Moody's affirms Aspen Insurance

Moody's Investors Service said it confirmed the A2 insurance financial strength ratings of Bermuda-based Aspen Insurance UK Ltd. and Aspen Insurance Ltd. and the Baa2 senior debt rating of Aspen Insurance Holdings Ltd. This concludes the review for possible downgrade initiated on Oct. 5.

Moody's said that the net loss range of $470 million to $535 million due to hurricanes Katrina, Rita and Wilma is large but fully offset by $600 million in common equity and $200 million in hybrid capital raised since early October.

In addition, Aspen introduced enhancements to its risk management systems and underwriting policies such as re-underwriting of catastrophe exposures and re-positioning the account, re-calibration of the model and the introduction of regional differentiation and additional headroom for unknown model error.

At the same time, Moody's noted that Hurricane Katrina has certain unique features which may contribute to higher-than-expected adverse loss development in the future. While such adverse development may put negative pressure on ratings, it is partly offset by the increased likelihood of an up to $100 million recovery under the natural catastrophe swap.

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