Q2 2025 Aspen Insurance Holdings Ltd Earnings Call
Management's prepared remarks, there will be an opportunity to ask questions. Please note. This call is being recorded I will now turn the call over to Marisa Costa head of Investor Relations. Please go ahead.
Thank you good morning, everyone and welcome to the Aspen Insurance Holdings Limited second quarter 2025 earnings Conference call. Our earnings press release and financial supplement Brook published last night and can be found.
On the Investor Relations section of our website at Investor that Aspen desktop.
Yes, and executives leading todays call.
Our Mark <unk> Executive Chairman and group Chief Executive Officer.
Christian then Livy.
President and Chief Executive Officer of Aspen, Bermuda Ltd, and Mark Pickering Group, Chief Financial Officer and Treasurer.
Before we begin I'll start the comments by noting that today's call will include.
Forward looking statements actual results may differ materially from what we shared today and we undertake no obligation to publicly update forward looking statements management comments regarding estimates.
Sections and similar are subject to the risks uncertainties and assumptions as noted in Aspen's SEC filings management May also refer to certain non-GAAP financial measures available explanations and reconciliations to GAAP can be found in our earnings release.
And financial supplement on the Investor Relations section of our website at Investor that Aspen Dot com with that I will turn the call over to Mark <unk> Mark.
Thank you Hello, everyone and thank you for joining us today I'm excited that you are joining us for <unk> first earnings call. Since we listed on the New York Stock Exchange in May of this year.
This may be the first time that some of you are hearing our story I will begin by introducing our business Christian will then pick up with updates for the quarter and Mark will round off our prepared remarks with financial updates.
Aspen is an international specialty insurer and reinsurer with a dynamic multi platform approach and differentiated value creation model.
<unk> to be a top quartile specialty risk insurer and reinsurer across market cycles targeting mid teens operating returns on equity.
We are focused on total value creation through profitable underwriting and investment performance. The underwriting performance of our segments is also supported by fee income generated by our Aspen capital markets business.
Aspen has over 20 years of experience in underwriting risks.
Our recent history began with Apollo's acquisition in 2019, which mark the start of the strategic transformation.
Our approach centered on disciplined and expert underwriting reduce volatility.
<unk> operational efficiency and developing a positive and customer focused culture.
During this period, we strategically exited 12 insurance and five reinsurance lines to focus on lines and classes of business, where Aspen has historically performed very well through multiple cycles.
We improved operational efficiency by significantly rationalizing our operating footprint and we are continuously investing in initiatives that enhance our underwriting systems and data analytics capabilities amongst others.
And finally led by an experienced management team, we have implemented a culture, where our values are aligned to our mission and our decision makers are empowered to bring to bear their expertise for our clients.
The results have been notable.
For the past five years, our adjusted combined ratio improved by over 20 percentage points that we have generated cumulative operating income returns totaling over $1 $2 billion.
At the heart of our success lies our multi platform strategy, which sets us apart in the industry.
Geographically, we operate seamlessly across U S submitted an E&S markets, Lloyd's Bermuda and the U K company market.
Our underwriting is focused on niche specialty classes, while also providing the spokes solutions for our customers across a well diversified portfolio of more than 40 insurance and reinsurance classes.
And through Aspen capital markets, we are able to bring in external third party capital, providing additional optionality to manage risk.
Excess capital and enhance returns through fee income.
We bring these platforms together through our one Aspen approach, which as its name suggests describes how we take the single view of risk to identify the most attractive risk versus return opportunities.
Our specialty focus and expertise further distinguish us in the market.
We have developed deep underwriting expertise and complex niche lines with high barriers to entry that return favorable combined ratios across the cycle.
Similarly in reinsurance, we take a nimble approach that capitalizes on market dislocations and specialty opportunities that command sizeable premiums.
Another cornerstone of our competitive advantage is our Aspen capital markets platform.
Unlike most of our competitors, who primarily focus on property catastrophe reinsurance.
ACM is built a more diversified product offering with more than 80% of fee income in 2024 coming from non catastrophe lines of business.
<unk> also maintained strong alignment with aspen's core business focusing on building sustainable long term relationships with sophisticated investors rather than pursuing short term opportunities.
Acm's contribution to Aspen's financial performance is meaningful and continuing to grow significantly with fee income flowing through our underwriting p&l's as an offset to net acquisition expenses.
With success in longer tail lines brings greater stability to our fee income and underwriting results as these arrangements typically involve multiyear structures with stable capital commitments.
Across both our earnings engines aligned with ACM source capital R. One Aspen approach has yielded strong results. Since 2018, we successfully reduced our P&L exposure from 32% to less than 10% of shareholders' equity are low.
No catastrophe exposure combined with the strategic use of reinsurance and third party capital has enabled us to demonstrate resilient performance during recent catastrophic events, including the California wildfires, our second quarter 2025 results also demonstrate the value of our approach.
<unk>.
It is pleasing to see that Aspen is consistent performance lower earnings volatility and improved capital position was recognized by S&P in may of this year with an upgrade of our ratings outlook to positive from stable.
Finally last month, we announced that John Welch was promoted to group CLO from reinsurance CEO. John has extensive market expertise and is the perfect fit to lead our underwriting teams and coordinate our one aspen appetite.
I will now hand, it over to Christian to dive deeper into the results the specific components of the business and current market conditions.
Thank you Mark and welcome to our second quarter earnings call.
Aspen delivered excellent results for the second quarter of 2025.
Both of our earnings assets performed well as we were able to create value through a profitable underwriting and investment performance.
Adjusted underwriting income increased 12, 8% compared to the prior period adjusted combined ratio improved two four percentage points year over year.
ACF fee income grew 53, 5% and we delivered a 17, 2% annualized operating return on equity.
Fixed income portfolio continues to deliver strong returns with a book yield of four 4% in the quarter.
We continued to benefit from a strong market presence and our one Aspen strategy focuses on effective risk selection and being the partner of choice for our customers.
The driving force for our overall results.
The current market environment remains attractive with almost all lines price adequate providing opportunities amidst a range of challenges from heightened economic and geopolitical environment, a transitioning market cycle ongoing <unk> litigation inflation and ample capacity.
After years of compounded rate increases in most classes risk adjusted rates are showing softening in some lines, while terms and conditions are broadly holding.
