made.
New Accounting Policies Adopted in 2013
In 2011, the Financial Accounting Standard Board (“FASB”) issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities.” The ASU 2011-11 retains the existing offsetting model under U.S. GAAP but requires disclosures to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (“IFRS”) by aligning these requirements. ASU 2011-11 is effective for annual reporting periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required.
In January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures About Offsetting Assets and Liabilities” which clarifies which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11. ASU 2013-01 addresses concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRS. Like ASU 2011-11, ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods therein. Retrospective application is required for any period presented that begins before the entity’s initial application of the new requirements. The Company adopted ASU 2011-11 and ASU 2013-01 in the first quarter of 2013 and they do not have a material impact on the unaudited condensed consolidated financial statements.

9


In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income” which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (“AOCI”). ASU 2013-02 is intended to improve the transparency of changes in other comprehensive income (“OCI”) and items reclassified out of AOCI in the financial statements. It does not amend any existing requirements for reporting net income or OCI in the financial statements. ASU 2013-02 was applied prospectively and was effective for annual reporting periods beginning after December 15, 2012, and interim periods within those years. The Company adopted ASU 2013-02 in the first quarter of 2013 and this information is presented in Note 3 of the accompanying notes to the unaudited condensed consolidated financial statements.
In July 2013, the FASB issued ASU 2013-10, “Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes” which provides guidance on the risks permitted to be hedged in a fair value or cash flow hedges, specifically, the risk of changes in a hedged item’s fair value or hedged transaction’s cash flows due to the changes in the designated benchmark interest rate. ASU 2013-10 is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013.  The Company has adopted ASU 2013-10 in the third quarter of 2013 and it does not have a material impact on the unaudited condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted
In February 2013, the FASB issued ASU 2013-04, “Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date” to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. Examples of obligations include debt arrangements, other contractual obligations and settled litigation and judicial rulings. ASU 2013-04 will be applied retrospectively and is effective for annual reporting periods beginning after December 15, 2013, and interim periods within those years. The Company does not anticipate that this standard will have a material impact on its unaudited condensed consolidated financial statements.
In March 2013, the FASB issued ASU 2013-05, “Parent’s Accounting for the Cumulative Translation Adjustment Upon Derecognition of Certain Subsidiaries or Groups of Assets Within a Foreign Entity or of an Investment in a Foreign Entity” to standardize the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary. ASU 2013-05 will be applied prospectively and is effective for annual reporting periods beginning after December 15, 2013, and interim periods within those years. The Company does not expect ASU 2013-05 to have a material impact on its unaudited condensed consolidated financial statements unless it should choose to sell its investments in a foreign entity or cease to hold a controlling financial interest.
 In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013 or interim periods within those years. The Company does not expect ASU 2013-11 to have a material impact on the unaudited condensed consolidated financial statements as its presentation of unrecognized tax benefits is already as required by ASU 2013-11.


10


3.
Reclassifications from Accumulated Other Comprehensive Income
The following table sets out the components of the Company’s AOCI that are reclassified into the unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2013:
 
 
 
Amount Reclassified from AOCI
 
 
Details about the AOCI Components
 
Three Months Ended September 30, 2013
 
Nine Months Ended September 30, 2013
 
Affected Line Item in the Unaudited
Condensed Consolidated Statement
of Operations
 
 
($ in millions)
 
 
Available for sale securities:
 
 
 
 
Realized gain on sale of securities
 
$
8.6

 
$
21.2

 
Realized and unrealized investment gains
Realized (loss) on sale of securities
 
(0.3
)
 
(0.5
)
 
Realized and unrealized investment losses
 
 
8.3

 
20.7

 
Income from operations before tax
Tax on realized gains and (losses) of securities
 
(0.1
)
 
(0.5
)
 
Income tax expense
 
 
$
8.2

 
$
20.2

 
Net income
Foreign currency translation adjustments:
 
 
 
 
 
 
Foreign currency translation adjustments, before tax
 
$
4.8

 
$
0.5

 
Net realized and unrealized foreign exchange gains/(losses)
Tax on foreign currency translation adjustments
 
(1.1
)
 
(0.1
)
 
Income tax expense
 
 
$
3.7

 
$
0.4

 
Net income
Amortization of derivatives:
 
 
 
 
 
 
Amortization of long-term debt associated expenses, before tax
 
$

 
$
(0.2
)
 
