Aspen Insurance Holdings Q3 2007 Earnings Call Transcript

| About: Aspen Insurance (AHL)

Aspen Insurance Holdings Ltd(NYSE:AHL)

Q3 2007 Earnings Call

November 2, 2007 8:30 am ET


Noah Fields - Head of IR

Chris O’Kane - CEO

Richard Houghton - CFO


Alain Karaoglan - Banc of AmericaSecurities

Vinay Misquith - Credit Suisse

Jay Yang - Perry Capital


My name is Michelle and I willbe your conference Operator today. At this time, I would like to welcomeeveryone to the Aspen Insurance Holdings Third Quarter 2007 Earnings ConferenceCall. All lines have been placed on-mute to prevent any background noise. Afterthe speakers' remarks, there will be a question-and-answer period. (OperatorInstructions)

Thank you. It is now my pleasureto turn the floor to your host, Mr. Noah Fields. Sir, you may begin yourconference.

Noah Fields

Thank you and good morning. Thepresenters on this morning's call are Chris O’Kane, Chief Executive Officer ofAspen Insurance Holdings; and Richard Houghton, Chief Financial Officer ofAspen Insurance Holdings. Before we get underway, I'd like to make thefollowing remarks. Yesterday afternoon, we issued our press release announcing Aspen's financial resultsfor the quarter ended September 30th, 2007. This press release, as well ascorresponding supplementary financial information, can be found on our websiteat

I would also like to draw yourattention to the fact that we have posted a short slide presentation on ourwebsite to accompany this call. This presentation contains, and Aspen may make from time to time, written or oralforward-looking statements within the meaning under and pursuant to the Safe Harborprovisions of U.S. Federal Securities laws. All forward-looking statements willhave a number of assumptions concerning future events that are subject to anumber of uncertainties and other factors.

For more detailed descriptions ofthese uncertainties and other factors, please see the Risk Factors section in Aspen's annual report onForm 10-K filed with the SEC and on our website. Finally, this presentationwill contain non-GAAP financial measures, which we believe are meaningful inevaluating the company's performance. For a detailed disclosure on non-GAAPfinancials, please refer to the supplementary financial data and our earningsslide presentation posted on the Aspenwebsite. Now, I'll turn the call over to Chris O’Kane.

Chris O’Kane

Thanks, Noah. Good morning, andthank you for joining us. I'm pleased to report another strong quarter ofearnings result. For the quarter, we reported net income of $117 million, anincrease of 23.4% versus the same period last year. This equates to anannualized return on average equity for the quarter of 20.2%. The combinedratio for the quarter was 88.5%. For the nine months of 2007, net income was$354 million and the annualized return on average equity was 21.2% with acombined ratio of 84.1%. Further detail on the results is setout in slides 3and 4.

These results, we achievedagainst backdrop with declining market and I am particularly pleased with thesereturns, as they reflect the changes we made to our business in 2005 to reducethe onsite risks, I will come back to this later on the call. This quarter, wealso realigned our operating segments to reflect the current organizational andreporting structure of our business. These changes are reflected in slide 5.

Our four new segments wereProperty Reinsurance, Casualty Reinsurance, International Insurance, whichcomprises all of our non USbased insurance operations, and US Insurance, which includes our Excess &Surplus Lines business. I will not comment on market conditions. Overall ratesare continuing to trend downwards, but there is significant variation by lineof business rating pressure in some of the lines, we write such as U.K.Commercial Property and U.K. Employers’ and Public Liability is particularlyacute.

Therefore, we wrote less newbusiness. We accept a reduced retention rates on renewals in order to preservethe underwriting margins and return on capital. One consequence of this isreducing top line, which is reflected in growth written premium for the thirdquarter of 18% less than the same period last year.

Turning now to each of ourbusiness segments, as shown in slide 6 and 7, we measure rate relativities on apremium weighted basis average. I’m sorry, read that again. We measurerelativities on the premium weighted average basis on business, we renew.

Starting with our PropertyReinsurance lines overall rates remained flat on business we renewed this year.Although rates, have trended down from the record highs achieved in July 2006.And our Catastrophe Treaty book rates are actually up 3% on average in 2007renewal business.

Further, the comparison between2006 and 2007 is somewhat assorted, because in January 2007, we saw US pricesthey were up over 30% year-on-year and we increased our book in anticipation ofrates softening later, which is exactly what happened. April renewal rates wereflat. We are sensing average price declines of 15% on renewals. The trend,however in property cat pricing is clearly downwards.