Almost all of the classes, we participate and remain price adequate and we continue our long standing focus on building a profitable portfolio through disciplined risk selection and customer engagement to defend and enhance our portfolio's return profile.
Our SaaS portfolio is focused on underwriting niche complex lines of business, where we have long standing deep underwriting expertise.
In recent years, we have narrowed our focus to underwrite a more select product offering and we are also going deeper with key customers and growing our market share when appropriate through the expansion of our lines and share.
During the second quarter, we saw mixed market conditions after years of compounded rate hardening with great softening, particularly in the excess and surplus property lines.
Some larger shared layer accounts for a restructured with increased market capacity in primary and excess layers, however opportunities in smaller and middle market property remain attractive where last compensation as prep.
Similarly, our crisis management business continues to see strong growth and profitability, while U S. Professional liability business continues to offer opportunities for growth given our market relevance in this space.
And casualty, particularly excess casualty the market remains disciplined with further rate increases and stable tariff and conditions.
And primary casualty, we're seeing improved conditions. However, additional rate increases are required to catch up and keep pace with loss trend.
In fact, we are seeing early signs of a correction in certain lines, while rates are starting to rebound, notably commercial D&O.
Slide 21, we have reduced our exposure to commercial D&O as a result of significant rate erosion.
However, we will assess new opportunities that meet our return hurdles.
We are also seeing evidence of firming rates and transactional liability and expect to see this trend to continue.
Our cyber business has been a strong performer.
While Ray competition has increased we have been proactive in diversifying and positioning our portfolio against emerging risks.
Our philosophy is to actively manage our exposures growing when the market is attractive and we're attracting the risks don't meet our profitability expectations and this is demonstrated in our results this quarter.
Our focus remains on protecting the integrity of our portfolio to deliver strong results through any market condition and have a good pipeline of opportunities for profitable growth.
Aspen reinsurance segment as a nimble platform strategically positioned to capitalize on market dislocations, while maintaining disciplined risk management.
The strength of this segment lies in its long standing relationships with Thetis, where approximately 80% of premiums that are written with Tito's, who have maintained their relationship with us for over 10 years, a testament to our reliability and expertise as a reinsurance partner.
Market conditions for property Cat and property reinsurance are softening.
Over the pace of decreased after the loss activity in the first quarter.
With stable terms and conditions ample capital has strong retained earnings we expect that property cat reinsurance book continue to deliver attractive risk adjusted returns.
We have reduced our non cap property reinsurance portfolio, while keeping our property cat book in line with the prior year.
In casualty pricing exceeding loss trend.
However, we remain watchful of trends in the market, including social inflation, particularly the frequency of nuclear verdicts and the impact of litigation financing.
Offsetting these concerns by the robust underlying rate environment and the underwriting actions taken by insurers in recent years.
Our growth in casualty reinsurance lines, so far in 2025 demonstrates our willingness to grow lines when pricing improves.
We grew at certain U S casualty business, where the market continues to show rates staying ahead of loss trends.
Going forward casualty rates need to continue to rise in step with this increase in loss trend to maintain rate adequacy.
We also take advantage of opportunities in international casualty reinsurance limited.
Limited severity loss allows for good geographic diversification.
Going forward all reinsurance lines are expected to continue to produce returns higher than our long term hurdle rate.
I am pleased to say that our results this quarter demonstrate demonstrates that our reinsurance platform to quickly adapt to market opportunities while positioning the portfolio for lower volatility in our results.
Aspen capital markets offers investors a broad product offering that provides direct fully aligned participation to risk underwritten by Aspen as primary specialty insurance and reinsurance portfolios.
<unk> actively managed fund products side cars.
This strategy also allows us to manage our net risk appetite and enhance our returns through fee income.
ACM is a key enabler for our two segments and bringing the right sources of capital to the risks, allowing Aspen <unk> dynamic capital allocator.
ACM and fee income continues to grow as our longer tail side cars right in.
We anticipate this growth to outpace DWP growth into 2026.
Denmark closely track our gws growth.
As we evaluate new classes and new portfolios of risk, we look to optimize these portfolios into our capital structure, including our third party capital partners with fully aligned quota shares consistent with our current structures.
Aspen's underwriting teams are experienced and well positioned to operate in this market through active portfolio in cycle management.
Our specialty focus multiplatform capabilities across insurance and reinsurance supported by Aspen capital markets through our one asset approach identifying the most attractive risk versus return opportunity gives us the confidence that we will continue to deliver on our mid teens operating Roe goal.
Where we are in and have very long standing portfolios.
Portfolios, there that we underwrite when that turn happens and there are signs that it's starting to happen we will lean into it.
We remain focused on supporting our customers, while protecting the profitability and lower volatility of our underwriting portfolio.
And we'll see what how im not a great cater of exactly when these things will happen but.
Our book of business remains well positioned to profit from market opportunities through the cycle.
It does appear that the downward trends as the Repowering and.
The loss activity.
We will remain good stewards of capital and maintain a disciplined approach to current market conditions, we have the flexibility and expertise to effectively and successfully manage the current market environment to deliver strong results for our shareholders.
It's a change in.
Pricing dynamic right.
Your next question comes from the line of Matthew <unk> from Citi. Your line is open.
I'll now pass it over to Mark Pickering to provide more detail about the quarters financial results.
Matthew Your line is open.
Okay.
Thank you Christian good morning, everyone and welcome to our second quarter earnings call.
And we'll move on to the next question from Paul Newsome from Piper Sandler Your line is open.
Aspen had a very strong quarter and our results reaffirm our commitment to preserving the quality of our portfolio managing volatility and maintaining underwriting discipline, while growing in lines that meet our profitability targets.
Good morning, Thanks for the call.
Well, we will be able to follow up on.
Potential globally.
Long tailed and capacities in the short tail.
Our operating income grew 13, 6% year over year to $111 million.
Is that truly implying.
Does.
It is an incremental uptick in the loss ratio. So to speak is the long tail because they have a higher.
Our $1 22 per common share.
<unk>, a 17, 2% annualized operating return on common equity, which aligns with our strategy of targeting mid teens operating Roe across market cycles.
The loss ratio.
Just to make sure we put out.
Yeah. Thanks, Paul it's Marc occurring here that is correct.
