AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating 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) (Dallas, TX) and Aspen Specialty Insurance Company (ASIC) (Bismarck, ND). Concurrently, AM Best has removed from under review with developing implications 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, and the Long-Term Issue Credit Ratings (Long-Term IRs) on the debt instruments and preference shares of Aspen. The outlook assigned to these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the Long-Term IRs.)
The removal of the ratings from under review follows the completion of the acquisition of Aspen by certain investment funds managed by affiliates of Apollo Global Management, LLC (Apollo) and AM Bests assessment of the change in ownership on Aspens rating fundamentals.
The ratings of Aspen reflect the groups very strong consolidated balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings of AIUK, ABL, AAIC and ASIC reflect their integration with and strategic importance to Aspen.
Aspens balance sheet strength is underpinned by strongest risk-adjusted capitalisation, as measured by Bests Capital Adequacy Ratio (BCAR), a prudent reserving approach and a conservative investment portfolio. Under its new ownership, the group plans to gradually modify its investment asset allocation in an effort to increase its investment returns. Nonetheless, AM Best expects its overall investment risk profile to remain supportive of the groups very strong balance sheet strength assessment. In 2018, Aspen increased its reliance on reinsurance in order to reduce its earnings volatility. In the medium term, Aspen is expected to increase its premium retention ratio for non-catastrophe exposed lines, whilst maintaining its catastrophe and tail-event protections.
Aspens operating performance has been subject to volatility, due to catastrophe losses and weaker-than-expected results in certain lines of business. The group has reported a five-year weighted average combined ratio of 103.1% (2014-2018). During 2018, Aspen took corrective actions to improve technical results, which included exiting non-performing lines, enhancing its underwriting risk selection and reducing operating expenses. AM Bests assessment of the groups operating performance reflects an expectation that these actions will lead to improvements in underwriting results in the medium term.
Aspens 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. The groups ERM is developed and well-aligned with its relatively high risk profile.
The following Long-Term IRs have been removed from under review with developing implications, affirmed and assigned a stable outlook:
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 (of which USD 125 million remains outstanding)
— 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
The following indicative Long-Term IRs under the universal shelf registration have been removed from under review with developing implications, affirmed and assigned a stable outlook:
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 Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
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