A.M. Best Europe – Ratings Services Limited has affirmed the financial strength ratings of A (Excellent) and the issuer credit ratings (ICR) of “a” of Aspen Insurance UK Limited (AIUK) (United Kingdom) and Aspen Insurance Limited (AIL) (Bermuda). A.M. Best has also affirmed the ICR of “bbb” and the ratings of “bbb” on USD 250 million 6% senior unsecured notes, “bb+” on USD 133 million perpetual non-cumulative preference shares and “bb+” on USD 230 million perpetual preferred income equity replacement securities of Aspen Insurance Holdings Limited (Aspen) (Bermuda) [NYSE: AHL], the non-operating holding company of the Aspen group of companies. In addition, A.M. Best has affirmed the ratings for Aspen’s universal shelf registration of “bbb”, “bbb-” and “bb+” on senior unsecured debt, subordinated debt, and preferred stock, respectively. The outlook for all ratings remains stable.

The ratings of the Aspen group companies reflect A.M. Best’s expectation that consolidated risk-adjusted capitalisation will remain strong in 2010, in spite of a USD 200 million share buy-back undertaken at the start of the year. Planned premium growth, mainly in the United States, is likely to continue to be supported by internal capital generation. Additionally, AIL and AIUK are expected to maintain strong stand-alone risk-adjusted capitalisation. AIUK continues to be the main earnings contributor of the Aspen group, whilst AIL remains important to Aspen’s capital management strategy as the provider of internal reinsurance to other Aspen group companies.

A good, albeit lower, consolidated pre-tax profit is expected in 2010 (2009: USD 534.7 million), largely supported by positive earnings from the group’s conservative cash and fixed income investment portfolio. A deterioration in the combined ratio to between 95% and 100% is anticipated (2009: 83.9%), reflecting the weaker rating environment and the impact of the major loss events in the first half of 2010 (including a net loss of USD 112 million from the Chilean earthquake). Business derived from Aspen’s US-domiciled subsidiary (representing less than 10% of consolidated gross written premiums) is likely to continue to dampen performance, owing to high start-up costs relative to premium earned and ongoing weak market conditions. In more recent years, the US account has also been affected by the unfavourable development of prior year claims, although consolidated underwriting results have been supported by consistent small overall reserve releases relative to net earned premium.

Aspen maintains a strong business profile in the London and Bermudian markets, writing a diversified portfolio of property, casualty and specialty lines insurance and reinsurance business. Additionally, Aspen’s access to business is enhanced by its US subsidiary and network of branch offices in Europe, Canada, Singapore and Australia. The United States remains Aspen’s primary focus for growth in the medium term, with more modest growth anticipated in the European and UK regional markets. Although Aspen’s growth plans in the United States have been constrained due to ongoing competitive conditions, A.M. Best will continue to closely monitor expansion of the US casualty account in view of the weak rating environment for this business and the potential impact of the economic downturn on claims experience.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; “Natural Catastrophe Stress Test Methodology”, “Equity Credit for Hybrid Securities”; and “A.M. Best’s Ratings & the Treatment of Debt”. Methodologies can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.

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