AM Best has affirmed the financial strength ratings of A (Excellent) and the long-term issuer credit ratings of “a” (Excellent) of four subsidiaries of Bermudian-based Aspen Insurance Holdings Limited, including Aspen Bermuda Limited.

The other rated subsidiaries are Aspen Insurance UK Limited, Aspen American Insurance Company of Austin, Texas and Aspen Specialty Insurance Company of Bismarck, North Dakota.

Concurrently, AM Best has affirmed the long-term ICR of “bbb” (Good) of Aspen Insurance Holdings, a non-operating holding company.

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

The outlook of these credit ratings is stable.

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.

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

BCAR scores decreased in 2022 driven by material unrealised losses in the group's investment portfolio, following sharp rises in interest rates. BCAR scores are expected to recover over the medium term and remain at the strongest level.

The group’s investment risk profile moderately increased during 2022 following the completion of the strategic asset allocation, which shifted part of the investment portfolio away from fixed income investments to higher yielding assets.

Aspen reported positive underwriting performance for year-ended 31 December 2022, with a combined ratio of 96.9 per cent (as calculated by AM Best). The result represents the first technical profit recorded in recent years and was driven by the corrective actions taken by management to improve profitability, as well as the favourable rate environment.

The group’s five-year (2018-2022) weighted average combined ratio is 106.3 per cent. Overall profitability in 2022 was impacted adversely by material unrealised losses on the fixed income portfolio. The losses, however, are expected to unwind over 2023 and 2024.

Aspen’s business profile benefits from its well-diversified portfolio of property/casualty and specialty insurance and reinsurance businesses, as well as a good geographic footprint.

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