S&P On Aspen Insurance Share Issuance
Standard & Poor’s Ratings Services yesterday [Apr.3] assigned its “BBB-” rating to Bermuda-based Aspen Insurance Holdings Ltd.’s proposed perpetual preferred share issuance.
The issuance will have a fixed rate and be callable after five years.
The ratings are subject to confirmation of the final terms and conditions of the issue.
The issue is made under Aspen’s universal shelf registration programme.
The ratings reflect S&P’s standard notching for subordinated debt issues, which in this instance is two notches below the long-term counterparty credit rating on the issuer.
S&P has analyzed and rated the proposed preference share issuance on the understanding that:
- The notes will be subordinate to senior creditors, and
- The issues are structured to be eligible for regulatory solvency purposes.
The ratings agnecy understands that Aspen plans to issue these instruments to take advantage of current financing conditions. S&P expects Aspen’s financial leverage and fixed-charge coverage ratios to remain within tolerances that are consistent with its credit ratings on Aspen [Aspen "BBB+"/Stable; core operating companies rated "A"/Stable].
In a statement S&P said: “We expect to classify the notes as having “intermediate equity content” under our hybrid capital criteria, subject to our review of the final terms. We  include such securities up to a maximum of 25% in our calculation of total adjusted capital, which forms the basis of our consolidated risk-based capital
analysis of insurance and reinsurance companies.
“The inclusion is based on our understanding that the issue is considered eligible for regulatory solvency, and the aggregate amount of included issues being no more than the total eligible for regulatory solvency.
“Our classification of the issue in the ‘intermediate equity content’ category may change if the Bermuda Monetary Authority group solvency requirements preclude the issue from being eligible as regulatory capital. The issuance terms allow the issuer to vary the terms
of the preference shares or exchange them for new securities, without the consent of any holders, in the case of such a capital disqualification event.”
S&P’s statement concluded: “However, no such variation would change the dividend payable, the liquidation preference, or the ranking of the preference shares.”