Interest expense
 
 
$

 
$
(0.2
)
 
Net income
Total reclassifications from AOCI to the statement of operations, net of tax
 
$
11.9

 
$
20.4

 
Net income



11


4.
Earnings per Ordinary Share
Basic earnings per ordinary share are calculated by dividing net income available to holders of Aspen Holdings’ ordinary shares by the weighted average number of ordinary shares outstanding. Diluted earnings per ordinary share are based on the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the period of calculation using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2013 and 2012, respectively:
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
($ in millions, except share and per share amounts)
Net income
 
$
107.4

 
$
115.1

 
$
239.3

 
$
278.4

PIERS redemption(1)
 

 

 
(7.1
)
 

Preference share dividends
 
(9.5
)
 
(8.6
)
 
(26.1
)
 
(22.6
)
Basic and diluted net income available to ordinary shareholders
 
97.9

 
106.5

 
206.1

 
255.8

Ordinary shares:
 
 
 
 
 
 
 
 
Basic weighted average ordinary shares
 
66,716,202

 
71,129,102

 
67,302,857

 
71,125,664

Weighted average effect of dilutive securities(2)
 
1,845,313

 
2,268,694

 
2,656,617

 
2,577,374

Total diluted weighted average ordinary shares
 
68,561,515

 
73,397,796

 
69,959,474

 
73,703,038

Earnings per ordinary share:
 

 

 

 

Basic
 
$
1.47

 
$
1.50

 
$
3.06

 
$
3.60

Diluted
 
$
1.43

 
$
1.45

 
$
2.95

 
$
3.47

 
(1) 
The $7.1 million deduction to net income is attributable to the reclassification from additional paid-in capital to retained earnings representing the difference between the capital raised upon issuance of the PIERS, net of the original issuance costs, and the final redemption of the PIERS in the amount of $230.0 million.
(2) 
Dilutive securities comprise: investor options, employee options, performance shares associated with the Company’s long term incentive program, employee share purchase plans and restricted stock units as described in Note 13, in addition to the PIERS.
Dividends. On October 30, 2013, the Company’s Board of Directors declared the following quarterly dividends:
 
 
 
Dividend
 
Payable on:
 
Record Date:
Ordinary shares
 
$
0.18

 
November 27, 2013
 
November 13, 2013
7.401% preference shares
 
$
0.462563

 
January 1, 2014
 
December 15, 2013
7.250% preference shares
 
$
0.4531

 
January 1, 2014
 
December 15, 2013
5.950% preference shares
 
$
0.3719

 
January 1, 2014
 
December 15, 2013

5.
Segment Reporting
The Company has two reporting business segments: Insurance and Reinsurance. In arriving at these reporting segments, the Company has considered similarities in economic characteristics, products, customers, distribution, the regulatory environment of the Company’s operating segments and quantitative thresholds to determine the Company’s reportable segments. Segment profit or loss for each of the Company’s operating segments is measured by underwriting profit or loss. Underwriting profit is the excess of net earned premiums over the sum of losses and loss expenses, amortization of deferred policy acquisition costs and general and administrative expenses. Underwriting profit or loss provides a basis for management to evaluate the segment’s underwriting performance.
Reinsurance Segment. The reinsurance segment consists of property catastrophe reinsurance, other property reinsurance (risk excess, pro rata, facultative and engineering), casualty reinsurance (U.S. treaty, international treaty and global facultative) and specialty reinsurance (credit and surety, agriculture and other specialty). For a more detailed description of this segment, see Part I, Item 1, “Business — Business Segment — Reinsurance” in the Company’s 2012 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission.

12


Insurance Segment. The insurance segment consists of property insurance, casualty insurance, marine insurance, energy and transportation insurance, financial and professional lines insurance and programs business. For a more detailed description of this segment, see Part I, Item 1 “Business — Business Segment — Insurance” in the Company’s 2012 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission.
Non-underwriting Disclosures. The Company has provided additional disclosures for corporate and other (non-underwriting) income and expenses. Corporate and other income and expenses include net investment income, net realized and unrealized investment gains or losses, corporate expenses, interest expenses, net realized and unrealized foreign exchange gains or losses and income taxes, which are not allocated to the underwriting segments. Corporate expenses are not allocated to the Company’s operating segments as they typically do not fluctuate with the levels of premiums written and are not directly related to the Company’s segment operations. The Company does not allocate its assets by segment as it evaluates underwriting results of each segment separately from the results of the Company’s investment portfolio.

