Bermuda-based Aspen Insurance Holdings Limited reported second-quarter net income increased 11 percent compared to the period in 2007, citing strong underwriting performance and solid investment returns.

Quarterly net income for the firm was reported at $126.9 million, compared to $114.7 million in the second quarter of 2007. Gross written premiums increased in the quarter to $528.8 million from $503 million in 2007.

Net earned premiums, though, fell 12 percent to $397.3 million compared to $451.2 million in the second quarter of 2007. Aspen Chief Financial Officer Richard Houghton said in a conference call that the lower net earned premiums "are a function of the reduction in gross written premium in the second half of 2007 and in the first quarter of 2008."

The company's combined ratio improved to 78.2 in the quarter compared to 88.4 in 2007. The combined ratio improved in all lines compared to the second quarter of 2007.

Property reinsurance improved to 65 from 77.3; casualty reinsurance improved to 91.5 from 94.7; international insurance improved to 79.2 from 88; and U.S. insurance improved to 91 from 122.6.

Net investment income dropped to $70.5 million in the quarter from $78.8 million in 2007. Mr. Houghton said that "although a decrease on the second quarter of last year, this is a significant improvement on the first quarter of 2008 as a result of the positive contribution from funds of hedge funds."

Christopher O'Kane, Aspen chief executive officer, said in a statement, "Aspen had a strong quarter and delivered results ahead of our expectations.... Our solid underwriting performance demonstrates our well-diversified portfolio and stringent risk selection criteria."

For the first half of 2008, net income is down 12 percent from 2007. Net income for the first half of 2008 was reported at $208.1 million compared to $236 million in the first half of 2007.

Aspen insurance segment consists of commercial property insurance, commercial liability insurance, and marine and aviation insurance. Group operations are conducted through Aspen Re in London and Aspen Specialty based in Atlanta.

Its reinsurance branch provides property, casualty and specialty reinsurance lines