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Basis of Preparation
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Preparation
The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. The unaudited condensed consolidated financial statements include the accounts of Aspen Holdings and its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.
The balance sheet as at December 31, 2018 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018 contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 13, 2019 (File No. 001-31909).
Assumptions and estimates made by management have a significant effect on the amounts reported within the unaudited condensed consolidated financial statements. The most significant of these assumptions and estimates relate to losses and loss adjustment expenses, reinsurance recoverables, gross written premiums and commissions which have not been reported to the Company such as those relating to proportional treaty reinsurance contracts, unrecognized tax benefits, the fair value of derivatives and the fair value of other investments. All material assumptions and estimates are regularly reviewed and adjustments made as necessary, but actual results could differ significantly from those expected when the assumptions or estimates were made.
Accounting Pronouncements Adopted in 2019
On February 25, 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-2, “Leases (Topic 842)” which supersedes the leases requirements in Topic 840 and establishes the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. On July 30, 2018, the FASB issued ASU 2018-11, “Targeted Improvements (Topic 842)” which amended the transitional guidance of ASU 2016-2, “Leases (Topic 842)” and provided an alternative transition method to the existing modified retrospective method. In particular, the amendment allows entities to initially apply the new lease standard as at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 was effective for fiscal years beginning after December 15, 2018, aligned to the effective date and transition requirements of ASU 2016-2.
Following the adoption of ASU 2016-02 and ASU 2018-11, the Company recognized right-of-use operating leased assets of $91.2 million, consisting of leased office real estate and motor vehicles, and an operating lease liability of $93.6 million on the balance sheet as of January 1, 2019, and a cumulative effect adjustment of $2.4 million through opening retained earnings. The interest rate assumption applied in determining the present value of future cash flows of 5% was determined based on the Company’s weighted average incremental borrowing rate. During the quarter ended March 31, 2019, additional right-of-use operating leased assets and a corresponding operating lease liability of $3.1 million have been recognized on balance sheet for new or renewed lease agreements. An operating lease charge of $4.5 million was incurred during the quarter, consisting of an amortization charge of $3.3 million on right-of-use operating leases assets and a $1.2 million finance charge on the operating lease liability.

On March 5, 2019, the FASB issued ASU 2019-01, “Codification Improvements (Topic 842)” which amended lessor accounting guidance in ASC 842 and clarifies exemption from certain interim period transitional disclosure requirements. The amendments of this ASU are effective for fiscal years beginning after December 15, 2018. Adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.
On August 28, 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815)” enabling entities to better align their hedge accounting and risk management activities, while also simplifying the application of hedge accounting in certain situations. This ASU is effective for fiscal years beginning after 15 December, 2018 using a modified retrospective approach for cash flow and net investment hedge relationships that exist on the date of adoption. Adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.
On February 14, 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220)” which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Adoption of this ASU did not have a material impact on the Company's financial statements and disclosures.

On June 20, 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation (Topic 718)” which amends the scope of Topic 718 via improvements to non-employee share-based payment accounting. Amendments include allowing companies to account for share-based payment transactions with non-employees in the same way as share-based payment transactions with employees and includes elections that offer relief to non-public companies when measuring non-employee equity share options. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Adoption of this ASU did not have a material impact on the Company's financial statements and disclosures.
2019 Accounting Pronouncements Not Yet Adopted    
Other accounting pronouncements issued during the three months ended March 31, 2019 were either not relevant to the Company or did not impact the Company’s consolidated financial statements.