The following tables provide a summary of gross and net written and earned premiums, underwriting results, ratios and reserves for each of the Company’s business segments for the three months ended September 30, 2013 and 2012:
 
 
 
Three Months Ended September 30, 2013
 
 
 
Reinsurance
 
Insurance
 
Total
 
 
 
($ in millions)
 
Underwriting Revenues
 
 
 
 
 
 
 
Gross written premiums
 
$
219.5

 
$
362.1

 
$
581.6

 
Net written premiums
 
218.4

 
323.6

 
542.0

 
Gross earned premiums
 
268.6

 
356.5

 
625.1

 
Net earned premiums
 
255.7

 
288.6

 
544.3

 
Underwriting Expenses
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
122.2

 
168.0

 
290.2

 
Amortization of deferred policy acquisition costs
 
49.1

 
61.4

 
110.5

 
General and administrative expenses
 
34.6

 
49.5

 
84.1

 
Underwriting income
 
49.8

 
9.7

 
59.5

 
Corporate expenses
 
 
 
 
 
(14.8
)
 
Net investment income
 
 
 
 
 
45.0

 
Realized and unrealized investment gains
 
 
 
 
 
23.6

 
Realized and unrealized investment (losses)
 
 
 
 
 
(5.9
)
 
Change in fair value of derivatives
 
 
 
 
 
6.6

 
Interest expense on long term debt
 
 
 
 
 
(7.7
)
 
Net realized and unrealized foreign exchange gains
 
 
 
 
 
2.4

 
Other income
 
 
 
 
 
1.6

 
Income before tax
 
 
 
 
 
$
110.3

 
 
 
 
 
 
 
 
 
Net reserves for loss and loss adjustment expenses
 
$
2,718.0

 
$
1,555.4

 
$
4,273.4

 
Ratios
 
 
 
 
 
 
 
Loss ratio
 
47.8
%
 
58.2
%
 
53.3
%
 
Policy acquisition expense ratio
 
19.2

 
21.3

 
20.3

 
General and administrative expense ratio
 
13.5

 
17.2

 
18.2

(1) 
Expense ratio
 
32.7

 
38.5

 
38.5

 
Combined ratio
 
80.5
%
 
96.7
%
 
91.8
%
 
 
(1) 
The general and administrative expense ratio in the total column includes corporate expenses.

13


 
 
Three Months Ended September 30, 2012
 
 
 
Reinsurance
 
Insurance
 
Total
 
 
 
( $ in millions)
 
Underwriting Revenues
 
 
 
 
 
 
 
Gross written premiums
 
$
259.5

 
$
298.9

 
$
558.4

 
Net written premiums
 
256.9

 
250.2

 
507.1

 
Gross earned premiums
 
299.8

 
302.0

 
601.8

 
Net earned premiums
 
279.6

 
236.6

 
516.2

 
Underwriting Expenses
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
117.1

 
137.9

 
255.0

 
Amortization of deferred policy acquisition costs
 
55.7

 
47.4

 
103.1

 
General and administrative expenses
 
33.6

 
42.8

 
76.4

 
Underwriting income
 
73.2

 
8.5

 
81.7

 
Corporate expenses
 
 
 
 
 
(14.3
)
 
Net investment income
 
 
 
 
 
48.6

 
Realized and unrealized investment gains
 
 
 
 
 
13.2

 
Realized and unrealized investment (losses)
 
 
 
 
 
(2.4
)
 
Change in fair value of derivatives
 
 
 
 
 
(4.9
)
 
Interest expense on long term debt
 
 
 
 
 
(7.8
)
 
Net realized and unrealized foreign exchange gains
 
 
 
 
 
4.5

 
Other income
 
 
 
 
 
4.8

 
Other (expenses)
 
 
 
 
 
(0.3
)
 
Income before tax
 
 
 
 
 
$
123.1

 
 
 
 
 
 
 
 
 
Net reserves for loss and loss adjustment expenses
 
$
2,755.1

 
$
1,422.9

 
$
4,178.0

 
Ratios
 
 
 
 
 
 
 
Loss ratio
 
41.9
%
 
58.3
%
 
49.4
%
 
Policy acquisition expense ratio
 
19.9

 
20.0

 
20.0

 
General and administrative expense ratio
 
12.0

 
18.1

 
17.6

(1) 
Expense ratio
 
31.9

 
38.1

 
37.6

 
Combined ratio
 
73.8
%
 
96.4
%
 
87.0
%
 
 
(1) 
The general and administrative expense ratio in the total column includes corporate expenses.


