AHL Aspen Insurance Holdings Limited Ordinary Shares

A.M. Best has revised the outlook for the issuer credit ratings (ICR) to positive from stable and affirmed the financial strength rating (FSR) of A (Excellent) and the ICRs 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 for the FSR remains stable. At the same time, A.M. Best has affirmed the ICR of “bbb” and the issue ratings of Aspen Insurance Holdings Limited (Aspen) (Bermuda) (NYSE: AHL), the non-operating holding company of the Aspen group of companies. The outlook for the ICR and the issue ratings has been revised to positive from stable. (Please see below for a detailed listing of the issue ratings.)

The ratings reflect A.M. Best’s expectation that Aspen’s consolidated risk-adjusted capitalisation will remain at an excellent level, in spite of a continuing programme of share repurchases. Projected growth in premium volumes, which is mainly targeted within the U.S. insurance market, is expected to be supported by internal capital generation. Additionally, the four subsidiary companies are expected to maintain strong stand-alone risk-adjusted capitalisation. AIUK continues to be the main earnings contributor of the Aspen group, whilst ABL remains important to Aspen’s capital management strategy, as it provides internal reinsurance to the other Aspen group companies and access to third-party business written in Bermuda. Aspen’s U.S. companies, AAIC and ASIC, provide business diversification for the group and benefit from extensive reinsurance support from ABL.

The revision of the ICR outlook to positive from stable reflects this continuing financial strength, the group’s recent record of excellent operating performance and its increasingly strong business profile. Over the past five years (2010-2014), Aspen has compiled a record of generally strong operating performances, despite the losses from the unprecedented series of natural catastrophes in 2011. For the last two full years, and for the first three quarters of 2015, underwriting performance has been excellent, with combined ratios below 93%. Aspen’s operating performance for 2015 is expected to remain at an excellent level, assuming normal catastrophe activity for the remainder of the year. A pre-tax profit of USD 214 million was reported in the first three quarters of 2015, a reduction from USD 300 million at the same point in 2014, reflecting in part an increase in attritional losses, including USD 30 million from the Tianjin explosion, and significant investment and currency exchange losses.

The performance of Aspen’s U.S.-domiciled subsidiaries has been a negative rating factor in the past, largely as a result of the subsidiaries’ high start-up costs relative to net earned premiums. However, the technical results of these subsidiaries have improved despite challenging market conditions. These companies are now making a positive contribution to the group’s profits. A.M. Best will continue to monitor the performance of these subsidiaries.

Aspen has an increasingly strong business profile in its core markets, supported by its diversified portfolio of property/casualty and specialty insurance and reinsurance business. Diversification has improved significantly in recent years through growth in insurance lines and increased geographical spread. Aspen’s access to business is enhanced by its U.S. subsidiaries and network of branches in Europe, Canada, Singapore and Australia.

The following issue ratings 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 200 million 7.401% perpetual non-cumulative preference shares (currently USD 133 million outstanding) -- “bb+” on USD 275 million 5.95% perpetual non-cumulative preference shares -- “bb+” on USD 160 million 7.25% perpetual non-cumulative preference shares   The following indicative ratings 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  

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

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A.M. Best CompanyDavid Drummond, +(44) 20 7397 0327Senior Financial Analystdavid.drummond@ambest.comorSusan Molineux, +(1) 908 439 2200, ext. 5829Senior Financial Analystsusan.molineux@ambest.comorChristopher Sharkey, +(1) 908 439 2200, ext. 5159Manager, Public Relationschristopher.sharkey@ambest.comorJim Peavy, +(1) 908 439 2200, ext. 5644Assistant Vice President, Public Relationsjames.peavy@ambest.com