Best’s News & Research Service - June 16, 2023 10:17 AM (EDT)
AM Best Affirms Credit Ratings of Aspen Insurance Holdings Limited and Its Rated Subsidiaries
- June 16, 2023 10:17 AM (EDT)
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. AM Best has also affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) on the debt instruments and preference shares of Aspen. The outlook of these Credit Ratings (ratings) is stable. (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). BCAR scores decreased in 2022 driven by material unrealised losses in the group’s investment portfolio, following sharp rises in interest rates. BCAR scores are expected to recover over the medium term and remain at the strongest level. The group’s investment risk profile moderately increased during 2022 following the completion of the strategic asset allocation, which shifted part of the investment portfolio away from fixed income investments to higher yielding assets.
Aspen reported positive underwriting performance for year-ended 31 December 2022, with a combined ratio of 96.9% (as calculated by AM Best). The result represents the first technical profit recorded in recent years and was driven by the corrective actions taken by management to improve profitability, as well as the favourable rate environment. The group’s five-year (2018-2022) weighted average combined ratio is 106.3%. Overall profitability in 2022 was impacted adversely by material unrealised losses on the fixed income portfolio. The losses, however, are expected to unwind over 2023 and 2024.
Aspen’s business profile benefits from its well-diversified portfolio of property/casualty and specialty insurance and reinsurance businesses, 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.