Best Affirms Aspen (UK), Aspen Holdings (Bermuda) Ratings

November 26, 2006

A.M. Best Co. has affirmed the financial strength rating of “A” (Excellent) and the issuer credit rating (ICR) of “a” of Aspen Insurance UK Limited (AIUK). Best also affirmed the ICR of “bbb” of AIUK’s ultimate parent, Bermuda-based Aspen Insurance Holdings Ltd. (AHL).

In addition Best affirmed its “bbb” debt rating on AHL’s $250 million 6 percent senior notes and its “bb” rating on the $ 200 million perpetual non-cumulative preference shares issued by AHL. Concurrently, Best has assigned a rating of “bb” to the $230 million perpetual preferred income equity replacement securities in line with its indicative ratings for AHL’s $500 million universal shelf registration filed in February 2005. The outlook on all these ratings is negative.

“The negative outlook reflects A.M. Best’s view that AHL’s consolidated profitability remains subject to significant volatility derived from its substantial property catastrophe account. Risk management changes put in place after the 2005 hurricane season have reduced this volatility,” said the announcement. “However, a longer monitoring period is required before A.M. Best can clearly establish that more stable results and risk-adjusted capitalization will result from these measures.”

Best said it “believes AIUK’s risk-adjusted capitalization is likely to remain excellent at year-end 2006, benefiting from the benign 2006 hurricane season, which is likely to support strong retained earnings of approximately £70 million-80 million ($130 million-150 million).”

Best also indicated that it “expects a combined ratio of between 80 percent-85 percent (factoring a decrease in expense ratio of approximately four percentage points) and stable investment returns in excess of 4 percent at year-end 2006. Whilst AIUK’s performance will remain subject to significant volatility, this is likely to reduce in 2007 due to the transfer of property and specialty reinsurance business to AHL’s Bermudan operation, Aspen Insurance Limited (AIL), through reciprocal quota share arrangements.

“In A.M. Best’s opinion, AIUK benefits from an excellent business profile based on its well established book of property and casualty reinsurance, primary U.K. commercial insurance, and specialty insurance and reinsurance business (comprises marine liability, hull, energy and aviation business). A.M. Best expects AIUK to report a slight decrease in its gross premiums written of approximately 2 percent-4 percent in 2006, followed by a further decrease of up to 10 percent in 2007, resulting primarily from a reduction in the level of overall property catastrophe business written and anticipated rate decreases within its insurance and aviation portfolios.”

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