Slight uptick in the reinsurance loss ratio.
We reported a very strong combined ratio of 85, 1% that was three six points better than a year ago.
Accident year ex cat as a result of the mix portfolio mix. So as we add casualty reinsurance to the book and we've come off property in Manhattan you.
And our combined ratio adjusted for the LPT impact was 84, 3% compared with 86, 7% in the second quarter of 2024.
You'll see a slight uptick in that loss ratio for the three months, who reported eight 5% and thats largely.
I expect.
Aspen capital markets reported total fee income up $53 4 million, an increase of 53, 5% compared to $34 8 million in the second quarter of 2024.
Right.
Yeah.
A little bit of pressure.
Thoughts about.
The demand that you may be seeing from the alternative capital folks.
I think.
Total capital reported for Aspen capital markets at the end of the quarter was $2 4 billion compared with $1 9 billion a year ago Rep.
News of the quarter so far.
Competition for example, but.
<unk> bye.
Representing a 26, 9% year over year growth.
Demand will alter by more by alternative capital to be in the business.
In line with our strategy, we have positioned our business provide our underwriting expertise to third party capital investors.
Are you seeing incrementally as well or.
Manage our net exposures and control for volatility within our portfolio, while generating stable fee income.
The receivable.
Alright.
$2 million.
Yes.
As youre thinking about the supply of alternative capital and how that may be changing.
Book value per share of $28 81 as of June 32025 grew 23, 6% over the past 12 months.
Yeah.
Thanks for the question, Paul I would say.
That there is continuing.
As of June 32025, our book value, excluding <unk> was $31 40.
From third party capital and I'll talk about capital and longer tail.
In particular.
Up 12, 4% compared to June 32024.
I think that it's going to be more structural going forward that's got it.
Let me move now to our underwriting results.
<unk> feature of the market, we're pretty well positioned in that we were a first mover we were quite early and helping design a lot of those structures.
For the second quarter, Aspen generated 124 billion in gross written premiums.
Two notch.
Representing a slight decrease versus the prior year quarter.
Not just yet.
Casualty lines, but also.
Driven by a decrease in our reinsurance segment, partially offset by growth in our insurance business.
Fire <unk> lines in insurance and reinsurance.
So there's a good pipeline there.
Net written premiums were $716 million compared with $811 million a year ago as we seeded more long tail business to a third party capital investors.
On board or just for the sake of it we want to make sure that we have the right risks to cede over to that.
And that we have really strong alignment, which is a good selling features that we've had with those investments at a time, so yes, I think thats going to be.
Coupled with a decrease in certain lines of business with limited ceded quota share arrangements.
Net written premium to gross written premium is 58% and we expect this retention ratio to be approximately 60% over the long term based on our planned ceded placements to manage our overall volatility.
President for the foreseeable future.
Our next question comes from the line of Matthew <unk> from Citi. Your line is open.
Hi, good morning, everybody.
Couple of quick questions. One was just maybe talk about the lines that you don't think it's adequate just on the back of your comment saying.
Our adjusted combined ratio, excluding the impact of the LPT was 84, 3%.
And our accident year loss ratio ex cat was 53, 4% compared with 51, 9% a year ago.
All are.
Sure.
Sure.
Primary casualty is one in particular.
The increase over the prior year accident year loss ratio is primarily a result of changes in the mix of the portfolio.
That need some rate in order to kind of return there has been rate coming in but I would suggest that more is needed.
We reported $10 2 million in favorable development for the quarter or one five combined ratio points.
It's very difficult.
Two.
Really understand what price adequate is on that so we are you know our view is that there needs to be continued strong rate growth.
In line with our plan, we completed a deep dive on approximately a quarter of our portfolios across our insurance and reinsurance segments.
Into that area.
Our insurance segment had net favorable development of zero point $5 million with favorable development in our specialty sub segment, partially offset by strengthening in our casualty portfolio.
Yeah.
<unk>.
You know we've.
Our book to really have.
Smaller line sizes going forward.
Our reinsurance segment had net favorable development of $9 7 million, mostly in our property reinsurance specialty reinsurance.
That really helps with some of the volatility as well.
Property non cat is kind of right on the I would say on the break up of.
You know price adequacy theres been quite a lot of loss out there over the last few years, but there's been continued downward trend in rates.
And property Cat sub segments.
Partially offset by our casualty reinsurance portfolio.
A favorable prior year development is indicative of the line of business and geographic diversification embedded within the portfolio despite pressure from social inflation.
So that's one that we've meaningfully reduced our exposure to.
And again, we do think of it.
By cat activity, but by and large losses.
Cat losses for the quarter were $23 6 million or three five loss ratio points.
Yes.
We should see some.
Coming through so.
I think it is.
An improvement from the prior year cat losses of $48 million due to benign catastrophe experience during the current quarter.
Significantly pellet prices I would say.
Maybe maybe.
D&O and <unk>.
The group expense ratio improved to 28, 9% compared with 29, 1% a year ago.
Primary casualty in particular.
Need for quite a bit of work still I think the signs are better, but there's more risk around.
Our acquisition cost ratio in the second quarter was 13, 3%.
I'd just be curious just.
Impaired with 15% a year ago due to a higher proportion of fee income earned from our third party capital arrangements.
You're right political risk I'd be curious.
Some of the <unk>.
Tensions.
The last several months.
Our G&A expense ratio was 15, 6% versus 14, 1% in the second quarter of 2024, driven.
Our changing loss content or your perceptions of lost top line of business.
That's a good question.
Driven by continued investments in process excellence data and analytics.
The site on.
As well as a lower denominator for earned premium from ceding more business through our third party capital investors in 2025.
Some of these.
Activity around.
Yeah.
Yeah.
Things like that.
Turning to our insurance segment gross written premium of $694 million increased by one 4% compared with a year ago driven by growth in <unk> and other insurance, partially offset by reductions in catastrophe and first party.
That is.
Not that I would say a huge amount of loss activity.
There have been some.
Some events there that have happened and you do have to think through this area quite carefully. This is a book that's performed very well for us over time.
Our net written premium of $390 million decreased eight 2% versus last years second quarter due to increased ceded premium and non renewal of certain large contracts and fin probe.
And.
We actually think we can do well in.
