AM Best has revised its outlook to negative from stable and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Aspen Insurance UK, Aspen Bermuda, Aspen American Insurance Company and Aspen Specialty Insurance Company.
The ratings agency also revised its outlooks to negative from stable and affirmed the Long-Term ICR of “bbb” of Aspen Insurance Holdings Limited, the non-operating holding company of the Aspen group of companies, and the Long-Term Issue Credit Ratings on the debt instruments and preference shares of Aspen.
AM Best believes these ratings reflect the group’s very strong consolidated balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management.
The negative outlooks reflect pressure on Aspen’s operating performance assessment, following losses reported in the last three years, which have contributed to an erosion of capital.
While the group has moved to improve performance, these have had a limited impact on financial results to date.
In spite of the reduction in its capital base, AM Best says the group’s risk-adjusted capitalisation has remained at the strongest level due to steps taken by the management to limit exposure to catastrophe losses and the adverse development of legacy business.
Aspen’s recent operating performance has been below AM Best’s expectations due to the impact of catastrophe losses and weaker-than-expected results for certain lines of business, and demonstrated by a five-year weighted average combined ratio of 107.5%.
AM Best believes Aspen’s business profile benefits from the company’s well-diversified portfolio of property/casualty and specialty insurance and reinsurance business, as well as a good geographical footprint.
