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APRIL 30, 2021 12:22 PM (EDT)

AM Best Revises Outlooks to Stable and Affirms Credit Ratings of Aspen Insurance Holdings Limited and Its Rated Subsidiaries


CONTACTS:
 Stanislav Stoev, ACCA
Financial Analyst
+44 20 7397 0306
stanislav.stoev@ambest.com

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268
ghislain.lecam@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

LONDON - APRIL 30, 2021 12:22 PM (EDT)
AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Ratings (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” 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 revised the outlook to stable from negative and affirmed the Long-Term ICR of “bbb” of Aspen Insurance Holdings Limited (Aspen) (Bermuda), the non-operating holding company of the Aspen group of companies. AM Best has also revised the outlook to stable from negative and 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.

The revision of the outlooks to stable reflects AM Best’s expectation that actions taken by the group to improve underwriting results, such as reducing catastrophe exposure, exiting poorly performing segments, enhancing underwriting risk selection and reducing operating expenses, will support adequate operating performance over the underwriting cycle.

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 benefited in 2020 from a capital contribution of USD 268 million from Aspen’s parent, Highland Bermuda Holdco, Ltd. (formerly known as Highland Holdings Ltd.), and a further reduction in exposure to catastrophe risks. In addition, an adverse development cover, which the group entered into in March 2020, protects losses incurred on or prior to 31 December 2019 on a diversified mix of property, liability and specialty lines of business. Management continues to include a prudent margin in reserves above its actuarial best estimate. Aspen decreased its reliance on reinsurance in 2020, as part of its plan to increase retention of non-catastrophe-exposed lines, but maintained its catastrophe and tail event protections.

Following losses reported in 2017-2019 due to catastrophe losses and weak results for certain lines of business, Aspen implemented a number of corrective measures to improve technical profitability. These translated into an improved underlying performance in 2020, with ongoing lines of business delivering positive technical results. The overall combined ratio was 107.3% (2019: 113.9%), with COVID-19-related losses adding 7.1 percentage points. AM Best expects the corrective actions taken over the last two years to support adequate operating performance over the underwriting cycle.

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 geographical footprint. The group’s ERM is developed and aligned appropriately with its relatively high-risk profile.

The following Long-Term IRs have been affirmed, with the outlook revised to stable from negative:

Aspen Insurance Holdings Limited—

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

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

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

— “bb+” 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 the outlook revised to stable from negative:

Aspen Insurance Holdings Limited—

— “bbb” on senior unsecured debt

— “bbb-” on senior subordinated debt

— “bb+” on junior subordinated debt

— “bb+” 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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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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