The credit and political risk portfolio itself.
The insurance adjusted combined ratio of 87, 9% includes two nine points of catastrophe losses.
Glasses inside of that.
Quite a lot of credit.
Got it.
Risks in there as well.
Accident year loss ratio ex cat of 56, 8%.
And we also have.
Kind of a traditional tower portfolio.
Representing an improvement of three nine points from a year ago, driven by better loss experience.
And after the sale of products.
So it's the remix and we try to balance the exposure to the individual classes within.
Looking into our reinsurance segment.
Gross written premium of 545 million declined three 7% compared with a year ago.
Next question.
Think of cadence Montazeri Deutsche Bank. Your line is open.
Mainly driven by premium adjustments related to rate decreases in our property reinsurance portfolio during 2025.
Good morning, guys.
Good morning.
On the reinsurance side.
After experienced significant rate increases in the second quarter of 2024.
We're in the top right.
And then linked to that question.
Partially offset by continued opportunities in casualty reinsurance.
Within <unk>, we will.
Or do you see more subtractive with Newtown.
Our net written premium of 325 million was down 15, 7% compared with the second quarter of 2024.
First of all for me.
Okay.
Thanks, Dave.
The decrease was driven by our property reinsurance portfolio as well as an increase in premium ceded to our ACM third party capital providers across several lines of business.
We certainly.
<unk> wants to be.
The reinsurance adjusted combined ratio of 79, 2%.
No.
So we're not actively seeking.
<unk> four four points of catastrophe losses.
In particular.
We do participate on some of those layers, but generally it's what we're looking at them.
The accident year loss ratio ex cats are 48, 5% represented an increase of six nine points from a year ago, driven by a larger proportion of casualty business.
Across the board participation.
The most competitive parts of the programs are definitely at the top.
Of programs.
Turning to our investment portfolio contribution.
And and.
Several of our portfolio and our book tends to.
Our net investment income was $80 5 million versus $82 5 million in relation to the same quarter last year.
Slight decrease in the quarter was due to the performance from our real estate funds and lower yields and floating rate assets.
At the bottom of programs.
There are people looking at individuals.
Partially offset by longer duration portfolio trades that increased the book yield of our core fixed income portfolio.
There.
We remain focused on delivering stable investment income, while maintaining appropriate portfolio liquidity and strong credit quality.
As of June 32025 by $6 3 billion fixed income portfolio had a duration of three two years.
And we'll write individuals' subtypes.
Our retention is valid.
An average credit rating of AA plus.
And an attractive book yield of four 4%.
Our balance sheet strength that is supported by managing our volatility and growing our capital position.
As of June 32025, our 2019 and prior LPT is $295 million of limit remaining.
Representing a 25% buffer to carried reserves.
During the second quarter, we performed a deep dive on the casualty insurance segment and strengthened the reserves accordingly.
Me neither.
We have skin.
I'm here.
Our shareholders equity is 335 billion in the second quarter of 2025, compared with $3. One 9 billion in the first quarter of 2025.
Yeah. Thanks for question in Smart Pickering here.
So our investment.
On the asset allocation, we have today is largely in line with our strategic asset allocation.
Driven by positive operating performance as well as an increase in accumulated other comprehensive income.
We'll dial up and down.
Certain asset classes, starting on market conditions.
The increase in OCI as a result of the rally in the U S treasury rates tightening of credit spreads as well as the weakening of the US dollar during the quarter that improved the value of our available for sale investment portfolio.
In terms of your question related to duration.
Our duration as at June 32025, 3.2 years for the portfolio.
And that's slightly below our longer duration, so I think.
Our capital ratios remained strong and well above our various capital requirement.
We are positioned portfolio going forward.
You've dropped up an asset.
On June 10, Aspen successfully priced an underwritten public bond offering of $300 million.
To lock in some longer fixed.
Fixed income.
575% senior notes due July one 2030.
We do have also floating rate securities in the portfolio to the adjusted portfolio as well.
The net proceeds from the offering were used to repay the $300 million term loan credit agreement Outstandings.
Your next question from the line of Andrew Anderson from Jefferies. Your line is open.
Finally, I am pleased to Echo <unk> comments on S&P's decision to revise aspen to outlook to positive from stable and reaffirming our a minus financial strength right.
Thanks, Good morning.
Within reinsurance you bet that growing the casualty line for a year or.
Two now, but you seem a bit more cautious on the insurance side.
S&P's decision recognizes the strength and stability of Aspen's operating performance and.
Can you talk about the difference in opportunity and reinsurance that.
Our neighboring you to grow versus.
And confidence in our strong capital base.
<unk>.
Competitive strength and.
Thanks, Andrew question.
And diversified portfolio.
Recognizing the lower earnings volatility model Aspen has employed.
B E.
Yeah reinsurance.
For the last couple of years to opportunities there as part of your Youre correct.
This concludes the discussion on our financials, we will now open the call to questions.
The upside we were allocating more capital there are waiting for.
Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star. One again, we ask that you. Please limit yourself to one question and one follow up.
Startup T pricing to respond.
That is why it appears to be cutting out some of that might be experience related but some of it may even need to pay for the reinsurance terms that are somewhat driving the original rates again.
First question today comes from the line of Charlie letter from BMO capital markets. Your line is open.
And so that we are going to see the movement again probably start.
Hey, Thanks, good morning.
Maybe maybe six months ago.
So when we started to build.
Christian you shared some good color on the pricing environment.
Getting things on the insurance side upside to make more sense and cutting started to kick in so we.
Being rate adequate in.
The marketplace.
Any dynamic with a lot of moving pieces can you talk about how youre thinking about that pace of growth in the back half of the year and have that underlying loss ratio in both segments.
Capital to be able to grow besides if we think participating pricing works.
The way the.
May run from here. Thanks.
T re team in particular about this was a very tough.
Thanks, Charlie Yes, it's it's a definitely a transitioning market.
Approach, where they sit down with the top five in the portfolio the top tier clients and also some of our larger claims and just work with them.
One of the interesting.
Things that we've been focusing on the last couple of years is really trying to manage these individual product kind of mini cycles.
To be able to grow that book.
Kind of played out exactly as.
As planned.
And so.
There was meaningful or theyre in 'twenty, four or quick again in 'twenty five.
