A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘A’ (Excellent) and the issuer credit ratings (ICR) of “a” of Aspen Insurance UK Limited (AIUK) and Aspen Bermuda Limited (ABL).
Best has also affirmed the ICR of “bbb” and the debt ratings of Bermuda-based Aspen Insurance Holdings Limited, the non-operating holding company of the Aspen group of companies.
The outlook for all of the ratings remains stable.
Best said the ratings reflect its expectation that “Aspen’s consolidated risk-adjusted capitalization will continue to be maintained at a strong level, after taking account of the $300 million share repurchases planned for 2013. Projected growth in premium volumes, which is mainly targeted within the US insurance market, is expected to be supported by internal capital generation.
“Additionally, AIUK and ABL are expected to maintain strong stand-alone risk-adjusted capitalization. AIUK continues to be the main earnings contributor of the Aspen group, whilst ABL remains important to Aspen’s capital management strategy as the provider of internal reinsurance to other Aspen group companies.”
Best also indicated that “Aspen’s performance is expected to remain at a good level, assuming normal catastrophe activity for the remainder of the year. This is demonstrated by the pre-tax profit of $139 million reported in the first half of 2013 (half-year 2012: $ 175 million), despite exposure to the high incidences of catastrophe losses. The performance of Aspen’s US-domiciled subsidiaries remains a negative rating factor. This largely reflects the subsidiaries’ high start-up costs relative to net earned premiums.”
The report explained that, “although the US market conditions remain challenging, “Best notes that “Aspen’s strategy to target the better priced risks and will continue to monitor the technical results of the US subsidiaries.”
In addition Best described Aspen as maintaining a “robust business profile in the London and Bermudian markets, supported by its diversified portfolio of property/casualty and specialty insurance and reinsurance business. Diversification has improved significantly in recent years, due to a combination of growth in insurance lines and due to improved geographical diversification. Aspen’s access to business is enhanced by its US subsidiaries and network of branches in Europe, Canada, Singapore and Australia.”
In conclusion Best said: Positive rating actions could occur if Aspen continues to maintain its excellent risk-adjusted capitalization levels and generates good underwriting results across the group’s subsidiaries. Unexpected weak operating performance or a material deterioration in the group’s consolidated risk-adjusted capitalization could lead to negative rating pressure.
Best’s report summarized the ratings and companies affected by its actions as follows:
The following debt ratings have been affirmed:
Aspen Insurance Holdings Limited—
- “bbb” on $250 million 6% senior unsecured notes, due 2014
- “bbb” on $250 million 6% senior unsecured notes, due 2020
- “bb+” on $200 million perpetual non-cumulative preference shares (currently USD 133 million outstanding)
- “bb+” on $275 million perpetual non-cumulative preference shares
- “bb+” on the $160 million perpetual non-cumulative preference shares
The following debt ratings under the universal shelf registration have been affirmed:
Aspen Insurance Holdings Limited—
- “bbb” on senior unsecured debt
- “bbb-” on junior subordinated debt
- “bbb-” on senior subordinated debt
- “bb+” on preferred stock
Source: A.M. Best