Best Affirms Aspen’s ‘A’ Ratings

January 19, 2010

A.M. Best Co. has affirmed the financial strength ratings of ‘A’ (Excellent) and the issuer credit ratings (ICR) of “a” of Aspen Insurance UK Limited (AIUK), Bermuda-based Aspen Insurance Limited (AIL), and Aspen Specialty Insurance Company (ASIC), which is based in Bismarck, North Dakota.

Best also affirmed the debt ratings for the group, notably the ICR of “bbb” of Aspen Insurance Holdings Limited, the non-operating holding company of the Aspen group of companies, and the ratings of “bbb” on the $250 million 6 percent senior unsecured notes, “bb+” on the $133 million perpetual non-cumulative preference shares and “bb+” on the $230 million perpetual preferred income equity replacement securities, all issued by Aspen. In addition, Best affirmed the ratings for Aspen’s universal shelf registrations of “bbb,” “bbb-“, “bbb-” and “bb+” on senior unsecured debt, subordinated debt, junior subordinated debt and preferred stock, respectively.

The outlook for all ratings remains stable.

Best explained that, in its opinion, “AIUK, AIL and ASIC benefit from the strong consolidated risk-adjusted capitalization of Aspen, the group’s ultimate holding company. The loss exposure and capital requirements of individual subsidiaries continue to be managed through the use of internal quota share reinsurance arrangements. On a consolidated basis, internal capital generation is expected to support the group’s planned premium growth through its U.S. and Lloyd’s operations.”

Best also anticipates that Aspen will post a profit for 2009 in excess of the $140.2 million it achieved in 2008. Best explained that the anticipated results were based on Aspen’s “strong underwriting performance…supported by rate improvements for classes of business affected by catastrophes in 2008 and benign claims experience for the property reinsurance account.”

However, the group’s U.S. excess and surplus lines carrier, ASIC, is expected to produce an underwriting loss as a result of the purchase of substantial group reinsurance support and relatively low levels of earned premium through 2009.

Best also described Aspen as having a “strong business profile in the London and Bermudian markets, underwriting a well-diversified portfolio of property, casualty and specialty insurance and reinsurance business. Additionally, Aspen benefits from access to business, which typically would not be available to the group in the London and Bermudian markets, through its U.S. operation and branch offices.

“An offsetting factor for the ratings is the prospective growth planned in the U.S. at a time when rates, particularly for U.S. casualty classes, remain weak.”

Source: A.M. Best –

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