A.M. Best Revises Issuer Credit Rating Outlook to Stable for Aspen Insurance Holdings Limited and Its Subsidiaries
December 15 2017 - 12:27PM
Business Wire
A.M. Best has revised the outlook to stable from positive
for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed
the Financial Strength Rating (FSR) of A (Excellent) and the
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. At the same time, A.M. Best has
revised the outlooks to stable from positive and affirmed the
Long-Term ICR of “bbb” and the Long-Term Issue Ratings (Long-Term
IRs) 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.
(Please see below for a detailed listing of the Long-Term IRs.)
The ratings of AIUK, ABL, AAIC and ASIC reflect their
integration with and strategic importance to Aspen, which is the
ultimate non-operating holding company and consolidating unit for
the Aspen group. In particular, the ratings of these subsidiaries
benefit from Aspen’s consolidated balance sheet strength, which
A.M. Best categorises as very strong, as well as its adequate
operating performance, neutral business profile and appropriate
enterprise risk management (ERM).
The revised outlooks on the Long-Term ICRs of the Aspen group
companies reflect A.M. Best’s view that an upgrade of the Long-Term
ICRs is unlikely in the near term, taking into account the
volatility in Aspen’s technical performance and the increasingly
challenging environment in which the group operates.
Aspen’s balance sheet strength is underpinned by risk-adjusted
capitalisation being at the strongest level, as measured by Best’s
Capital Adequacy Ratio (BCAR), a prudent reserving philosophy and a
low-risk investment portfolio. Additionally, the group benefits
from an effective capital management policy and good financial
flexibility.
Aspen has a good performance record, albeit subject to
volatility due to exposure to catastrophe events. For the first
nine months of 2017, the group reported a net loss of USD 81.5
million compared with a net profit of USD 274.9 million reported
for the same prior year period. The results were affected by an
increase in the loss ratio to 80.8% (nine months 2016: 58.7%), due
to losses from a series of natural catastrophe events including
hurricanes Harvey, Irma and Maria, and the earthquakes in Mexico,
which combined amounted to USD 424.3 million on a net basis.
A.M. Best will closely monitor the impact of Aspen’s recent
initiatives, including a cost efficiency programme and revisions to
net loss exposures across the portfolio, on the group’s technical
performance.
Aspen’s business profile is supported by a well-diversified
portfolio of property/casualty and specialty insurance and
reinsurance business, as well as a good geographical footprint.
Whilst the group is viewed as having a good competitive position in
some of its key markets, its ability to successfully defend its
market position has become increasingly difficult due to the
challenging operating environment characterised by abundant
capacity and intense competitive pressures from both traditional
and alternative markets.
Aspen maintains a well-developed ERM framework with clear
guidelines and limits in place that is appropriate for the size and
complexity of the group’s operations. Going forward, the group’s
risk management efforts are expected to focus on limiting
volatility arising from its exposure to catastrophe risks.
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 275
million 5.95% perpetual non-cumulative preference shares— “bb+” on
USD 250 million 5.625% perpetual non-cumulative preference
shares
The 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 stock
This 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. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20171215005642/en/
A.M. BestValeria Ermakova, +44 20 7397
0269Senior Financial
Analystvaleria.ermakova@ambest.comorChristopher
Sharkey, +1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorCatherine
Thomas, +44 20 7397 0281Senior Director,
Analyticscatherine.thomas@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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