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Aspen reducing volatility in insurance biz, to record underwriting Q4'16 loss

Aspen Insurance Holdings Ltd. expects to record an underwriting loss of approximately $30 million in the fourth quarter of 2016 as the company took various actions to reduce volatility and exit certain less profitable business lines in its insurance segment.

"We have exited lines where the level of volatility is too high and where the returns are not expected to meet our requirements," Group CEO Chris O'Kane said in a news release. The insurer remains optimistic about growth opportunities in professional lines, U.K. property and casualty, crisis management and surety.

The insurer significantly reduced its appetite for programs business and primary casualty following a review to improve Aspen's underwriting performance in late 2015. The company restructured its ceded reinsurance arrangements to reduce volatility and benefit the expense ratio, and purchased runoff reinsurance during the most recent quarter.

In the reinsurance segment, Aspen anticipates an underwriting income of approximately $10 million in the fourth quarter of 2017. Results for the quarter reflect an increase of approximately $15 million in catastrophe losses, and an increase of approximately $25 million in energy and property-related losses compared with the fourth quarter of 2015, and one-time commission-related adjustments of approximately $10 million in the fourth quarter of 2016.

Overall, the group expects a loss ratio of approximately 63% and an expense ratio of approximately 44% in the fourth quarter of 2016.

The insurer also disclosed that the adverse mark-to-market impact on its investment portfolio was approximately $190 million as yield curve movements affected financial markets in the fourth quarter of 2016. The company expects to post a book value per share of $46.70 at the end of 2016.

The company will release fourth-quarter 2016 results on Feb. 8.