Aspen Insurance Holdings Reports Record Net Income for the Fourth Quarter and Twelve Months

Business Wire, Feb 6, 2008

* Full year net income of $489 million and fourth quarter net income of $135 million, up 29.3% on 2006 and 13.1% over the same quarter last year.

* Full year net investment income of $299 million and fourth quarter net investment income of $80 million, up 46.3% on 2006 and 28.1% over the same quarter last year.

* Book value per share of $27.95, up 25.1% on 2006.

* EPS of $5.11 for 2007 up 36% on 2006 and $1.44 for the quarter up 20% on the fourth quarter of 2006.

* Operating ROE of 21.1% for the twelve months and annualized 23.2% for the quarter.

* Combined ratio for the twelve months of 83.0% and 79.4% for the quarter.

HAMILTON, Bermuda -- Aspen Insurance Holdings Limited (NYSE:AHL) today reported net income for the fourth quarter of 2007 of $135.2 million, or $1.44 per diluted ordinary share, an increase of 20% over the same quarter last year. Diluted operating income per share is $1.47 compared to $1.22 in the fourth quarter of 2006. The combined ratio was 79.4%, compared to 76.8% in the prior year period. Annualized operating return on average equity increased to 23.2% from 22.8% in the fourth quarter of 2006. Book value per share increased 25.1% to $27.95.

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Chris O'Kane, Chief Executive Officer, commented, "For the fourth quarter and full year 2007, Aspen delivered record net income and earnings per share. These outstanding results reflect that all areas of the Company are executing in-line with our strategy to diversify and leverage our underwriting platforms, and generate strong consistent results from our investment portfolio. We are well positioned for the softening markets in 2008 and expect to continue delivering value for our shareholders."

2007 Operating Highlights

* AM Best announced an upgrade of Aspen's Bermuda operation, Aspen Insurance Limited, to a financial strength rating of "A" and affirmed the U.K. operation's rating as "A", both with a "Stable" outlook.

* Net investment income for the year was $299 million, up 46.3% on last year with the Funds of Hedge Funds producing an 11.4% return over the year.

* Assets under management increased to $5.9 billion at the end of 2007 from $5.2 billion at the end of 2006.

* Cash flows from operating activities increased from $723 million in 2006 to $774 million in 2007.

* Limited catastrophe losses for the year of $77 million, including $18 million of losses resulting from the California wildfires in the fourth quarter.

* Following the $50 million share buyback in the third quarter, Aspen completed the final $50 million tranche in the fourth quarter. This completes the $300 million buyback program authorized by the Board in November 2006.

* During 2007, Aspen continued to implement its successful diversification strategy across business lines and geographies, with new initiatives including entry into Political Risk, Global Excess Casualty and Professional Liability insurance markets, and the establishment of operating platforms in Zurich and Dublin.

2007 Business Segment Highlights

In the third quarter of 2007, the Company announced a change in the composition of its business segments to reflect the manner in which the business is managed. The new segments are Property Reinsurance, Casualty Reinsurance, International Insurance, and U.S. Insurance. A summary of the operating highlights for each of these segments is presented below.

Property Reinsurance Segment

The Property Reinsurance segment finished the year with a strong quarter recording a combined ratio of 74.8% compared with 80.1% last year, with the only substantial loss of $18 million attributable to the California wildfires. The full year combined ratio improved to 72.6% in 2007 from 79.2% in 2006. In 2006, there were virtually no catastrophic events whereas 2007 has produced losses from Windstorm Kyrill, U.K. floods and the California wildfires. While not insignificant, losses from these events were comfortably within the initial catastrophe loss guidance of $135 million for the year. The loss ratio for the year was 39.7% versus 43.2% last year, and gross written premium fell by only 3% to $602 million despite pressure on prices.

Casualty Reinsurance Segment

Casualty Reinsurance finished the year with a combined ratio of 94.6% compared with 83.4% in the prior year reflecting increased loss experience and lower rate levels. In addition, 2006 included favorable reserve development of $60 million compared with $32 million in 2007.

International Insurance Segment

The International Insurance segment covers a wide range of classes of business with the overall combined ratio for the year of 80.7% compared with 79.1% last year. 2007 includes some moderate-sized losses in both the marine and aviation books, offset by strong prior year releases within the U.K. liability account from 2006 and prior years. In the fourth quarter of 2007, the new lines, excess casualty and professional liability, began contributing to the top line with increased contributions from all new teams and distribution platforms expected in 2008.