LONDON--(BUSINESS WIRE)--
A.M. Best has revised the outlook to stable from positive for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” of Aspen Insurance UK Limited (AIUK) (United Kingdom), Aspen Bermuda Limited (ABL) (Bermuda), Aspen American Insurance Company (AAIC) (Dallas, TX) and Aspen Specialty Insurance Company (ASIC) (Bismarck, ND). The outlook of the FSR remains stable. At the same time, A.M. Best has revised the outlooks to stable from positive and affirmed the Long-Term ICR of “bbb” and the Long-Term Issue Ratings (Long-Term IRs) on the unsecured debt and preferred shares of Aspen Insurance Holdings Limited (Aspen) (Bermuda) [NYSE:AHL], the non-operating holding company of the Aspen group of companies. (Please see below for a detailed listing of the Long-Term IRs.)
The ratings of AIUK, ABL, AAIC and ASIC reflect their integration with and strategic importance to Aspen, which is the ultimate non-operating holding company and consolidating unit for the Aspen group. In particular, the ratings of these subsidiaries benefit from Aspen’s consolidated balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks on the Long-Term ICRs of the Aspen group companies reflect A.M. Best’s view that an upgrade of the Long-Term ICRs is unlikely in the near term, taking into account the volatility in Aspen’s technical performance and the increasingly challenging environment in which the group operates.
Aspen’s balance sheet strength is underpinned by risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), a prudent reserving philosophy and a low-risk investment portfolio. Additionally, the group benefits from an effective capital management policy and good financial flexibility.
Aspen has a good performance record, albeit subject to volatility due to exposure to catastrophe events. For the first nine months of 2017, the group reported a net loss of USD 81.5 million compared with a net profit of USD 274.9 million reported for the same prior year period. The results were affected by an increase in the loss ratio to 80.8% (nine months 2016: 58.7%), due to losses from a series of natural catastrophe events including hurricanes Harvey, Irma and Maria, and the earthquakes in Mexico, which combined amounted to USD 424.3 million on a net basis. A.M. Best will closely monitor the impact of Aspen’s recent initiatives, including a cost efficiency programme and revisions to net loss exposures across the portfolio, on the group’s technical performance.
Aspen’s business profile is supported by a well-diversified portfolio of property/casualty and specialty insurance and reinsurance business, as well as a good geographical footprint. Whilst the group is viewed as having a good competitive position in some of its key markets, its ability to successfully defend its market position has become increasingly difficult due to the challenging operating environment characterised by abundant capacity and intense competitive pressures from both traditional and alternative markets.
Aspen maintains a well-developed ERM framework with clear guidelines and limits in place that is appropriate for the size and complexity of the group’s operations. Going forward, the group’s risk management efforts are expected to focus on limiting volatility arising from its exposure to catastrophe risks.
The following Long-Term IRs have been affirmed:
Aspen Insurance Holdings Limited—
— “bbb” on USD 300 million
4.65% senior unsecured notes, due 2023
— “bbb” on USD 250 million
6% senior unsecured notes, due 2020
— “bb+” on USD 275 million
5.95% 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:
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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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