Our Pro Rata Treaty business hasseen average rate declines of 1% in 2007. And our Risk Excess Treaty businessrenewal rates were down approximately 4% with some pressure on terms andconditions. Within Property Reinsurance as a whole, terms and conditions haveremained stable. But we will continue to pay close attention to contractwordings particularly as the markets softens. However, in the underlyingprimary policies, we project there has been some erosion in terms and conditions.

In Casualty Reinsurance, we haveseen prices come down although slightly less than our expectations. OurInternational Causality Reinsurance account rates have declined byapproximately 5% reflecting lower pricing in the insurance markets and we anticipatefurther rating pressure in 2008.

In US Casualty Reinsurance, werecorded reduction also of approximately 5% on a book. Overall the downwardpressure rate is increasing with finance referencing, recent profitability andongoing total bond plus rate reductions.

In the international insurancesegment, we have seen rates come off approximately 2% on average on renewal business,although it varies widely by line. In our energy physical damage accountaverage renewal pricing declined 8% year-to-date reflecting minimal lossactivity.

Marine liability insuranceexperienced 10% in increase average rates due to combination of market practiceand tax loss activity in some contracts although we do anticipate somereductions in the coming months.

We recorded 6% increase in ourmarine hull account as the consequence of the increased frequency of losses inthis line of business. Rates for aviation insurance are down 7%. However, thesome encouraging signs in the aviation market, a some business, which we have rejectedis being under priced is come back to a certain improved terms when the markethad been unwilling to complete placement the previous firm order.

UK employees and public liabilityhave seen the largest fall off in rates down 12% due to increased competitionand we have written 25% less premium in these lines as a result. We also seenaverage rate of clients of 4% this year on our UK commercial property account. Andour specialty reinsurance account, which we reported within the internationalinsurance segment rates have declined by on average of 5%.

Finally, moving to launch themarket is seeing reduction typically in the range of 10% to 20% on E&SProperty and 12.5% to 15% in the E&S Casualty. Our renewal business are verymuch better. Leveraging opportunities in client connections and by careful riskselection, we have [landed] the weight reductions and our property accounts 2%,casualty to 5%. Our new property underwriting team has been in board for justover six months. They were making progress and working with wholesale brokers,so they understand the business we want.

We changed our approach toproduce the management and we have been corrective in terms of originatingbusiness. The betterments of this will be reflected in our reported performance,as we go through to 2008. As you have heard from me today and others, thisearning season, our industry is in the middle of a softening rate environmentand I believe that it is worthwhile spending a few moments on our businessmodel and while, we are well positioned in this market.

Over the years, we have mentioneddiversified setout on slide 8 and 9. In fact, we have been pursuing ourmultiplatform, multi-class approach since Aspen’screation over five years ago. We added approximately $1.1 billion in new linessince 2004 with the particular focus in building out reinsurance operations andnon co-relating lines.

Our portfolio split isapproximately 35/66 percent insurance, reinsurance and 60/40%, public casualty.We have made some very deliberate changes to our business model in 2005including a reduction in our risks tolerance to 70.5% of third shareholdersequity for 1,100 year event and 25% or 1,250 year event, which reducedcatastrophe exposures right through the loss distribution curve.

As a result, we purchasedsignificantly less reinsurance and retrocession cover, which has the directimpact on our bottom line. So, for the record, our reinsurance charge for thenine months this year was $119.3 million down from $254.4 million for the sameperiod in 2006.

In other words, we are verycomfortable with the well priced and diversified cat exposures we hold, and webelieve that it make sense to keep these in our balance sheet. This isadvantageous both from a risk management and return on capital perspective.

This quarter we continue todiversify selectively and broaden our portfolio with addition of two new lines.We began underwriting mainly international focused professional liabilityinsurance account in UK and outsidein to excess Casualty Insurance with establishment of dedicated underwritingunits in Dublin.

We expect to commenceunderwriting in excess casualty at the end of November this year. Gross writtenpremium from these lines should contribute around $150 million in 2009.Selective diversification through the addition of new underwriting teams is acore component of our long-term growth strategy. Well I could hire of the teamsin 2008.

It’s our belief that goodunderwriters can source profitable business in all phases of market cycle. Forthe amount of such business will be limited when rates are low, but thisapproach will leave as extremely well placed to expand rapidly, when conditionsare right.

