A.M. Best : Affirms Credit Ratings of Aspen Insurance Holdings Limited and Its Subsidiaries
A.M. Best has affirmed the Financial Strength Rating (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) (Dallas, TX) and Aspen Specialty Insurance Company (ASIC) (Bismarck, ND). The outlook of the FSR remains stable; the outlook of the Long-Term ICRs remains positive. At the same time, A.M. Best has affirmed the Long-Term ICR of “bbb” and the Long-Term Issue Credit Rating (Long-Term IR) 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. The outlooks of the Long-Term ICR and the Long-Term IRs remain positive. (Please see below for a detailed listing of the Long-Term IRs.)The ratings reflect A.M. Best’s expectation that Aspen’s consolidated risk-adjusted capitalisation will remain at an excellent level, in spite of a continuing programme of share repurchases. A.M. Best expects projected growth in premium volumes, which is mainly targeted within the U.S. and Middle Eastern insurance markets, will be supported by internal capital generation. Additionally, the four subsidiary companies are expected to maintain strong stand-alone risk-adjusted capitalisation. AIUK continues to be the main earnings contributor of the Aspen group, whilst ABL remains important to Aspen’s capital management strategy, as it provides internal reinsurance to the other Aspen group companies and access to third-party business written in Bermuda. Aspen’s U.S. companies, AAIC and ASIC, provide business diversification for the group and benefit from extensive reinsurance support from ABL.The maintained positive outlook on the Long-Term ICRs reflects this continuing financial strength, the group’s recent record of excellent operating performance and its increasingly strong business profile. Over the past five years (2011-2015), Aspen has compiled a record of generally strong operating performances, despite the losses from the unprecedented series of natural catastrophes in 2011. For the four full years since then, underwriting results have been excellent, with combined ratios around 90%. However, in the first three quarters of 2016, losses from weather-related events in the U.S. and Europe, earthquakes in Taiwan and Japan, and wildfires in Canada, have driven the combined ratio more than three percentage points higher than at the same point in 2015. Nevertheless, Aspen’s operating performance for 2016 is expected to remain at a strong level, assuming normal catastrophe activity for the remainder of the year. A pre-tax profit of USD 284 million was reported in the first three quarters of 2016, a good increase from USD 214 million at the same point in 2015, following a strong investment performance.The performance of Aspen’s U.S.-domiciled subsidiaries has been a negative rating factor in the past, largely as a result of the subsidiaries’ high start-up costs relative to net earned premiums. However, the technical results of these subsidiaries have improved despite challenging market conditions. These companies are now making a positive contribution to the group’s profits. A.M. Best will continue to monitor the performance of these subsidiaries.Aspen has an increasingly strong business profile in its core markets, supported by its diversified portfolio of property/casualty and specialty insurance and reinsurance business. Diversification has improved significantly in recent years through growth in insurance lines and increased geographical spread. Aspen’s access to business is enhanced by its U.S. subsidiaries and network of branches in Europe, Canada, Dubai, Singapore and Australia.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 200 million 7.401% perpetual non-cumulative preference shares (currently USD 133 million outstanding)— “bb+” on USD 275 million 5.95% perpetual non-cumulative preference shares— “bb+” on USD 160 million 7.25% perpetual non-cumulative preference shares— “bb+” on USD 250 million 5.625% perpetual non-cumulative preference sharesThe 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 stockThis 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.A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries.ALL RIGHTS RESERVED.