14


The following tables provide a summary of gross and net written and earned premiums, underwriting results, ratios and reserves for each of the Company’s business segments for the nine months ended September 30, 2013 and 2012:
 
 
 
Nine Months Ended September 30, 2013
 
 
 
Reinsurance
 
Insurance
 
Total
 
 
 
($ in millions)
 
Underwriting Revenues
 
 
 
 
 
 
 
Gross written premiums
 
$
957.7

 
$
1,084.6

 
$
2,042.3

 
Net written premiums
 
907.5

 
844.2

 
1,751.7

 
Gross earned premiums
 
828.9

 
1,000.7

 
1,829.6

 
Net earned premiums
 
788.2

 
811.0

 
1,599.2

 
Underwriting Expenses
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
394.9

 
497.4

 
892.3

 
Amortization of deferred policy acquisition costs
 
161.0

 
161.3

 
322.3

 
General and administrative expenses
 
97.2

 
134.0

 
231.2

 
Underwriting income
 
135.1

 
18.3

 
153.4

 
Corporate expenses
 
 
 
 
 
(42.0
)
 
Net investment income
 
 
 
 
 
139.2

 
Realized and unrealized investment gains
 
 
 
 
 
54.3

 
Realized and unrealized investment (losses)
 
 
 
 
 
(28.0
)
 
Change in fair value of derivatives
 
 
 
 
 
(0.5
)
 
Interest expense on long term debt
 
 
 
 
 
(23.2
)
 
Net realized and unrealized foreign exchange (losses)
 
 
 
 
 
(7.1
)
 
Other income
 
 
 
 
 
3.6

 
Other (expenses)
 
 
 
 
 
(0.6
)
 
Income before tax
 
 
 
 
 
$
249.1

 
 
 
 
 
 
 
 
 
Net reserves for loss and loss adjustment expenses
 
$
2,718.0

 
$
1,555.4

 
$
4,273.4

 
Ratios
 
 
 
 
 
 
 
Loss ratio
 
50.1
%
 
61.3
%
 
55.8
%
 
Policy acquisition expense ratio
 
20.4

 
19.9

 
20.2

 
General and administrative expense ratio
 
12.3

 
16.5

 
17.1

(1) 
Expense ratio
 
32.7

 
36.4

 
37.3

 
Combined ratio
 
82.8
%
 
97.7
%
 
93.1
%
 
 
(1) 
The general and administrative expense ratio in the total column includes corporate expenses.

15


 
 
Nine Months Ended September 30, 2012
 
 
 
Reinsurance
 
Insurance
 
Total
 
 
 
( $ in millions)
 
Underwriting Revenues
 
 
 
 
 
 
 
Gross written premiums
 
$
1,033.5

 
$
973.6

 
$
2,007.1

 
Net written premiums
 
963.2

 
759.3

 
1,722.5

 
Gross earned premiums
 
890.8

 
848.8

 
1,739.6

 
Net earned premiums
 
832.6

 
692.4

 
1,525.0

 
Underwriting Expenses
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
386.4

 
414.7

 
801.1

 
Amortization of deferred policy acquisition costs
 
166.8

 
134.4

 
301.2

 
General and administrative expenses
 
92.6

 
126.3

 
218.9

 
Underwriting income
 
186.8

 
17.0

 
203.8

 
Corporate expenses
 
 
 
 
 
(40.1
)
 
Net investment income
 
 
 
 
 
153.8

 
Realized and unrealized investment gains
 
 
 
 
 
29.3

 
Realized and unrealized investment (losses)
 
 
 
 
 
(8.2
)
 
Change in fair value of derivatives
 
 
 
 
 
(24.0
)
 
Interest expense on long term debt
 
 
 
 
 
(23.2
)
 
Net realized and unrealized foreign exchange (losses)
 
 
 
 
 
(0.5
)
 
Other income
 
 
 
 
 
9.0

 
Other (expenses)
 
 
 
 
 