We continue to enhance our riskmanagement framework, which has been awarded a strong rating by Standard &Poor's the second highest rating. Only 3 out of 29 global reinsurance companiesrated by S&P on this basis of higher rating allowance, which we think it isa significant achievement.

Our tax rate has fallen from 20%in 2006 to 15% reflecting a number steps taken to improve our overall financialefficiency. Returns have been enhanced further by corrective balance sheetmanagement through our authorized $300 million share repurchase program. And weexpect to complete the remaining $50 million by year end.

This scrutiny apply to ourunderwriting is also reflected and how we approach our investment portfolio. Wecontinue to pickup yield without reducing credit quality by careful selectionand managing the yield curve. This is resulted increasingly larger contributionfrom investments of overall results.

I am extremely pleased in thisconnection to announce Liaquat Ahamed joined our Board earlier this week. Liaquatwas Head of the World Bank's Investment Department and the CEO of Fischer FrancisTrees & Watts. And I am looking forward toworking with him.

With that, I’d like to turn thecall over to Richard Haughton.

Richard Haughton

Thank you, Chris. Good morning.I’m delighted to report on excellent third quarter earnings for Aspen with netincome of $170 million or 23% on the same quarter last year and year-to-date,net income up 37% or $354 million. Book value per ordinary share for the ninemonths ended September was up by [1%] on last year and both our third quarterannualized return on equity of 20.2% and 21.2% for the nine months ended 30thof September show the quality and consistent of our performance.

In environment, where many of ourproduct lines are suffering softening pricing, as Chris just described ourthird quarter and 2007 performance to-date of the products have disciplinedunderwriting, prudent reserving, most pleasingly in the lights of uncertainfinancial markets, strong investment performance. We have also of coursebenefited from a benign third quarter cat season.

Our combined ratio for thequarter of 84.5% compares with 81% last year, which have no reported catlosses. Our year-to-date, combined ratio is virtually unchanged at 84.1%despite pressure on margins, and our loss ratio for the same period is alsovirtually flat at 54.8%. Our combined ratio excluding cat losses year-to-datewas 79.3% compared with 84.3%.

I’ll now take you though some ofthe highlights of our financial performance and provide an update on both theyearend guidance and capital management activities. Starting first with ourthird quarter claims performance, I’m happy to report that the only significantweather related event was the July floods in the UK for which we have set asidereserves of $7 million substantially less than the June flood reserve. We havealso reduced marginally our June UK flood reserves to $22.5 million.

Our total cat losses year-to-dateare $64 million compared with none last year. The ninth third quarterexperience balancing heavier than expected losses in the first half through WindstormKyrill and the June UK floods.

We release $29 million priorreserves in the third quarter compared with 12 million in 2006. Bringing ouryear-to-date releases to $73 million slightly up on $58 million at this pointlast year was still representing only 3% of net reserves with the start of theyear.

This quarter reserve releasescame predominately from our international insurance book a most specificallyfrom both our UKliability book and aviation account those claims have settled favorably. Ourexpense ratio is 32.1% for the quarter compared to 27% in the correspondingquarter in 2006.

The operating and administrativeexpense element of this is 14% in the quarter up from 8.6% in 2006. The keyfactors driving this increase, where the cause of hiring new teams,restructuring our US insurance operations, a higher charge of performancerelated remuneration and high cost in dollar terms reduce the strengthening ofSterling, where over 50% of our cost were incurred compared with dollar.

As Chris has already noted, wehave slightly amended our segmentation for reporting purposes and the detailsare setout in page 5 of the slides. We presented our results on both old andnew basis in the financial supplement.

Gross written premiums were down 18%in the third quarter to $374 million, a reduction of $84 million on last year,which are declining Property Reinsurance, contributed $62 million. Thisreduction is due to softening market conditions, [normal year rejection] ofbusiness, which does not meet our required rate of return and the change in theseasonality of our Property Reinsurance business.

In 2007, we were proportionallymore business earlier in the year than 2006, making third quarter comparative premiumappear low. The timing of our writing in 2006 was delayed, as we anticipatedcorrectly the rates would improve shifting premium to latterly in the year thanfor this year. This year-on-year reduction should be seen in the context of ayear-to-date reduction of $43 million or 8%.

Property Reinsurance driven bydisciplined underwriting and a benign loss experienced in the third quartermade an underwriting profit of $39 million compared with $29 million last yearand excellent combined ratio is 69.1% better the solid 2006 performance of 77.8%.