That's not necessarily a new a new feature of <unk>.
I would say this year.
We expect that to continue in the near term and but I would not expect insurance side too.
Even when the market.
Experiencing a broad hardening there were still some classes underneath that.
Off the pace a little bit of advice remains in stark continues.
We are softening as well.
So thats not necessarily.
Okay.
And then sticking with NN re insurance $10 million of favorable, but I think you mentioned them offset by casualty reinsurance can you maybe just give some more color on liner or action and are there.
A new phenomenon.
The the mix for the book.
I have some bearing on.
Underlying loss ratios, because we're holding property cat and particular stable.
Yeah. Thanks, Andrew It's Mark Pickering here, Yeah, as we mentioned in the opening remarks with favorable prior year development.
Sure.
We're okay with the pricing, but we're not really looking to onboard more.
Indicative of.
Diversification across the lines of business segments, and the geographic segments.
Nat cat risk.
We'll hold pretty stable and then we're really looking at some of the casualty areas and some of the other specialty classes for a little more growth, which is a little more long tail. So.
And as you're continuing to see.
Pressure from social inflation and casualty exposed lines.
We will deep dive across all lines of business every 12 months.
Quarter, we touched on over the.
I think.
The mix I don't think thats going to change dramatically, but I would expect.
Top tier.
Exposed lines to our social inflation.
Longer tailed lines to outgrow.
Both the insurance and reinsurance segments.
<unk> and.
So the deep dive.
In the real short tail lines in the near term.
To reflect some unfavorable fans in 2021 and prior year casualty insurance and reinsurance and we.
Okay.
Thanks.
Then for my follow up.
We took the opportunity to strengthen our assumptions accordingly.
You made some comments that helped somewhat points.
As an example again.
Around opportunities in <unk> and transaction liability in P&L or capital markets activity seems picking up should we infer that that Aspen is leaning in there are considering it.
Responding quickly to bad news with our reserving philosophy.
Much slower to react to good news in the book and remain unfavorable a versus the position.
Just maybe one point that there.
Yes.
I would say that we are.
The deep dives or a really important part of how we think about not just reserved but also pricing and underwriting. So there's <unk> that's in place.
Ready to lean in.
We are starting to see.
Certainly a floor on D&O pricing I wouldn't say that it's necessarily.
And really high lines of communication between the reserving the pricing actuaries and the underwriters and what we see on the cost of claims teams and while we see on the.
Going up again are accelerating.
But the negative downward trend seems to be moderating in our Florida, appearing so that's helpful.
Reserving satisfied immediately fed back into the side and also to the underwriters.
We have been expecting the transactional liability market to heart in probably for about the last 18 months, we think it's somewhat overdue.
And then we.
To reflect that in our initial estimated loss picks up for those individual classes. So as Mark said we.
And Thats an area, where we are real experts in and have very long standing.
The philosophy is to be quick to respond to bad news and slower to respond to favorable.
Portfolios, there that we underwrite so when that.
<unk> happens and there are signs that it's starting to happen we will lean into it.
That into the pricing side vertically so that we can.
And we will see what I am not a great prognosticator of exactly when these things will happen, but the timing. It does appear that the downward trend has been reversing in.
<unk>.
Rates.
Reflecting loss trends.
Your next question comes from the line of Rob <unk> from <unk>.
The loss activity warrants a change in <unk>.
Goldman Sachs. Your line is.
Pricing dynamic there.
Hey, Thanks, good morning.
And noticed.
Our next question comes from the line of Matthew <unk> from Citi. Your line is open.
Adding programs or highlights in the quarter for the insurance.
Curious how much of the football insurance portfolio.
Matthew Your line is open.
As in programs and if you could talk about your.
Yeah.
Roche to growth there.
And we will move on to the next question from Paul Newsome from Piper Sandler Your line is open.
Thanks, Rob.
Good question.
Good morning, Thanks for the call.
One is just around 30% on a delegated basis.
Just a.
Little bit of a follow up on the potential for me.
That is with a relatively small number of partners a number of them, who we've been with for a very long time.
Long tail to grow faster than the sure Joe.
Naturally imply and I think it does.
Doug what are kind of small one off plays for us those are strategic for certain partnerships across multiple cancers.
A little bit of an incremental uptick in the loss ratio just because of the long till Tuesday and behind them.
And those have.
Loss ratio.
Make sure we.
Been a little more public than others.
That out.
We're in our roadshow deck space and prospectus. So you can give us some of those there.
Yeah. Thanks, Paul It's Marc Pickering here that's correct.
Strategy. There is really two part where there's very strong alignment and very us complement might be underwriting.
Slight uptick in the reinsurance loss ratio.
Accident year ex cat as a result of the mix portfolio mix. So as we add more casualty reinsurance to the book and we've come off on property non cat Youll see a slight uptick in that loss ratio for the three months, we reported 48, 5% and Thats largely what we expect.
So we're giving access to classes that's typical for us to access maybe they're small niche lines and they require a high level of technical expertise for example.
And so it is not.
The scenario, where we would partner with <unk>.
Great.
To give us more of what we're on and ourselves.
Maybe a little bit further.
And we really worked very closely explored and performance manage that going forward.
It's about.
The demand that you may be see the alternative capital folks.
That's really the strategy quite.
I think one of the.
Using this quarter so far has been.
Quite well over the last few years, we see a pretty steady decline of.
<unk>.
MGA competition for example, but.
Those kind of opportunities coming through.
A lot of that seems to be backed by.
And they do take some time through and put together and so that's not necessarily the most predictable from.
Demand for more altered by more.
By alternative capital to be in the business.
From when they will come.
Are you seeing that incrementally as well.
Come on Board and then also how those earn in.
Clearly stable.
So a little bit lumpy, but you know we would expect to put on one or two of those retirement and it generally will be for.
Okay.
$2 million.
Yes.
Thinking about the <unk> supplier of alternative capital and how that may be changing.
Them to be.
From a premium perspective.
Yeah.
Thanks for the question, Paul I would say.
Okay, great. Thanks for that.
I'll add just one thing.
That there is continuing interest from third party capital and alternative capital in longer tail lines in particular.
Yeah.
Okay.
Sure.
Holding up well.
Our defensible.
The changes in terms and can and has been throughout.
