S&P Affirms Aspen’s Ratings; Removes from CreditWatch

November 23, 2005

The London office of Standard & Poor’s Ratings Services announced that it has “affirmed its ‘A’ long-term counterparty credit and insurer financial strength ratings on U.K.-based Aspen Insurance U.K. Ltd. (Aspen Insurance U.K.) and Bermuda-based Aspen Insurance Ltd. (Aspen Insurance)–the core subsidiaries of the Aspen group (Aspen)–and its ‘BBB+’ long-term counterparty credit and senior unsecured debt ratings on Aspen Insurance Holdings Ltd. At the same time, all ratings were removed from CreditWatch with negative implications, where they had been placed on Oct. 3, 2005.” The outlook on Aspen’s ratings, however, remains negative.

“The ratings reflect Aspen’s strong competitive position, proven management team, strong operating performance, and strong capitalization,” stated S&P credit analyst Marcus Rivaldi.

S&P indicated, however that these “factors are partially offset by the potential volatility inherent in the business classes on which the group focuses; risks to the competitive position associated with changes to the group’s underwriting strategy and risk appetite; operational controls requiring strengthening; and the reinsurance and insurance industry’s low barriers to entry.”

“The negative outlook reflects the latent operational weaknesses exposed by the group’s performance during the 2005 hurricane season, and the potential for a negative impact on the group’s competitive position from changes to underwriting strategy and risk appetite–particularly with regard to the group’s core property reinsurance portfolio,” Rivaldi added.

S&P said it would review Aspen’s ratings for a possible downgrade under the following circumstances: “If improved operational controls are not implemented before the start of the 2006 U.S. Atlantic windstorm season; there is a negative impact on the group’s competitive position; and Aspen does not post a combined ratio and ROR for 2005 in line with Standard & Poor’s expectations of about 115 percent and about a negative 9 percent, respectively. The outlook may be revised to stable if these are successfully achieved.”

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