The performance of our CasualtyReinsurance segment this quarter was affected by a number of one-offconsiderations and we report an underwriting loss of $2 million compared withthe 2006 profit of $19 million. The letter including reserve release of $7million.

Our year-to-date combined ratiois 94% versus 82.6% last year, while the combined ratio for the quarter was101.7% versus 85.4% last year. We expect that the year-to-date combined ratiois more indicative of the future performance of the book in the medium term.

Our International Insurancesegment enjoyed a steady quarter with underwriting profit of $28 million and acombined ratio of 80.9% versus $45 million and a combined ratio of 68.7% lastyear. Strong positive prior year development from both the UK Liability andAviation Accounts was offset by a single aviation loss in Brazil of $10million and July fed losses of $4 million.

I’m pleased to report our USInsurance operation made an underwriting profit of $1 million in the quartercompared with the loss of an $11 million last year, as we continue torestructure the property account in particular.

Our investment activities haveagain produced an excellent performance in the third quarter generating $72million of investment income up by 53.1% on 2006 details of our portfolio givenon slide 10 and 11. Our performance is driven by increasing book yields in ourfixed income portfolio, strong operating cash flow, which has increased ourportfolio to $5.8 billion up by 20% from this time last year.

Our investment portfolio remainsdominated by high quality liquid fixed income investments representing over 91%of our portfolio. The book yield on the fixed income element of our portfolioincreased to 5.08% at the end of the quarter up from 4.94% as of June 30, 2007and compared with 4.44% up same point last year.

We have an average portfoliorating of AA plus with 89% of our portfolio rated ‘A’ better. Only 1.7% of ourbook is rated BBB and we have no high yield securities. There is being much interestin the performance by investment in funds of hedged funds over the quartergiven the turmoil in the financial markets.

And I’m pleased to report thatour multi-manger, multi-strategy diversified selection criteria protected usfrom extreme volatility. And this portion of our portfolio produced anannualized 6.5% return in the third quarter contributing $8 million to thequarter's investment income and an annualized return of 13% at the end of thethird quarter. Funds of hedged funds currently represents, approximately 9% ofour total portfolio.

Turning to capital management, weundertook a further stock buyback of $50 million at the end of the quarterthrough an accelerated stock repurchase needing a further $60 million buybackto complete the $300 million authorized buyback authorized by our board in2006. We will seek to complete this remaining portion by the year end subjectto market conditions.

I expect to provide a furtherupdate on capital management on our next earnings call following the year endresults.

Lastly, I would like to update onguidance for 2007, based on our experience year-to-date. You will see anupdated set of metrics on page 12 of the slide presentation. In brief, we havenarrowed our combined operating ratio guidance to 83% to 86%. Investment incomehas been increased to a range of $280 million to $300 million and bettingimproving book yields further in to our expectations.

We have reduced the tax raterange the 14% to 16% driven by the strong performance by our Bermudadomiciled book. Lastly, we have reduced our assumed Cat-Load for the full yearto $90 million to reflect year-to-date experience.

To conclude this is the seventhquarter in a row that we have increased book value per share and our return onequity above the quarter and year-to-date are we believe testament to ourdisciplined underwriting diversified book and considered approached to ourinvestment portfolio. Our future capital plans will continue to align ourbalance sheet to the opportunities currently available in the market.

And on that note, I would like toreturn the call back to Chris O’Kane.

Chris O’Kane

Thanks, Richard. Well, in Aspen, we have a season(inaudible) with many years of experience navigating through soft markets. Ourapproach is predicated and targeted management of the underlying drivers ofROE.

Underwriting discipline and riskselection coupled with prudent capital and balance sheet management to strongbest returns a key to performing well in the softening market. As I haveoutlined above we have taken a number of steps to build in our strongunderwriting results and position Aspento continue generating attractive returns and book value growth.

With that, I will turn the callover to questions.

Question-and-Answer session


(Operator Instructions) Yourfirst question is coming from Alain Karaoglan of Bancof America Securities.

Alain Karaoglan - Banc of America Securities

Good morning. I’ve a couple ofquestions. Could you comment a little bit on the Casualty Reinsurance resultsthat had a combined ratio of above 100? And also the expense ratio ticking up,you mentioned a few reason hiring new people is that going to force them towrite more business in an environment than softening. And Chris, how do youmake sure that your new team do not do that and still write the business thatyou want them to write in spite of being just hired?