I think that is going to be more structural going forward, that's going to be a permanent feature of the market.
And would you expect.
Going down the road of a softer market that these.
We're really well positioned in that we were a first mover we were quite early in helping design a lot of those structures and bring them to <unk>.
Terms and conditions could be fixed.
Not just.
No there has not been much terms and conditions over the last couple of years and I think were still quite a way from a soft market.
Casualty lines, but also.
Some of our fin pro lines in insurance and reinsurance.
So there's a good pipeline there we don't onboard it just for the sake of it we want to make sure that we have the right risks to cede over to that.
And I think.
Recent memory, Alex to answer so relatively fresh.
It's I think.
And that we have really strong alignment, which is one of the good selling features that we've had with those investors over time. So yes, I think that's gonna be present.
Cat side in particular.
It's it's a good sign that the market has remained disciplined.
Tension that those have flipped back and we feel quite strong that needs to hold.
President for the foreseeable future.
Outside of that you know there really has been a.
Our next question comes from the line of Matthew Harrigan from Citi. Your line is open.
A lot of erosion there.
Yes.
Hi, good morning, everybody.
I'm not I.
Couple quick questions. One was just can you maybe talk about the lines that you don't think are price adequate just on the back of your comment saying almost all are.
I don't think Theres, a sign that suddenly going to emerge I think were quite a bit of discipline around the market.
<unk>.
Your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.
Sure.
Sure.
Primary casualty is one in particular.
Hi, Thanks, Good morning, I was hoping.
That need some rate in order to kind of return there has been rate coming in but I would suggest that more is needed.
Santa worthy.
Capital fits today.
What would you guys need to see to consider.
It's very difficult.
Two.
Returning capital to shareholders.
Really understand what price adequate is on that line. So we are our view is that there needs to be some continued strong rate growth.
Essentially 25.
Do you think about for 'twenty 2020.
Yeah. Thanks, Elyse for the question. So yes, we have.
To that area.
Yeah.
We.
At the moment.
We've organized our book to really have.
<unk> hundred 24 lbs CR rates.
Great.
Smaller line sizes going forward. So we think that really helps with some of the volatility as well.
264%.
We are going into.
Sure.
Okay.
Property non cat is kind of right on the I would say on the brink of Av.
Okay.
Please proceed.
Price adequacy theres been quite a lot of loss activity there over the last few years, but there has been continued downward trend in rate.
Okay.
Okay.
Okay.
Bringing all of that part of the planning close together, we'll also consider any capital activity.
And so that's one that we've meaningfully reduced our exposure to and.
Or may not be required.
And again, we do think of this is driven not by cat activity, but by large losses on the non cat side.
And I would.
That any future return on capital will be in the form of share repurchases.
We should see some rate coming through so.
<unk>.
Thanks, Tom.
Nothing is.
My follow up.
Significantly below price adequate I would say.
You could think about.
Maybe maybe barring.
Putting a lot of your comments together.
D&O and and <unk>.
Still good market and obviously some areas are softening geyser picking your spots.
Primary casualty in particular.
Need quite a bit of work still I think the signs are better, but there's more room to run.
Should we think about.
Growth I guess going forward right in.
Thanks for that Tom I'd, just be curious just since you're right political risk I'd be curious if.
If we look at we can trend.
Our insurance.
<unk> like.
Some of the.
The decline in reinsurance.
Pensions, we fitness in the last several months.
Think about I guess.
Migrating trajectory and thinking about the back half of this year, but also just you know.
Our changing loss content or your perceptions of loss content in that line of business.
Heading into 2020 as well thank you.
That's a good question.
Thanks Elyse.
The certainly on.
I wouldn't.
I wouldn't anticipate.
Some of the.
Ship activity around attacks on ships.
Reinsurance thinking.
Thank you have a pretty good place there.
The HUD fees and things like that.
<unk> of the reinsurance premiums.
That is not.
On kind of a basis was this client's adjustment issue.
Not presented I would say a huge amount of loss activity to the market yet, but there have been some.
Reinsurance level were satisfied.
Some events there that have happened you do have to think through this area are quite carefully. This is a book that's performed very well for us over time.
We saw rates softening in that.
All of them reduce their volumes.
Leaves the reinsurance team itself downsizing the portfolio on.
On an underwriting year basis.
And.
Things are.
It's one that we actually think we can do well in.
Great.
I would have expected I.
Really good.
The credit and political risk portfolio itself. There is a number of classes inside of that.
No.
<unk> shipped with.
The pull out there, who we want to trade with.
But there is quite a lot of credit risk in there as well.
That they'd like to do more with Aspen, Tom So I think it's been a good spot and they'll grow quickly when they see opportunities and if the market does it.
And then we also have.
Kind of a traditional tower portfolio doesn't after the sale of a product and a few other things so it's.
Discipline, which I'm not saying they would then react to that quickly as well.
It's a real mix and we try to balance the exposure to the individual classes within that bucket.
We don't think about growth.
We think about it on a longer horizon, and we want to make sure that we get.
Your next question comes from the line of Cave Montazeri from Deutsche Bank. Your line is open.
Bringing these transactions in.
You know in an orderly fashion.
And that we really do our homework and we don't really anticipate getting a lot of new line immediate future. So the underwriting is very much bottom line focused.
Good morning, guys.
I was just wondering if.
On the reinsurance side, if you had a bit of a sweet spot where in the tower you would like to right and then I guess linked to that question.
Where.
No.
We've I think demonstrated that over the last couple of years and we feel we need to.
Within <unk>, we wish layer do you see are the most attractive within the town.
Response for market development.
Thanks, Preston maybe school point of view.
We're able to access new opportunities on the back of that.
Okay.
Thanks, Dave.
Your next question comes from the line of Matt <unk> from citizens JMP Your line.
We certainly tend to want to be a little bit away from the frequency. So we are not actively seeking out lower layers in particular.
Okay. Thanks.
Just a quick numbers question.
Corporate expenses.
We do participate on some of those layers, but generally it's when we're looking at an across the board participation.
$25 million ish, the past couple of quarters.
Is that kind of a good way to think about it or are there any kind of IPO.
The most competitive parts of the programs are definitely at the top of programs.
One time expenses in there and we should think about it.
And you know.
Yes.
