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Best’s News & Research Service - May 26, 2022 09:24 AM (EDT)

AM Best Affirms Credit Ratings of Aspen Insurance Holdings Limited and Its Rated Subsidiaries

  • May 26, 2022 09:24 AM (EDT)
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London //BestWire// - AM Best has affirmed the Financial Strength Ratings (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of Aspen Insurance UK Limited (AIUK) (United Kingdom), Aspen Bermuda Limited (ABL) (Bermuda), Aspen American Insurance Company (AAIC) (Austin, TX) and Aspen Specialty Insurance Company (ASIC) (Bismarck, ND). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” (Good) of Aspen Insurance Holdings Limited (Aspen) (Bermuda), a non-operating holding company. The outlook of these Credit Ratings (ratings) is stable. AM Best has also affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) on the debt instruments and preference shares of Aspen. (Please see below for a detailed listing of the Long-Term IRs.)

The ratings reflect Aspen’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group’s adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings of AIUK, ABL, AAIC and ASIC reflect their integration and strategic importance to Aspen.

Aspen’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the balance sheet benefits from a loss portfolio transfer (LPT), which the group entered into in January 2022 to protect against the adverse development of losses incurred on or prior to 31 December 2019 on a diversified mix of business. The LPT replaced the adverse development cover that was previously in place, providing the group with increased protection.

The adequate operating performance assessment considers corrective actions taken by management to improve underwriting profitability, such as reducing catastrophe exposure, exiting poorly performing lines of business, enhancing underwriting risk selection and reducing operating expenses. AM Best expects these actions to translate into further improvements in underlying results, supporting adequate performance over the underwriting cycle. The group’s performance in 2021 was negatively affected by significant catastrophe claims, which contributed 13.6 percentage points to the 104.8% combined ratio (2020: 14.2 percentage points, including 7.1 percentage points related to COVID-19, out of 107.5%), as calculated by AM Best.

Aspen’s business profile benefits from the company’s well-diversified portfolio of property/casualty and specialty insurance and reinsurance business, as well as a good geographic footprint. The group’s ERM is developed and considered appropriately aligned with Aspen’s relatively high-risk profile.

The following Long-Term IRs have been affirmed, with a stable outlook:

Aspen Insurance Holdings Limited—

— “bbb” (Good) on USD 300 million 4.65% senior unsecured notes, due 2023

— “bb+” (Fair) on USD 275 million 5.95% fixed-to-floating rate perpetual non-cumulative preference shares

— “bb+” (Fair) on USD 250 million 5.625% perpetual non-cumulative preference shares

— “bb+” (Fair) on USD 250 million 5.625% perpetual non-cumulative preference shares

The following indicative Long-Term IRs under the universal shelf registration have been affirmed, with a stable outlook:

Aspen Insurance Holdings Limited—

— “bbb” (Good) on senior unsecured debt

— “bbb-” (Good) on senior subordinated debt

— “bb+” (Fair) on junior subordinated debt

— “bb+” (Fair) on preferred stock

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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