A.M. Best Affirms Ratings of Aspen Specialty Insurance Company and Aspen American Insurance Company
16 November 2012 - 4:33AM
Business Wire
A.M. Best Co. has affirmed the financial strength rating
of A (Excellent) and issuer credit ratings of “a” of Aspen
Specialty Insurance Company (ASIC) (Bismark, ND) and Aspen
American Insurance Company (AAIC) (Dallas, TX). Both companies
are wholly owned subsidiaries of their ultimate parent, Aspen
Insurance Holdings Limited (Aspen) [NYSE: AHL]. The outlook for
all ratings is stable.
These ratings are based upon A.M. Best’s criteria “Rating
Members of Insurance Groups” and take into consideration the roles
and strategic importance of ASIC and AAIC to Aspen’s overall U.S.
strategy. Additionally, the ratings reflect the explicit support
provided through the substantial quota share reinsurance of ASIC
and AAIC’s net business by their Bermuda-based affiliate, Aspen
Bermuda Limited (ABL). Moreover, ABL also provides a guarantee
of all of ASIC and AAIC’s third-party reinsurance recoverables. In
addition, ASIC’s balance sheet is further protected by an adverse
development cover for its outstanding loss reserves as of December
31, 2008. The ratings also acknowledge the implied support of
future parental commitment.
ASIC and AAIC continue to maintain solid stand-alone
capitalization, which has been enhanced by low underwriting and
investment leverage as well as capital contributions from Aspen.
Although pricing pressures appear to be abating, competition
continues to pose a significant challenge to ASIC and AAIC as both
attempt to establish Aspen’s presence in the United States. 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 execution and their ability to
achieve business projections.
Based on their group ratings, any future rating actions for ASIC
and AAIC will likely be in accordance with any future rating
actions on ABL.
Factors that may lead to negative rating actions on ASIC and
AAIC could result from their continued sub-par operating results,
further divergence in operating performance relative to ABL, a
material deterioration in their stand-alone risk-adjusted
capitalization and/or any lessening of support (implied or
explicit) provided by ABL. These ratings do not take into
consideration potential losses from Hurricane Sandy, as estimates
from this recent event are unavailable at this time.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which
provides a comprehensive explanation of A.M. Best’s rating process
and highlights the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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