So our portfolio in our book tends to.
Good question, Matt and corporate expenses that $25 million is an appropriate run rate going forward in terms of IPO related expenses. They sit in the nonoperating expense line.
The more with national writers as well, who tend to carry higher retentions, which is helpful.
But yes types of programs are definitely more competitive.
Okay, great. Thanks, a lot guys. Thanks.
The bottom of programs has there are people looking at individual interest there.
Thanks.
Thank you.
Your next question comes from line of Charlie letter from BMO Capital markets. Your line is open.
And we will write individuals' sub layers, but retentions of health, which we think is important going forward and I do think some of the rate activity that we've seen in the last few months has been essentially.
Okay. So I just wanted to follow up on the <unk>.
To incurred ratio in the quarter ticked up a little bit is that just.
A bit of a trade off to hold retention is giving up a bit of rate.
<unk> or I'm sorry to.
To call out there.
By the market and that makes sense to us.
Our our property play in the company is much more weighted towards property reinsurance and that's because we can reshape the portfolio faster and we can also sit above the frequency losses in particular.
Sorry could you repeat that please.
Sorry, the paid trip ratio at victory.
The level in the quarter ticked up year over year.
Starting I guess notable in there that related to the wild cards in the first quarter, just the payments that Zimmer.
Makes sense.
To the investment side.
<unk>.
Do you have room to maybe increase duration of your assets.
Any color there yeah.
Christian I suspect you are seeing there is.
A bit more.
And also like you've pulled away pretty high quality right now understanding you want to be.
More accelerated payments on the wildfires.
There is a limit losses and net losses.
Risk is a bit more from here.
Yes, thanks for the question and Smart Pickering here.
I believe on the California law.
There is a requirement to yes.
Our investment portfolio the asset allocation, we have today is largely in line with our strategic asset allocation.
Within a certain time.
So I suspect that Fletcher.
Thanks.
We'll dial up and dial down certain asset classes based on market conditions.
Your next question comes from the line of Matthew <unk> from Citi. Your line is open.
In terms of your question related to duration.
<unk> as of June 32025 was three two years for the portfolio and that's slightly below our liability duration. So I think as.
Okay.
And that concludes our question and answer session I will now turn call back over to Mark <unk> opening remarks.
We position the portfolio going forward you may see a drift up in asset duration to lock in some of those longer.
Thank you Dave.
On today's call as you have heard pleased with this set of results, which affirms the power of our differentiated one Aspen strategy.
Fixed income yields we do have also a sleeve of floating rate securities in the portfolio that allows us to adjust the portfolio as well.
Very disciplined.
Yeah.
Looking ahead, we will continue.
Okay.
Continuing to deliver profitable portfolio with mid teens operating Roe.
Your next question comes from the line of Andrew Anderson from Jefferies. Your line is open.
Through the cycle.
Hey, Thanks, good morning.
The strong fundamentals that we have in place will underpin our future success.
Within reinsurance you've been growing the casualty line for a year or two now, but you seem a bit more cautious on the insurance side can you maybe just talk about the difference in opportunities you're seeing in reinsurance that.
This concludes our call.
Thank you for your support and we look forward to talking to you again.
This concludes today's conference call you may now disconnect.
Our enabling you to grow versus the primary side.
Okay.
Thanks, Andrew for the question.
Yeah.
The reinsurer.
Reinsurance.
For the last couple of years, we've seen the opportunities there as more attractive youre correct.
Okay.
Okay.
The insurance side, we were kind of allocating more capital there waiting for insurance casualty pricing to respond.
That is why it appears to be happening now some of that might be loss experience related but some of it may also be the need to pay for the reinsurance terms that are somewhat driving the original rates again.
And so that we are starting to see the movement again probably started.
Maybe maybe six nine months ago. When we started to feel like we were seeing things on the insurance side start to make more sense and you know that team started to lean back in so.
We have the capital to be able to grow in both sides.
If we think pricing pricing works.
The way the casualty re team in particular about this was a very targeted.
Approach, where they they sat down with the top clients in the portfolio the top tier clients and also some of our larger relationships and just work with them specifically to be able to grow that book.
It kind of played out exactly as.
As planned.
So there was meaningful growth there in 'twenty four there was growth again in 'twenty five.
We expect that to continue in the near term and but I would also expect the insurance side to start picking up the pace a little bit if pricing remains in stock continues to improve.
Thanks, and sticking within reinsurance 10 million of favorable but I think you mentioned some offset by casualty reinsurance can you maybe just give some more color on liner or accident here there.
Yeah. Thanks, Andrew It's Mark <unk> here, yes, as we mentioned in the opening remarks, we had favorable prior year development.
Indicative of obviously the diversification across the lines of business the segments and the geographic mix.
The industry is continuing to see.
Sure from social inflation in the casualty exposed lines we.
We took we do a deep dive across all of our lines of business every 12 months and in the second quarter, we touched on some of the <unk>.
Top tier.
Exposed lines to social inflation.
Both in the insurance and reinsurance segments.
So the deep dive during the quarter reflected some unfavorable experience in 2021 and prior and the casualty insurance and reinsurance book and we took the opportunity to strengthen our assumptions accordingly.
This is an example, again, where we've responded quickly to bad news in line with our reserving philosophy, while were much slower to react to good news in the book and remain in a favorable versus the position.
Just maybe one point to add there.
The deep dives or a really important part of how we think about not just reserves, but also pricing and underwriting. So there is a feedback loop that's in place.
And really high lines of communication between the reserving actuaries, the pricing actuaries and the underwriters and what we see on the as well as the claims teams and while we see on the reserving.
Our reserving side as immediately fed back into the pricing side and also to the underwriters.
And then we also look to reflect that in our initial estimated loss picks for those individual classes. So as Mark said we are.
The philosophy is to be quick to respond to bad news and slower to respond to favorable but get that into the pricing side very quickly. So that we can make sure that the.
Rates are reflecting loss trend.
Your next question comes from the line of Rob Cox from Goldman Sachs. Your line is open.
Hey, Thanks, good morning.
Noticed.
The growth in programs was highlighted in the quarter for the insurance segment I'm curious how much of the overall insurance portfolio.
As in programs and if you could talk about your approach to growth there.
Thanks, Rob.