Chris O’Kane

Okay. Well, let me take thebeginning of that call, and I’ll then hand over to Richard to give you moreabout the hired data. Our view is that high quality underwriters particularlykind of teams, we like to have them following in terms of the brokers producersand in terms of plans that they like to do business with. They tend to be loyalto them in hard markets and soft markets.

And the best quality of businessmakes some money in the soft market. It makes more than the hard marketobviously. So, our view is to bring teams on board now even in the softeningmarket will actually yield us some small amount of profit. But it also showsthe seed for very rapid expansion, when the market turns. I think, we can maybeleverage that distribution capability we have, when the rates are better andthat’s what we’re doing. And I guess, I’ve done it for my underwriting careerand I know it can work.

How do we know that they are notgoing to write bad business just because that’s what I just want to do? Wedon’t give them very demanding premium targets. We look at it very carefully.We look at what’s available. We look at our own track records. We essentiallysay success is in your underwriting margin, the profit margin not in your topline. Right, that’s true for the new teams and it’s true for the existingteams, no one when asked and they told the top line is an important thing tolook.

So, underwriting margin than Iguess there is a controlled Operators through the company, which willunderwriting audits, internal audits, line management into use. It looks a bitstrange are also part of the Operators control. But to be honest, I think, our guysright across the company no words wanted off them and it’s extremely rare, wehave a conversation to do with you are writing more business than you will be.

So, I guess the point here isthere is an expense ratio up tick as a result in the short-term. The expensescome first, the revenues come later. We look at it, if you like on a netpresent value basis and over three years every team we have appears to make alot of sense. I think, you also asked about the Casualty Reinsurance in detailand the expense ratio. I’m going to ask Richard to help on that.

Richard Houghton

Thanks, Chris. Just to tied youup on the expense ratio, first. Firs of all if I could allow, I think, Chrishas outlined most of the issues here. But there was some really good new storiesfor me in the expense number even though it’s moved adverse. I’ll see asinvestments spend in new teams and as Chris said that comes before the incomestarts to flow.

But we’ve done some very exitingthings this quarter and it cost us some money and we look forward to enjoyingthe benefits of that in 2008 and going forward. The other sizeable element inthe expense ratio is our bonus profits growth that’s driven by a very strongperformance in our year-to-date position.

So, again I think that’s goodnews hopefully for our shareholders and our employees. There is also a smallForex element because we do hold a portion of our cost base in Sterling and that just our policies way thecurrency has moved in the quarter.

But nothing to me anywayparticularly concerning in the Q3 expense ratio in fact there is quite a fewpositives in that. But you clearly you have to continue to explain theincreases in terms of investment of what positive and if there are anynegatives I will of course tell you. But that’s not the story for this quarterin my view.

Turning to the CasualtyReinsurance book, as usual you got to getaway from the noise to trying workalready underlying performance of the book this year, because we have somereserve release movement both in the last year and this year. So, the releasewas salient ratio that allows you to consider is our year-to-date combinedoperating ratio for the accident year is 99% versus 97% last year.

And Chris referred to the toughmarket conditions in this particular section of our book, but if you strip outsome of the one offs that we had in the quarter that relate to reserve releasesetcetera, then our underlying performance is we believe satisfactory.

Alain Karaoglan - Banc of America Securities

Two questions, just twofollow-ups one on the expense ratio. Could you quantify the performance part ofthe expense ratio? And second, but is it 99% or 97% casualty combined ratio atthis stage of the cycle acceptable or you are saying reserves are conservative.Could you comment on that?

Richard Houghton

Yeah. Sure, okay. On the expenseside, my variance year-on-year would up about $6 million for the quarter andnot reflect all sort of year-to-date performance. So, that rate the number inthat. In terms of the long-term performance is 99% adequate, you do have toremember what sort of investment performance we can drive from the casualtyreinsurance book. So that is still a more and eloquent combined operating ratiofor us to work on.

Alain Karaoglan - Banc of America Securities

Okay. And the last question hasto do on the guidance. The implied ROE of 16%, I mean to reach the bottom endof that return on equity it’s suggest a pretty bad return on equity in thefourth quarter. I guess, the question that I’ve and the reason why you didn’ttighten up that range, as well the way you did with the combined ratio and withthe cat losses by moving the bottom part of it up?

Chris O’Kane

I’ll confess to my usual accountsand it’s prudent. I think Alain the wind is blowing a little bit in Bermuda, as we sit here today, we still don’t know what’sgoing to happen in Q3 otherwise you can see from all the metrics they arevirtually all going the right way. So, I’d be very, very hopeful that we willbe moving towards the top end of the ROE gotten.

