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Aspen (AHL) and Units Receive Rating Action, Outlook Lowered

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The Long-Term Issuer Credit Rating of “bbb” and the Long-Term Issue Ratings (Long-Term IRs) on the unsecured debt and preferred shares of Aspen Insurance Holdings Limited were reiterated by A.M. Best. The outlook is revised to stable from positive.

The rating agency also retained the Financial Strength Rating (FSR) of A and the Long-Term ICR of “a” for Aspen Insurance UK Limited, Aspen Bermuda Limited, Aspen American Insurance Company and Aspen Specialty Insurance Company. The outlook is revised to stable from positive.

The rating affirmations came on the back of the subsidiaries’ association with the holding company and benefits derived from Aspen’s sturdy balance sheet. The rating agency lends a favorable view of a sturdy risk-adjusted capitalization, a prudent reserving policy, low-risk investment portfolio, an effective capital management policy and a decent financial flexibility.

Also, Aspen’s compelling portfolio of property and casualty and specialty insurance as well as its reinsurance business, international exposure and a competitive position are favored by the rating agency. However, exposure to catastrophe loss remains a concern.

The outlook downgrade reflects an unlikely upgrade of the Long-Term ICRs in the near term, given the company’s competitive operating environment.

Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence in the stock as well as maintaining its credit worthiness in the market. Therefore, rating downgrades affect the business as well as increase the costs of future debt issuances. Shares of Aspen have lost 23.9% year to date, underperforming the industry’s rally of 16.3%. The company also witnessed its 2017 Zacks Consensus estimate move further to a loss of $3.20 per share from loss of $2.50 per share 60 days back. However, the consensus mark for 2018 moved up 5.3% over the same time frame.



Zacks Rank & Stocks to Consider

Aspen carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty insurers are Infinity Property and Casualty Corporation , CNA Financial Corporation (CNA - Free Report) and NMI Holdings Inc. (NMIH - Free Report) .

Infinity Property and Casualty provides personal automobile insurance products in the United States. The company’s four-quarter average positive surprise is 300.65% and it sports a Zacks Rank #1 (Strong Buy). Shares have gained 22.3% year to date, outperforming the industry’s gain. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial provides commercial property and casualty insurance products, primarily in the United States. The company delivered a four-quarter average beat of 39.78%. Shares of the company have risen 27.9% year to date. The stock sports a Zacks Rank of 1.

NMI Holdings provides private mortgage guaranty insurance services in the United States. The company’s four-quarter average positive surprise is 11.72% and it carries a Zacks Rank #2 (Buy). Shares have soared 62% year to date, outperforming the industry’s increase.

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