Good question. The insurance book is just around 30% on a delegated basis.
That is with a relatively small number of partners a number of them, who we've been with for a very long time.
Those are not kind of small one off program place for us those are strategic longer term partnerships across multiple classes.
And some of those.
Been a little more public than others.
We are in our roadshow deck and in the prospectus. So you can you can see some of those there.
The strategy there is really two partner, where theres very strong alignment.
And very complementary underwriting teams, who are giving access to classes that may be difficult for us to access maybe they're small niche lines.
They require a high level of technical expertise for example.
And so it's not a.
A scenario, where we would partner with anybody to give us more of what we are underwriting ourselves.
And then we really worked very closely to onboard and performance manage that business going forward.
So that's really the strategy its worked quite well over the last few years, we do see a pretty steady pipeline of.
Those kind of opportunities coming through and they do take some time to think through and put together and so it's not necessarily the most predictable from when they will come come onboard and then also how those earn in.
So there are a little bit lumpy, but we would expect to put on one or two of those a year over time and generally we'll be looking for.
Them to be meaningful from a premium perspective.
Okay, great. Thanks for that.
I just wanted to follow up on terms and conditions I. Appreciate the color on is holding up well how defensible do you think it changes in terms and conditions have been throughout recent years and would you expect if we keep going down the road of a softer market that.
Changes on terms and conditions could be sticky.
Okay.
Yes, there has not been much movement on terms and conditions over the last couple of years and I think were still quite a way from a soft market.
And I think.
You know recent memory and experience is still relatively fresh.
It's I think on the cat side in particular.
It's a good sign that the market has remained disciplined around retention. So those haven't slipped back and we feel quite strongly that that needs to hold.
Outside of that there really hasnt been a lot of erosion there.
You know I'm not I no I don't think Theres a sign that that's suddenly going to emerge I think we are actually there is quite a bit of discipline around the market on some of the details.
Your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.
Hi, Thanks, good morning.
My first question I was hoping you can give us a sense of where the excess capital sits today and then.
What would you guys need to see to consider.
Returning capital to shareholder is that potentially 25 of that something to think about for 'twenty 2026.
Yes, Thanks Elyse for the question, it's Mark here.
Yes, we have some excess capital at the moment, we reported our 2024 <unk> the Bermuda regulatory ratio at 264%.
We are going into our planning for next year from our three year planning process for 2006 through 2008, and we'll be looking at growth opportunities in the market as well as the effect on the capital requirements there.
Bringing all of that part of the planning process together, we'll also consider any capital management activity.
That may or may not be required.
And I would expect.
That any type of future return on capital would be in the form of share repurchases or special dividends.
Thanks, Tom and then my follow up on you know what if we just think about it.
You know putting a lot of your comments together.
It's still a good market, but obviously some areas are softening there.
You're spot on.
Should we think about growth I guess going forward right Dean.
If we look at we can try and being driven off of that.
And Sharon.
Continuing like to see some declines in reinsurance or just help us think about I guess, the premiums rating trajectory and thinking about the back half of this year, but also just on <unk>.
Heading into 2026 as well thank you.
Okay.
Thanks Elyse.
I wouldn't.
I wouldn't anticipate reinsurance.
Reinsurance shrinking.
Think we're in a pretty good place there the real driver of the reinsurance premium.
On a GAAP basis was this client adjustment issue. It had a primary insurance level were essentially.
They saw rates softening and then also some of them have reduced their volumes. It wasn't really the reinsurance team itself downsizing the portfolio.
On an underwriting year basis things are pretty much where we would've expected we have a really good.
Our relationship with <unk>.
Insurers out there, who we want to trade with most of them have said they'd like to do more with Aspen overtime. So I think reinsurance is in a good spot and they'll grow quickly when they see opportunities and if the market loses its discipline, which I'm not predicting they would then react to that quickly as well.
We don't think about growth quarterly we think about it on a longer term horizon and we want to make sure that we are.
Bringing these transactions in.
You know in an orderly fashion and we really do our homework and we don't really anticipate getting into a lot of new lines in the immediate future. So the underwriting philosophy is very much bottom line focused.
Where.
I think we've demonstrated that over the last couple of years that when we feel we need to respond to the market development. We will but then we're able to access new opportunities on the back of that.
Your next question comes from the line of Matt <unk> from citizens JMP. Your line is open.
Hey, Thanks, good morning.
Just a quick numbers question.
Corporate and other expenses.
$25 million ish. The past couple of quarters is that kind of a good way to think about it or are there any kind of IPO or other kind of one time expenses buried in there and we should think about a different run rate going forward.
Yes, good question, Matt and corporate and other expenses that $25 million is an appropriate run rate going forward in terms of IPO related expenses. They sit in the nonoperating expense line.
Okay, Great. That's all I got thanks.
Thanks.
Thank you.
Your next question comes from the line of Charlie letter from BMO Capital markets. Your line is open.
Hey, Thanks, I just wanted to follow up on the paid to incurred ratio in the quarter ticked up a little bit is that just wildfires or is there anything else to call out there thats notable.
Sorry could you repeat that please sure.
Sorry, the paid to incurred ratio at the consolidated level in the quarter ticked up year over year.
Is there anything I guess notable in there that related to the wildfires in the first quarter, just the payments on them or any.
Any color there thanks.
Sorry, Christian I suspect what Youre seeing there is.
At a more accelerated payments on the California wildfires.
When there is a limit losses full limit losses.
I believe under California law that was kind of there is a requirement to pay those.
Within a certain timeframe, so I suspect thats, what youre picking up.
Yeah.
Thanks.
Yeah.
Your next question comes from the line of Matthew <unk> from Citi. Your line is open.
It's been answered thank you.
Yeah.
And that concludes our question and answer session I will now turn the call back over to Mark <unk> for closing remarks.
Yeah.
Thank you to everyone, who joined today's call as you've heard we're pleased with this set of results, which affirms the power of our differentiated one Aspen strategy.
Very disciplined fiction.
Looking ahead, we are focused on continuing to deliver profitable portfolio with mid teens operating Roe.
Through the cycle and are confident that the strong fundamentals that we have in place will underpin our future success.
This concludes our call today. Thank you for your support and we look forward to talking to you again soon.
This concludes today's conference call you may now disconnect.