Alain Karaoglan - Banc of America Securities

Great, thank you very much.

Chris O’Kane

Thank you.

Richard Houghton

Thanks, Alain.


Thank you. (OperatorsInstructions) Your next question is coming from VinayMisquith of Credit Suisse.

Vinay Misquith - Credit Suisse

Hi, good morning. Started with[data harsh] but just wondering with your expense ratio, with the operatingexpense. I wanted to know, whether this was really be the run rate for the nextfew quarters or would you be spending a little bit more money on your new teamsand offset by some reduction maybe in the next two quarters from the bonusaccrual. So, I just want to get a sense for whether your run rate of about $59million this quarter would be the run rate going forward for the next fewquarters?

Chris O’Kane

This quarter feels slightly onthe heavy side, Vinay is what I’d say. But you kind of remember how the ratiois prepared it’s driven half the premium. So, our focus is on the bottom lineunderwriting discipline. So, I don’t want get too hang-up on the expense ratio,but I would say it is slightly heavier than our anticipation, because the takeone of the new teams that we’ve had, on the way we’ve accounted for bonus inQ3.

Vinay Misquith - Credit Suisse

Okay. That’s fair enough. And Idon’t know whether you have, but if you can just provide us with a breakdown ofhistorical performance of the new segments that would be helpful? And on the PropertyReinsurance, looking at the consolidated reinsurance that you purchased it wasroughly about 11% of gross premiums this year. Do you anticipate buying asimilar amount next year?

Chris O'Kane

Okay. In terms of the historicalof the new segments I believe we have disclosed that and we will continue to dothat for the immediate future. So that, it would assists in your makingcomparisons. I’m sorry. Could you repeat the other part of your question?

Vinay Misquith - Credit Suisse

Sure. The reinsurance, right.

Chris O’Kane

Yeah. We’re looking that at themoment. The reason where the assumption is it we would spend approximately thesame next year as we did this year, very approximately. It depends a little biton how prices in that market move and we don’t yet know. How they’re going tomove.

Vinay Misquith - Credit Suisse

Okay, fair enough. And in termsof the top line, just wondering you have three new segments or sort of new setof teams Nathan Warde also came on Board in the US. I’m just curious what you’relooking at next year would we still see down premiums because maybe pullingback some more on the causality reinsurance side and maybe on the PropertyReinsurance, but your three new insurance teams. What start to kick in somepremiums next year, I’m just wondering what you can give us?

Chris O’Kane

I can’t give you very much thismorning. Next call we'll talk about 2008 guidance. All I’d say is I’m speakingabout the new teams replacing loss revenue in difficult markets [cyclicality] elsewhereas supposed to necessarily making perhaps good growth. I think the line ofthinking that you are on is probably about correct.

Vinay Misquith - Credit Suisse

Okay, fair enough. And one lastnumbers question maybe for Richard. The $10 million in cat losses, which linesthat flow through exactly?

Richard Houghton

That would have gone through theInternational Insurance line. That’s was in relation to the U.K. floods.

Vinay Misquith - Credit Suisse

Okay. Also the entire $10 millionwould have been in that line, okay?

Richard Houghton

So, there is about $7.5 amountmillion in relations to the U.K.floods of which $4 million was in the International Insurance line.

Vinay Misquith - Credit Suisse

Fair enough. All right. Thankyou.

Richard Houghton


Chris O’Kane

Thanks, Vinay.


Thank you. (Operator Instructions).There appear to be no more questions at this time. I will turn the floor overback to your host Mr. Chris O’Kane for any closing remarks.

Chris O’Kane

Actually, we may have one morequestion. Let me just check.


Yes sir. We have Jay Yang of PerryCapital.

Jay Yang - Perry Capital

Good morning. Could you just putthe assumed average cat load in perspective? Do you have any year-to-datenumber for cats that you have reported?

Richard Houghton

Yeah, sure it’s around about $64million year-to-date.

Jay Yang - Perry Capital

64 million okay. Great. Thankyou.


Thank you. There are no morequestions at this time, sir.

Chris O’Kane

Okay. Well, that really is theend. And so, thank you very much for your attention this morning. Have a goodday. Good luck.


Thank you. This concludes today'sAspen Insurance Holdings third quarter 2007 earnings conference call. You maynow disconnect.

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