Aspen Insurance Holdings Ltd.'s profits fell by more than one third during the third quarter of 2010 as the company suffered a $20.4 million loss from the New Zealand earthquake and took a significant hit from oil and gas pipelines losses.

The re/insurer posted net income of $92.8 million or 79 cents per share after tax for the quarter compared to $145 million or $1.40 per share for the same period in 2009.

But diluted book value per share was up 15.3 percent at $38.22 over the end of last year's third quarter and 12 percent from the end of 2009, due to $75.6 million in retained income and a $61.5 million increase in unrealised gains, net of tax, from its fixed income portfolio in the quarter.

Operating income after tax dropped 44.5 percent to $69.7 million for the quarter from $125.6 million last year impacted by $20.4 million of pre-tax losses from the New Zealand Earthquake.

Chris O'Kane, CEO of Aspen, said: "I am pleased to announce our eighth successive quarter of increasing book value per share, a 15 percent increase year on year. Third quarter net income amounted to $92.8 million and we reported an annualised return on equity of 13.2 percent.

"Market conditions remain highly challenging; in these circumstances our underwriters are hard at work in identifying those few segments where good profits are available and increasing our exposure to them. Elsewhere, it is a question of cutting back top line volume, rigorous risk selection and maintaining a very defensive underwriting posture."

Gross written premiums were down 15 percent at $415.8 million for the quarter from $490.3 million, mainly from the reinsurance segment.

Meanwhile underwriting income for the quarter stood at $25.3 million versus $92.5 million in the previous year, including $20.4 million of losses from the New Zealand earthquake and three large insurance losses totalling $40 million from oil and gas pipelines.

Unrealised gains in the available-for-sale fixed income portfolio climbed by $68.3 million for the third quarter to $361.6 million against $106.3 million in the previous year.

The insurance segment made an underwriting loss for the quarter, excluding investment income, of $13.4 million compared with an underwriting profit of $20.9 million in the third quarter of 2009.

The reinsurance segment underwriting profit for the third quarter of 2010 was $53 million against $86.3 million last year, reflecting a combined ratio of 80.1 percent compared with 70.1 percent for the same period in 2009. The combined ratio included 7.6 percentage points of losses from the earthquake in New Zealand.

The combined ratio for the nine months ended September 30, 2010 of 90.6 percent was impacted by 16 percentage points, or $132.7 million of losses, net of reinstatement premiums, from the earthquakes in Chile and New Zealand and compares with 69.8 percent for the corresponding period in 2009.

Net investment income for the quarter of $58.1 million was down slightly from $58.9 million in the third quarter of 2009.