Aspen ratings affirmed despite disappointing 2022 investment results
The subsidiaries of Bermuda-based Aspen Insurance Holdings have had their financial strength ratings of A (Excellent) affirmed.
Ratings agency AM Best said the ratings reflected 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.
Best said Aspen’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio.
It added: "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."
AM Best said Aspen reported a positive underwriting performance for 2022, with a combined ratio of 96.9% (as calculated by AM Best).
It added: "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%. 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."
Best said Aspen’s business profile benefited 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.
The companies rated include Aspen Insurance UK, Aspen Bermuda , Aspen American Insurance Company and Aspen Specialty Insurance Company.
