Company: AHL
Filing Date: 2025-03-20
Form Type: F-1/A
Source: 0001628280-25-014149
Chunk: 141

Company: ASPEN INSURANCE HOLDINGS LTD
Filing Date: 2025-03-20
Form: F-1/A
Chunk 141
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 our strategy to simplify our operations and more strategically align our platforms. This increased the relevance and scale in the important Lloyd’s market. Growing our presence in Lloyd’s is a critical part of our overall balance sheet simplification strategy. It also allows us to better utilize the advantages of the Lloyd’s platform, both for capital efficiencies and ease of access.

Price Inflation and Social Inflation

The elevated level of inflation relative to pre-pandemic levels, as well as the elevated level of uncertainty regarding the outlook for inflation in future periods, could affect our results. Specifically, with respect to premium pricing and loss reserving, those trends contribute to the risk of understating loss costs, which may be higher than anticipated due to increased inflation. Even though inflation has been decreasing compared to 2023, its outlook is currently uncertain, according to policymakers and business owners. The U.S. Federal Reserve and other monetary authorities see the level of uncertainty around their forecasts for core Personal Consumption Expenditures inflation as high, compared to the average over the past 20 years. The path of inflation has been historically and objectively difficult to predict since the pandemic started.

In addition, social inflation, or the increase in loss compensation cost over and above basic economic trends, is putting pressure on and contributing to the uncertainty in our pricing and reserving of loss costs. Unlike inflation, where economic price indices over a time period can be measured and monitored, social inflation is difficult to explicitly measure over time and to project. It is caused by a broad set of underlying drivers, such as increasing litigation costs, outsized jury awards and litigation funding. U.S. litigation is fueled by a growing influx of third-party capital, enabling plaintiffs to pursue more cases, staff them with more experts and lawyers, and extend their lifespan. The increasingly litigious environment is further fueled by a rise in anti-corporate sentiment. There is an observed tendency to attribute fault to corporate actors for accidents, even if they did not directly cause the accident. COVID-19 further distorted the current exposure landscape. While the pandemic period offered some reprieve in terms of frequency loss reduction and fewer excessive judicial verdicts, this was only temporary. In 2020, cases slowed amid court closures and public health measures associated with the COVID-19 pandemic. At present, court data suggests that a large proportion of injury cases remain unresolved in the court system and will work their way through over time. Uncertainty about the impact of social inflation on loss costs is something we are monitoring closely and that could have an effect on our results