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Aspen Insurance Holdings (AHL) and its Units Get Rated

MCY ACGL AHL NMIH

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Aspen Insurance Holdings Limited (AHL - Free Report) and its affiliates recently received rating action from credit rating giant, A.M. Best. The rating agency affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Aspen Insurance U.K. Limited, Aspen Bermuda Limited, Aspen American Insurance Company and Aspen Specialty Insurance Company. The outlook for FSR remained stable, whereas the outlook of the Long-Term ICRs was positive.

Concurrently, the credit rating agency affirmed the Long-Term ICR of “bbb” and the Long-Term Issue Credit Rating (Long-Term IR) on the unsecured debt and preferred shares of Aspen Insurance Holdings. Notably, the outlook for both the ratings were positive.

Despite the continuity of the share buyback program, the credit rating giant expects Aspen Insurance Holdings’ risk-adjusted capitalization to be at an excellent level. This is reflected by the affirmed ratings. Moreover, the credit rating agency anticipates the projected growth, primarily in the U.S. and the Middle Eastern insurance markets, to be cushioned by internal capital generation. In addition, the four units of the property and casualty (P&C) insurer are anticipated to maintain robust stand-alone risk-adjusted capitalization.

The P&C insurer’s continued financial strength, robust operational performance and increasingly solid business profile are represented by the positive outlook of the Long-Term ICRs.

Historically, the underperformance of the Aspen Insurance Holdings’ U.S.-domiciled units has been a dampener. This is because of the units’ high start-up costs relative to net earned premiums. Nevertheless, the affiliates are presently making a positive contribution to the P&C insurer’s profits. The credit rating agency will continue to track the performance of these units and affirm ratings likewise going forward.

Rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company write more business, going forward.

Currently, Aspen Insurance Holdings carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the same space are Mercury General Corporation (MCY - Free Report) , NMI Holdings, Inc. (NMIH - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercury General is a P&C insurer that is engaged in writing personal automobile insurance in the U.S. The company delivered positive surprises in two of the last four quarters but with an average miss of 21.04%.

NMI Holdings offers private mortgage guaranty insurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 62.80%.

Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarter with an average beat of 9.27%.

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