Operating performances within the Aspen group of companies have been below the expectations of AM Best “due to the impact of catastrophe losses and weaker-than-expected results for certain lines of business, and demonstrated by a five-year weighted average combined ratio of 107.5 per cent (2015-2019)”.The rating agency has revised the outlooks to negative from stable and affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” of Aspen Insurance UK Limited, Aspen Bermuda Limited, Aspen American Insurance Company and Aspen Specialty Insurance Company.Concurrently, the rating agency has revised the outlooks to negative from stable and affirmed the long-term ICR of “bbb” of Aspen Insurance Holdings Ltd, the Bermudian-based non-operating holding company of the Aspen group of companies, and the long-term issue credit ratings on the debt instruments and preference shares of Aspen. AM Best said the ratings of Aspen reflect the group’s “very strong consolidated balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings of AIUK, ABL, AAIC and ASIC reflect their integration with and strategic importance to Aspen”.It said the negative outlooks reflect pressure on Aspen’s operating performance assessment, following losses reported in the last three years, which had contributed to an erosion of capital. “The group has taken remedial actions to improve performance, but these have had a limited impact on financial results to date. AM Best will continue to monitor the impact of these actions, and the improvement plan adopted by the new management team appointed in 2019, on the group’s underwriting results. Failure to improve operating performance could lead to further negative rating action,” the rating agency said. However, in spite of the reduction in its capital base, the group’s risk-adjusted capitalisation has remained at the strongest level, as measured by Best’s Capital Adequacy Ratio, “due to steps taken by the management to limit exposure to catastrophe losses and the adverse development of legacy business”. AM Best said Aspen’s management “continues to include a prudent margin in reserves above its actuarial best estimate”. It added: “Aspen’s balance sheet strength assessment benefits from a conservative investment portfolio. Aspen decreased its reliance on reinsurance in 2019, as part of its plan to increase retention of non-catastrophe-exposed lines, whilst maintaining its catastrophe and tail event protections.”