AM Best has affirmed the financial strength ratings of A (Excellent) and the long-term issuer credit ratings of “a” (Excellent) of Aspen Bermuda Limited (ABL) and three related companies -- Aspen Insurance UK Limited (AIUK), Aspen American Insurance Company (AAIC) and Aspen Specialty Insurance Company (ASIC).

Concurrently, the agency affirmed the long-term ICR of “bbb” (Good) of parent company, Bermudian-based Aspen Insurance Holdings Limited, a non-operating holding company.

The outlook of these credit ratings is stable.

AM Best has also affirmed the long-term issue credit ratings on the debt instruments and preference shares of Aspen.

The ratings reflect Aspen’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group’s adequate operating performance, neutral business profile and appropriate enterprise risk management.

The ratings of AIUK, ABL, AAIC and ASIC reflect their integration and strategic importance to Aspen, the agency said.

Aspen’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio.

In addition, the balance sheet benefits from a loss portfolio transfer, which the group entered into in January to protect against the adverse development of losses incurred on or prior to December 31, 2019 on a diversified mix of business.

The LPT replaced the adverse development cover that was previously in place, providing the group with increased protection.

The adequate operating performance assessment considers corrective actions taken by management to improve underwriting profitability, such as reducing catastrophe exposure, exiting poorly performing lines of business, enhancing underwriting risk selection and reducing operating expenses.

AM Best expects these actions to translate into further improvements in underlying results, supporting adequate performance over the underwriting cycle.

The group’s performance in 2021 was negatively affected by significant catastrophe claims, which contributed 13.6 percentage points to the 104.8 per cent combined ratio (2020: 14.2 percentage points, including 7.1 percentage points related to Covid-19, out of 107.5 per cent), as calculated by AM Best.

The agency said 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 geographic footprint.

The group’s ERM is developed and considered appropriately aligned with Aspen’s relatively high-risk profile, AM Best said.