Best Affirms Aspen Specialty, Aspen American Ratings; Outlook Stable

October 13, 2011

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A (Excellent) and issuer credit ratings (ICR) of “a” of Aspen Specialty Insurance Company (ASIC), headquartered in Bismarck, North Dakota and Aspen American Insurance Company (AAIC), headquartered in Dallas, Texas. Both companies are wholly owned subsidiaries of their ultimate parent, Aspen Insurance Holdings Limited.

The outlook for all of the ratings is stable.

Best said the ratings are based on its “group rating methodology and take into consideration the roles and strategic importance of ASIC and AAIC to Aspen’s overall U.S. strategy. The ratings also reflect the explicit support provided through substantial quota share reinsurance of ASIC and AAIC’s net business by their Bermuda-based affiliate, Aspen Insurance Limited (AIL).”

In addition AIL “provides a guarantee of all of ASIC and AAIC’s third-party reinsurance recoverables, while ASIC’s balance sheet is further protected by an adverse development cover for the company’s outstanding loss reserves as of December 31, 2008,” Best noted. The ratings also reflect the implied support of future parental commitment.

“ASIC and AAIC continue to maintain strong stand-alone capitalization, which is driven by low underwriting leverage, negligible investment leverage and capital contributions from Aspen,” the report continued. However, best also pointed out that ASIC’s “recent operating performance has been adversely impacted by higher losses from weather-related events and unfavorable development from some prior year claims.

“In addition, the current competitive market presents a significant challenge to ASIC as the company re-establishes itself and to AAIC as it attempts to establish its presence in the U.S. specialty admitted market.

“Toward this end, management has made significant investments in new underwriting teams and infrastructure. Given the aforementioned, A.M. Best will closely monitor the operating performance of both companies, with particular focus on AAIC’s ability to achieve business projections.”

Source: A.M. Best

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