A.M. Best Affirms Ratings of Aspen Insurance UK Limited.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR) of "a" of Aspen Insurance UK Limited (AIUK) (United Kingdom). A.M. Best has also affirmed the ICR of "bbb" of AIUKeIUs ultimate parent, Aspen Insurance Holdings Ltd. (AHL) (Bermuda), the debt rating of "bbb" on the USD 250 million 6% senior notes and the "bb" on the USD 200 million perpetual non-cumulative preference shares issued by AHL. Concurrently, A.M. Best has assigned a rating of "bb" to the USD 230 million perpetual preferred income equity replacement securities in line with A.M. BesteIUs indicative ratings for AHLeIUs USD 500 million universal shelf registration filed in February 2005. The outlook on all these ratings is negative.

The negative outlook reflects A.M. BesteIUs view that AHLeIUs consolidated profitability remains subject to significant volatility derived from its substantial property catastrophe account. Risk management changes put in place after the 2005 hurricane season have reduced this volatility; however, a longer monitoring period is required before A.M. Best can clearly establish that more stable results and risk-adjusted capitalisation will result from these measures.

A.M. Best believes AIUKeIUs risk-adjusted capitalisation is likely to remain excellent at year-end 2006, benefiting from the benign 2006 hurricane season, which is likely to support strong retained earnings of approximately GBP 70 million-80 million (USD 130 million-150 million). A.M. Best expects a combined ratio of between 80%-85% (factoring a decrease in expense ratio of approximately four percentage points) and stable investment returns in excess of 4% at year-end 2006. Whilst AIUKeIUs performance will remain subject to significant volatility, this is likely to reduce in 2007 due to the transfer of property and specialty reinsurance business to AHLeIUs Bermudian operation, Aspen Insurance Limited (AIL), through reciprocal quota share arrangements.

In A.M. BesteIUs opinion, AIUK benefits from an excellent business profile based on its well established book of property and casualty reinsurance, primary U.K. commercial insurance, and specialty insurance and reinsurance business (comprises marine liability, hull, energy and aviation business). A.M. Best expects AIUK to report a slight decrease in its gross premiums written of approximately 2%-4% in 2006, followed by a further decrease of up to 10% in 2007, resulting primarily from a reduction in the level of overall property catastrophe business written and anticipated rate decreases within its insurance and aviation portfolios.

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