(1.9
)
 
Income before tax
 
 
 
 
 
$
298.0

 
 
 
 
 
 
 
 
 
Net reserves for loss and loss adjustment expenses
 
$
2,755.1

 
$
1,422.9

 
$
4,178.0

 
Ratios
 
 
 
 
 
 
 
Loss ratio
 
46.4
%
 
59.9
%
 
52.5
%
 
Policy acquisition expense ratio
 
20.0

 
19.4

 
19.8

 
General and administrative expense ratio
 
11.1

 
18.2

 
17.0

(1) 
Expense ratio
 
31.1

 
37.6

 
36.8

 
Combined ratio
 
77.5
%
 
97.5
%
 
89.3
%
 
 
(1) 
The general and administrative expense ratio in the total column includes corporate expenses.


16


6.     Investments
Income Statement
Investment Income. The following table summarizes investment income for the three and nine months ended September 30, 2013 and 2012:
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
September 30, 2013
 
September 30, 2012
 
September 30, 2013
 
September 30, 2012
 
 
($ in millions)
 
($ in millions)
Fixed income maturities — Available for sale
 
$
38.2

 
$
43.7

 
$
117.2

 
$
136.9

Fixed income maturities — Trading
 
5.3

 
4.0

 
13.4

 
12.2

Short-term investments — Available for sale
 
0.3

 
0.5

 
1.9

 
1.8

Fixed term deposits (included in cash and cash equivalents)
 
0.7

 
1.4

 
3.4

 
4.7

Equity securities — Available for sale
 
1.2

 
1.9

 
4.7

 
5.1

Equity securities — Trading
 
1.8

 

 
5.5

 

Total
 
$
47.5

 
$
51.5

 
$
146.1

 
$
160.7

Investment expenses
 
(2.5
)
 
(2.9
)
 
(6.9
)
 
(6.9
)
Net investment income
 
$
45.0

 
$
48.6

 
$
139.2

 
$
153.8


17


The following table summarizes the net realized and unrealized investment gains and losses recorded in the statement of operations and the change in unrealized gains and losses on investments recorded in other comprehensive income:
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
September 30, 2013
 
September 30, 2012
 
September 30, 2013
 
September 30, 2012
 
 
($ in millions)
 
($ in millions)
Available for sale:
 
 
 
 
 
 
 
 
Fixed income maturities — gross realized gains
 
$
6.9

 
$
1.5

 
$
15.7

 
$
5.3

Fixed income maturities — gross realized (losses)
 
(5.6
)
 
(0.1
)
 
(6.8
)
 
(0.4
)
Equity securities — gross realized gains
 
6.3

 
1.0

 
13.8

 
2.9

Equity securities — gross realized (losses)
 

 
(0.1
)
 

 
(4.5
)
Trading:
 
 
 
 
 
 
 
 
Fixed income maturities — gross realized gains
 
0.8

 
2.3

 
6.6

 
6.7

Fixed income maturities — gross realized (losses)
 
(1.3
)
 
(0.1
)
 
(1.9
)
 
(0.3
)
Equity securities — gross realized gains
 
0.4

 

 
0.8

 

Equity securities — gross realized (losses)
 

 

 
(0.3
)
 

Net change in gross unrealized gains/(losses)
 
9.0

 
6.7

 
(2.7
)
 
12.7

Impairments:
 
 
 
 
 
 
 
 
Total other-than-temporary impairments
 

 
(2.1
)
 

 
(3.0
)
Gross realized and unrealized gains in Cartesian Iris
 
1.2

 
1.7

 
1.1

 
1.7

Total net realized and unrealized investment gains recorded in the statement of operations
 
$
17.7

 
$
10.8

 
$
26.3

 
$
21.1

 
 
 
 
 
 
 
 
 
Change in available for sale net unrealized gains/(losses):
 
 
 
 
 
 
 
 
Fixed income maturities
 
(3.3
)
 
25.5

 
(168.7
)
 
40.9

Short-term investments
 

 
0.2

 

 
0.2

Equity securities
 
(0.2
)
 
6.5

 
9.4

 
16.1

Total change in pre-tax available for sale unrealized gains/(losses)
 
(3.5
)
 
32.2

 
(159.3
)
 
57.2

Change in taxes
 
(0.3
)
 
(1.1
)
 
