Company: AHL
Filing Date: 2025-05-08
Form Type: 424B4
Source: 0001628280-25-023859
Chunk: 202

Company: ASPEN INSURANCE HOLDINGS LTD
Filing Date: 2025-05-08
Form: 424B4
Chunk 202
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 many years after the event giving rise to the claims has happened. Classes of business where the IBNR proportion of the total reserve is high, such as casualty insurance, will typically display greater variations between initial estimates and final outcomes because of the greater degree of difficulty of estimating these reserves.

Classes of business where claims are typically reported relatively quickly after the claim event tend to display lower levels of volatility between initial estimates and final outcomes. Reinsurance claims are subject to a longer time lag both in their reporting and in their time to final settlement. The time lag is a factor which is included in the projections to ultimate claims within the actuarial analyses and helps to explain why in general a higher proportion of the initial reinsurance reserves are represented by IBNR than for insurance reserves for business in the same class. Delays in receiving information from cedants are an expected part of normal business operations and are included within the statistical estimate of IBNR to the extent that current levels of backlog are consistent with historical data. Currently, there are no processing backlogs which would materially affect our financial statements.

Allowance is made, however, for changes or uncertainties which may create distortions in the underlying statistics or which might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims, including:

• changes in our processes which might accelerate or slow down the development and/or recording of paid or incurred claims;

• changes in the legal environment (including challenges to tort reform);

• the effects of inflation, which rose rapidly over 2022 and 2023;

• changes in the mix of business;

• the impact of large losses; and

• changes in our cedants’ reserving methodologies.

These factors are incorporated in the management’s best estimate of reserves. We take all reasonable steps to ensure that we utilize all appropriate information and actuarial techniques in establishing our IBNR reserves. However, given the uncertainty in establishing claims liabilities, it is likely that the final outcome will prove to be different from the original provision established at the balance sheet date. Changes to our previous estimates of prior period loss reserves impact the reported calendar year underwriting results by worsening our reported results if the prior year reserves prove to be deficient or improving our reported results if the prior year reserves prove to be redundant. As at December 31, 2024, a 5% change in the gross reserve for IBNR losses would have equated to a change of approximately $262.4 million (2023 — $234.8 million) in loss reserves