Aspen Insurance Holdings Reports First Quarter 2008 Results

Business Wire, April 30, 2008

* Book value per share of $29.22, up 23.7% versus Q1 2007 and up 4.5% from Q4 2007

* Net Income of $81.2 million versus $121.9 million in Q1 2007

* Net income per share of $0.85 versus $1.27 in Q1 2007

* Net investment income of $39.1 million, down 42.1% from Q1 2007 due to the performance of funds of hedge funds

* Combined ratio of 85.4% for Q1 2008 versus 79.4% in Q1 2007

* Annualized ROE of 12.8% versus 22.9% in Q1 2007

HAMILTON, Bermuda -- Aspen Insurance Holdings Limited (NYSE:AHL) today reported that for the first quarter of 2008 net income after tax was $81.2 million or $0.85 per share versus $121.9 million and $1.27 per share for the first quarter of 2007. The combined ratio was 85.4%, compared to 79.4% in the same quarter last year. The annualized return on average equity was 12.8%, down from 22.9% in the first quarter of 2007, and book value per share increased 23.7% to $29.22 when compared to the first quarter of 2007.

For the quarter, net income per share would be $0.16 higher at $1.01 per share if losses associated with the investment in funds of hedge funds were excluded. The $1.01 per share compares to $1.18 per share in Q1 2007. On this basis the Q1 2008 annualized ROE would be 15.3% versus an equivalent figure of 21.2% for Q1 2007.

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Chris O'Kane, Chief Executive Officer said, "Book value per share at the end of the first quarter was $29.22, which is up 23.7% year-over-year and the eighth consecutive quarterly increase in book value. Underwriting results were strong with a combined ratio of 85.4%, which is well within our plan. As we anticipated, we wrote less business this quarter because of declines in rates. We continue to maintain our underwriting discipline. Cash flow from operating activities also remained strong at $163.5 million for the quarter, up 27%. However, net income and EPS were impacted by disappointing returns from our investment in funds of hedge funds."

Operating Highlights for Q1 2008

* Gross written premium for the quarter was in-line with plan at $596.2 million, down 6.3% from Q1 2007.

* Aspen established Syndicate 4711 at Lloyd's, providing the Company with the benefit of Lloyd's global licensing as well as its important distribution platform for many of the lines in which Aspen has strong leadership positions.

* The first quarter combined ratio of 85.4% was achieved during a period of unusually high single risk losses, reflecting Aspen's strong risk selection process.

* Cash flows from operating activities increased to $163.5 million from $128.8 million in the first quarter of 2007. Assets under management increased to $6.0 billion at the end of the first quarter 2008 from $5.9 billion at the end of 2007.

Business Segment Highlights for Q1 2008

A summary of the operating highlights for each of Aspen's four business segments is presented below.

Property Reinsurance Segment

The Property Reinsurance segment enjoyed a strong first quarter, recording a combined ratio of 63.4% compared with 69.1% last year. The industry has suffered a higher than anticipated number of medium to large sized single risk losses, the majority of which have not impacted Aspen. The improvement in the loss ratio for the segment from 41.8 % to 29.9% is due mainly to $13.6 million of reserve releases in the first quarter of 2008 compared with a strengthening of $7.8 million in the first quarter 2007. The current year reserve releases are attributable to a reduction in loss estimates associated with the U.K. floods in June 2007 and a favorable settlement on a prior year loss.

Casualty Reinsurance Segment

Casualty Reinsurance faced a challenging pricing environment and the combined ratio increased from 84.6% in the first quarter of 2007 to 94.9%. The adverse movement in the combined ratio was impacted by reserve releases which were $7.7 million less than Q1 2007, at $14.3 million and slightly higher than anticipated profit commissions.

International Insurance Segment

The International Insurance segment reported a combined ratio of 95.5% compared with 82.7% last year. Gross written premium increased by 7.6% to $199.3 million reflecting the contribution of new teams, which has improved the diversification of our portfolio. The loss ratio increased from 55.4% to 65.0% impacted by a satellite loss and lower reserve releases this quarter compared to the first quarter of 2007.

U.S. Insurance Segment

The U.S. Insurance operation continues its rebuilding phase against the backdrop of a highly competitive pricing environment. The combined ratio has increased for the segment from 96.0% to 103.7% due mainly to a reduction in earned premium associated with the restructuring of the segment to enhance its long-term prospects. The loss ratio of 50.8% compares favorably with 59.6% for the prior period.

Investment Performance for Q1 2008

Net investment income declined from $67.5 million in the first quarter of 2007 to $39.1 million in 2008 primarily due to the performance of our funds of hedge funds which are equity accounted for in our net income. Net investment income for the quarter also included a one-off negative accounting adjustment of $7.8 million relating to 2007. The funds of hedge funds investments have produced cumulative returns of more than 15% since April 2006, when the company initiated investing in them, and they remain an important component of Aspen's investment diversification strategy.