11.8

 
(0.9
)
Total change in net unrealized gains/(losses), net of taxes recorded in other comprehensive income
 
$
(3.8
)
 
$
31.1

 
$
(147.5
)
 
$
56.3


Other-than-temporary Impairments. A security is potentially impaired when its fair value is below its amortized cost. The Company reviews its available for sale fixed income and equity portfolios on an individual security basis for potential other-than-temporary impairment (“OTTI”) each quarter based on criteria including issuer-specific circumstances, credit ratings actions and general macro-economic conditions. For a more detailed description of OTTI, please refer to Note 2 (c) of the “Notes to the Audited Consolidated Financial Statements” in the Company’s 2012 Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission. The total OTTI charge for the three and nine months ended September 30, 2013 was $Nil (2012 — $2.1 million) and $Nil (2012$3.0 million), respectively.

18


Balance Sheet
Fixed Income Maturities, Short-Term Investments and Equities Available For Sale. The following tables present the cost or amortized cost, gross unrealized gains and losses and estimated fair market value of available for sale investments in fixed income maturities, short-term investments and equity securities as at September 30, 2013 and December 31, 2012:
 
 
 
As at September 30, 2013
 
 
Cost or
Amortized Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Market
Value
 
 
($ in millions)
U.S. government
 
$
995.3

 
$
28.4

 
$
(2.6
)
 
$
1,021.1

U.S. agency
 
269.2

 
13.0

 
(0.7
)
 
281.5

Municipal
 
29.1

 
1.1

 
(0.3
)
 
29.9

Corporate
 
1,942.6

 
92.2

 
(16.7
)
 
2,018.1

Non-U.S. government-backed corporate
 
77.5

 
1.4

 

 
78.9

Foreign government
 
815.5

 
9.9

 
(3.2
)
 
822.2

Asset-backed
 
113.7

 
3.1

 
(0.3
)
 
116.5

Non-agency commercial mortgage-backed
 
58.1

 
6.3

 

 
64.4

Agency mortgage-backed
 
1,087.2

 
35.1

 
(10.0
)
 
1,112.3

Total fixed income maturities — Available for sale
 
5,388.2

 
190.5

 
(33.8
)
 
5,544.9

Total short-term investments — Available for sale
 
150.3

 

 
(2.0
)
 
148.3

Total equity securities — Available for sale
 
128.7

 
35.3

 
(0.8
)
 
163.2

Total
 
$
5,667.2

 
$
225.8

 
$
(36.6
)
 
$
5,856.4

 
 
 
As at December 31, 2012
 
 
Cost or
Amortized Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Market
Value
 
 
($ in millions)
U.S. government
 
$
1,071.8

 
$
54.8

 
$
(0.3
)
 
$
1,126.3

U.S. agency
 
288.3

 
20.3

 

 
308.6

Municipal
 
37.2

 
2.6

 
(0.1
)
 
39.7

Corporate
 
1,889.2

 
149.9

 
(0.6
)
 
2,038.5

Non-U.S. government-backed corporate
 
98.0

 
3.1

 

 
101.1

Foreign government
 
617.0

 
24.1

 
(0.1
)
 
641.0

Asset-backed
 
49.2

 
4.6

 

 
53.8

Non-agency commercial mortgage-backed
 
61.7

 
9.4

 

 
71.1

Agency mortgage-backed
 
1,116.1

 
61.2

 
(0.1
)
 
1,177.2

Total fixed income maturities — Available for sale
 
5,228.5

 
330.0

 
(1.2
)
 
5,557.3

Total short-term investments — Available for sale
 
431.5

 

 

 
431.5

Total equity securities — Available for sale
 
174.0

 
28.2

 
(2.1
)
 
200.1

Total
 
$
5,834.0

 
$
358.2

 
$
(3.3
)
 
$
6,188.9

Unrealized foreign exchange gains and losses included in the tables above are included within change in foreign currency translation adjustment within the statement of operations and other comprehensive income.


19


Fixed Income Maturities, Short Term Investments and Equities — Trading. The following tables present the cost or amortized cost, gross unrealized gains and losses, and estimated fair market value of trading investments in fixed maturities, short-term investments and equity securities as at September 30, 2013 and December 31, 2012:
 
 
 
As at September 30, 2013
 
 
Cost or
Amortized Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Market
Value
 
 
($ in millions)
U.S. government
 
$
32.0

 
$