Dunleavy: Aspen has “strong ambition” to post top-quartile results

Aspen group CUO Christian Dunleavy has said the carrier’s forthcoming 2023 full-year results will “validate” the work that’s been done to get the company in a position “to execute the potential that we thought was there and underlying in the business all along”.

His comments come at a time when there is much speculation surrounding the group’s IPO plans and M&A prospects.

But CEO Mark Cloutier downplayed these recently during a panel at the Bermuda Risk Summit, describing the M&A environment and IPO market conditions as “choppy”, while suggesting that companies such as his that are exploring a public listing would likely require “creative thinking”.

Speaking to The Insurer TV in Bermuda last week, Dunleavy explained that change doesn’t happen overnight, and in Aspen’s case it has taken two years to fully materialise, noting that “you have to have some thick skin in the interim”.

“We work in a very complicated, uncertain business and so surprises do happen,” he said. “But in the last 18 months, in particular, we feel like we're showing really good results.

“We have an ambition to post top-quartile results for the industry and we feel like we're on a really good track to position ourselves there,” he added.

Part of the remediation work has seen Aspen cut back in some lines – namely nat cat – and pull out of others altogether, especially on the reinsurance side with the group exiting aviation, space and bloodstock risks.

“We looked really hard at the portfolio, asking, ‘are we in the classes that we want to be in? And do we really have some expertise there? Are we relevant, are we meaningful, do we have scale?’” Dunleavy explained.

“Moonlighting on little hobbies in classes can be dangerous,” he added.

The giant $3.57bn loss portfolio transfer deal with Enstar also played a significant role. “This really allowed us to draw a line under the past and enabled the portfolio to perform. We could really start to understand the business better, because there wasn’t so much of a drag from prior year challenges,” he said.

But Dunleavy also commended the people involved in getting the business to this point, noting that the group has “great people” executing on the underwriting strategy.

Bifurcated view on casualty

Drawing a line under the past with the loss portfolio transfer has safeguarded Aspen from some of the casualty woes others in the industry are experiencing.

During the Bermuda Risk Summit last week, the casualty market was very much in focus as prior year loss development, concerns around rates and inflation and reserve charges dominated conversations.

“My background was in property cat for a long time, and so I really had my induction into the casualty world over the last five years and I really think that casualty, casualty cats or casualty development is actually far more consequential for the industry than property cat in a lot of ways,” Dunleavy warned.

“If you look back at what's driven some of the real significant dislocations, they've come out of casualty events. So, I think it's important to keep our eye on the ball there. Those kind of mid-teens years are problematic years for the industry, and everybody is focused on the reserves there.

“The loss portfolio transaction that we did gives us a high degree of confidence on those years and maybe allows us to think about it a bit differently than others. But I think there's a bifurcated view on casualty. People who leaned in and wrote a lot in the soft market years probably feel like they need to be paid a lot more today to fix that issue than maybe some of the companies who are either newer entrants or pulled back and showed more discipline in that period of time.”

On rate and trend, Dunleavy said this is the “great debate” that will never be fully answered, but he believed there has been a significant amount of rate that's come in and that limit management has been “a lot better” across the industry.

“And I think that discipline should hold, but the litigation trends are real, the litigation funding industry is active, and you have to be very thoughtful around where you take those casualty bets and how you size them,” he added.

Watch the full 14-minute interview with Aspen’s Dunleavy, during which we discuss: