AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 2003.

REGISTRATION NO. 333- o o o o o
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
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FORM F-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ASPEN INSURANCE HOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)

BERMUDA 6331 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Number) Identification No.)

VICTORIA HALL
11 VICTORIA STREET
HAMILTON HM 11
BERMUDA
TELEPHONE: (441) 295-8201
FACSIMILE: (441) 295-1829
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

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CT CORPORATION SYSTEM
111 EIGHTH AVENUE
NEW YORK, NEW YORK 10011
TELEPHONE: (212) 590-9200
(Name, address, including zip code, and telephone number,

including area code, of agent for service)
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Copies to:

MICHAEL GROLL, ESQ. JOSEPH D. FERRARO, ESQ. GARY I. HOROWITZ, ESQ.
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. SIMPSON THACHER & BARTLETT LLP
125 WEST 55TH STREET NO. 1 MINSTER COURT 425 LEXINGTON AVENUE
NEW YORK, NY 10019-5389 MINCING LANE NEW YORK, NY 10017-3954
TELEPHONE: (212) 424-8000 LONDON, EC3R 7AA TELEPHONE: (212) 455-7113
FACSIMILE: (212) 424-8500 TELEPHONE: 011-44-207-459-5000 FACSIMILE: (212) 455-2502
FACSIMILE: 011-44-207-459-5099
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Approximate date of commencement of the proposed sale of the securities to the
public: As soon as practicable after the Registration Statement becomes
effective.

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

CALCULATION OF REGISTRATION FEE

Proposed
Title Of Each Class Of Maximum Aggregate Amount Of
Securities To Be Registered Offering Price (1)(2) Registration Fee
- ------------------------------------------------------ ----------------------- -----------------

Ordinary Shares, par value 0.15144558(cents) per share $250,000,000 $20,225
- ------------------------------------------------------ ------------ -------

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.

(2) Includes shares subject to the underwriters' over-allotment option.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION. DATED NOVEMBER 12, 2003.

9,524,000 SHARES

[GRAPHIC OMITTED]

ASPEN INSURANCE HOLDINGS LIMITED

Ordinary Shares

----------------
This is an initial public offering of ordinary shares of Aspen Insurance
Holdings Limited. All of the ordinary shares are being sold by Aspen Insurance
Holdings Limited.

Prior to this offering, there was no public market for our ordinary
shares. We currently estimate that the initial public offering price per
ordinary share will be between $20.00 and $22.00. We have applied to list our
ordinary shares on the New York Stock Exchange under the symbol "AHL."

See "Risk Factors" beginning on page 15 to read about factors you should
consider before buying the ordinary shares.

THE SECURITIES AND EXCHANGE COMMISSION, STATE SECURITIES REGULATORS, THE
REGISTRAR OF COMPANIES IN BERMUDA AND THE BERMUDA MONETARY AUTHORITY HAVE NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND ASPEN INSURANCE
PUBLIC COMMISSIONS HOLDINGS LIMITED
---------- --------------- -----------------

Per Share ......... $ $ $
Total ............. $ $ $

To the extent that the underwriters sell more than 9,524,000 ordinary
shares, the underwriters have the option to purchase up to an additional
1,428,600 ordinary shares from Aspen Insurance Holdings Limited at the initial
public offering price less the underwriting discount to cover over-allotments
of shares.

The underwriters expect to deliver the ordinary shares against payment in
New York, New York on , 2003.
Joint Book-Running Managers

CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO.

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DEUTSCHE BANK SECURITIES
----------------

UBS INVESTMENT BANK

DOWLING & PARTNERS SECURITIES, LLC
FOX-PITT, KELTON
KEEFE, BRUYETTE & WOODS, INC.
----------------
Prospectus dated , 2003.

Table of Contents

Page Page
----------- -----------

Prospectus Summary ......................... 1 Description of Share Capital ............... 127
Risk Factors ............................... 15 Shares Eligible for Future Sale ............ 141
Forward-Looking Statements ................. 39 Underwriting ............................... 143
Use of Proceeds ............................ 40 Exchange Rate Information .................. 147
Dividend Policy ............................ 40 Legal Matters .............................. 148
Capitalization ............................. 41 Experts .................................... 148
Dilution ................................... 42 Where You Can Find More
Selected Financial Data .................... 43 Information ............................. 148
Unaudited Pro Forma Financial Enforceability of Civil Liabilities under
Information and Operating Data .......... 45 United States Federal Securities Laws
Management's Discussion and Analysis and Other Matters ....................... 149
of Financial Condition and Results of Index to Consolidated Financial
Operations .............................. 48 Statements .............................. F-1
Industry Background ........................ 66 Index to Syndicates 2020 and 3030
Business ................................... 69 Financial Statements .................... P-1
Regulatory Matters ......................... 85 Management's Discussion and Analysis
Management ................................. 97 of Financial Condition and
Principal Shareholders ..................... 106 Underwriting Results of Syndicates
Certain Relationships and Related 2020 and 3030 ........................... M-1
Transactions ............................ 111 Glossary of Selected Reinsurance,
Material Tax Considerations ................ 115 Insurance, Investment and Other
Terms ................................... G-1

----------------

Until , 2003, which is the 25th day after the date of this prospectus,
all dealers that buy, sell or trade our ordinary shares, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers' obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
WE ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY THESE SECURITIES ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF ORDINARY
SHARES.

ORDINARY SHARES MAY BE OFFERED OR SOLD IN BERMUDA ONLY IN COMPLIANCE WITH
THE PROVISIONS OF THE INVESTMENT BUSINESS ACT OF 1998 OF BERMUDA WHICH
REGULATES THE SALE OF SECURITIES IN BERMUDA. IN ADDITION, THE BERMUDA MONETARY
AUTHORITY (THE "BMA") MUST APPROVE ALL ISSUANCES AND TRANSFERS OF SHARES OF A
BERMUDA EXEMPTED COMPANY. BEFORE THIS OFFERING, WE EXPECT THE BMA WILL HAVE
ISSUED ITS PERMISSION FOR THE ISSUE AND FREE TRANSFERABILITY OF THE ORDINARY
SHARES BEING OFFERED PURSUANT TO THIS PROSPECTUS, AS LONG AS THE ORDINARY
SHARES ARE LISTED ON THE NEW YORK STOCK EXCHANGE ("NYSE") OR OTHER APPOINTED
STOCK EXCHANGE, TO AND AMONG PERSONS WHO ARE NON-RESIDENTS OF BERMUDA FOR
EXCHANGE CONTROLS PURPOSES AND OF UP TO 20% OF THE ORDINARY SHARES TO AND AMONG
PERSONS WHO ARE RESIDENTS IN BERMUDA FOR EXCHANGE CONTROL PURPOSES. IN
ADDITION, WE WILL DELIVER TO AND FILE A COPY OF THIS PROSPECTUS WITH THE
REGISTRAR OF COMPANIES IN BERMUDA IN ACCORDANCE WITH BERMUDA LAW. THE BMA AND
THE REGISTRAR OF COMPANIES ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS
OF ANY PROPOSAL OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR
OPINIONS EXPRESSED IN THIS PROSPECTUS.

WE HAVE NOT AUTHORIZED ANY OFFER OF THE ORDINARY SHARES BEING OFFERED
PURSUANT TO THIS PROSPECTUS TO THE PUBLIC IN THE UNITED KINGDOM WITHIN THE
MEANING OF THE PUBLIC OFFERS OF SECURITIES REGULATION 1995, AS AMENDED (THE
"REGULATIONS"). ORDINARY SHARES MAY NOT LAWFULLY BE OFFERED OR SOLD TO PERSONS
IN THE UNITED KINGDOM EXCEPT IN CIRCUMSTANCES WHICH DO NOT RESULT IN AN OFFER
TO THE PUBLIC IN THE UNITED KINGDOM WITHIN THE MEANING OF THE REGULATIONS OR
OTHERWISE IN COMPLIANCE WITH ALL APPLICABLE PROVISIONS OF THE REGULATIONS.

THIS DOCUMENT IS FOR DISTRIBUTION ONLY TO PERSONS WHO (1) ARE OUTSIDE THE
UNITED KINGDOM, (2) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO
INVESTMENTS OR (3) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH
NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.") OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2001 (AS AMENDED)
(ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS
DOCUMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT
PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS DOCUMENT RELATES
IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT
PERSONS.

IN THE UNITED KINGDOM, ANY COMPANY OR INDIVIDUAL THAT (TOGETHER WITH ITS
OR HIS ASSOCIATES) DIRECTLY OR INDIRECTLY ACQUIRES 10% OR MORE OF OUR ORDINARY
SHARES, OR IS ENTITLED TO EXERCISE OR CONTROL THE EXERCISE OF 10% OR MORE OF
THE VOTING POWER OF OUR ORDINARY SHARES, WOULD BE CONSIDERED TO HAVE ACQUIRED
"CONTROL" OF ASPEN INSURANCE HOLDINGS LIMITED AND, BY EXTENSION, ASPEN
INSURANCE UK LIMITED AND THEREFORE MUST FIRST NOTIFY THE U.K. FINANCIAL
SERVICES AUTHORITY ("FSA") OF ITS OR HIS INTENTION TO DO SO AND OBTAIN THE
FSA'S PRIOR APPROVAL. SEE "RISK FACTORS -- RISKS RELATED TO OUR ORDINARY SHARES
AND THIS OFFERING -- THERE ARE REGULATORY LIMITATIONS ON THE OWNERSHIP AND
TRANSFER OF OUR ORDINARY SHARES."

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus
and may not contain all of the information that may be important to you. In
this prospectus, references to the "Company," "we," "us" or "our" refer to
Aspen Insurance Holdings Limited (formerly known as Exali Reinsurance Holdings
Limited; "Aspen Holdings") or Aspen Holdings and its wholly-owned subsidiaries
Aspen Insurance UK Limited (formerly known as Wellington Reinsurance Limited and
The City Fire Insurance Company Limited; "Aspen U.K."), Aspen (UK) Holdings
Limited ("Aspen U.K. Holdings"), Aspen Insurance UK Services Limited ("Aspen
U.K. Services"), Aspen Insurance Limited ("Aspen Bermuda"), Aspen U.S. Holdings,
Inc. ("Aspen U.S. Holdings"), Aspen Specialty Insurance Company (formerly known
as Dakota Specialty Insurance Company; "Aspen U.S."), Aspen Specialty Insurance
Management Inc. ("Aspen Specialty Management"), Aspen Insurance U.S. Services
Inc. ("Aspen U.S. Services") and any other direct or indirect subsidiary
collectively, as the context requires. Aspen U.K., Aspen Bermuda and Aspen U.S.
are each referred to herein as an "Insurance Subsidiary," and collectively
referred to as the "Insurance Subsidiaries." References in this prospectus to
"U.S. dollars," "dollars," "$" or "(cents)" are to the lawful currency of the
United States of America, references to "British Pounds," "pounds" or "(pounds
sterling)" are to the lawful currency of the United Kingdom, and references to
"euros" or "(euro)" are to the lawful currency adopted by the participating
member states of the European Union (the "E.U.") other than Denmark, Sweden and
the United Kingdom, unless the context otherwise requires. In this prospectus,
the financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America ("U.S. GAAP"). As
used in this prospectus, "common shares" refers to our ordinary shares of par
value 0.15144558(cents) each ("ordinary shares") and non-voting ordinary shares
of par value 0.15144558(cents) each ("non-voting shares"), collectively. Unless
otherwise stated, all figures assume no exercise of the underwriters' over
allotment option or of any outstanding options to purchase the shares of Aspen
Holdings. All share amounts, per share data and strike prices contained in this
prospectus have been adjusted to reflect a 10 for 1 share split which the
Company effected on November 6, 2003. As used in this prospectus, all references
to "bye-laws" are intended to refer to our amended and restated bye-laws, which
will be in effect upon the completion of this offering and as more specifically
described in "Description of Share Capital -- Bye-laws." All references to
"shareholders' agreement" and "registration rights agreement" are intended to
refer to the amended and restated shareholders' agreement and second amended and
restated registration rights agreement, which, after the execution by the
parties thereto, will be fully in effect upon the completion of this offering
and as more specifically described in "Description of Share Capital --
Shareholders' Agreement" and "-- Registration Rights Agreement," respectively.
Although this summary contains important information about the Company and this
offering, you should read it together with the more detailed information and our
financial statements and the notes to those statements appearing elsewhere in
this prospectus. You should read this entire prospectus carefully, including
"Risk Factors" and "Forward-Looking Statements," to determine how suitable an
investment in the Company would be for you. For your convenience, we have
provided a Glossary of Selected Reinsurance, Insurance, Investment and Other
Terms, which begins on page G-1, and have printed these terms in boldface type
the first time they are used in this prospectus.

OUR COMPANY

OVERVIEW

We are a Bermuda holding company that provides PROPERTY and CASUALTY
REINSURANCE in the global market, PROPERTY and LIABILITY INSURANCE principally
in the United Kingdom and surplus lines insurance in the United States through
our wholly-owned subsidiaries located in London, Bermuda and the United States.
In the period from our formation on May 23, 2002, through December 31, 2002, we
wrote $374.8 million in gross PREMIUMS, of which $288.2 million related to
reinsurance and $86.6 million related to insurance. For the nine months ended
September 30, 2003, we wrote $1,161.8

million in gross premiums, of which $939.6 million related to reinsurance and
$222.2 million related to insurance. As of September 30, 2003, approximately
50.3% of our reinsurance GROSS PREMIUMS WRITTEN covered risks located in the
United States and Canada, approximately 19.9% covered risks located in the
United Kingdom and the balance covered worldwide risks and risks located in
Western Europe, Japan and Australia. Our insurance business covers commercial
risks predominantly located in the United Kingdom and the United States.

Our management and most of our UNDERWRITERS worked as a team at Society of
Lloyd's ("Lloyd's") Syndicate 2020 ("Syndicate 2020") and its predecessors.
Syndicate 2020 is an UNDERWRITING operation in the London insurance and
reinsurance market (the "London Market") and is managed by Wellington
Underwriting Agencies Limited ("WUAL"), a wholly-owned subsidiary of one of our
largest shareholders, Wellington Underwriting plc ("Wellington"). Since the
formation of the Company, Syndicate 2020 has continued to operate within the
operating and regulatory structure of the Lloyd's market. Aspen U.K., our
principal U.K. operating subsidiary, is an insurance company directly regulated
by the FSA and, as such, is not a member of Lloyd's or part of the Lloyd's
market.

When we commenced operations on June 21, 2002, Wellington and WUAL agreed
to facilitate the transfer to us of our senior management team and all of the
Syndicate 2020 underwriters that specialize in the lines of business that we
underwrite. As part of this agreement, Wellington agreed to provide us with
some administrative services for a transition period, to offer us a QUOTA SHARE
of Syndicate 2020's business and not to compete initially with us. We have
chosen to continue to outsource support for our information technology systems
to Wellington, but we anticipate that we will not continue to receive any other
significant services from WUAL beyond the end of 2003. We also received cash
from Wellington upon its exercise of rights to purchase our ordinary shares.

As a result of these formation agreements, we secured from Wellington and
WUAL the opportunity to underwrite a substantial portion of the portfolio of
risks that had been developed over many years by the team of underwriters that
joined us from Syndicate 2020. This portion of the portfolio of risks comprises
certain of our initial lines of business, including U.K. commercial property
insurance, U.K. commercial liability insurance, property reinsurance and
casualty reinsurance (the "Initial Lines of Business"). This established book
of business and the operational continuity we enjoy give us a competitive
advantage over other recent start-up companies in the insurance and reinsurance
sectors.

We manage our operations around two business segments: reinsurance and
insurance. These two business segments and their respective lines of business
may, at times, have different business cycles, allowing us to manage our
business by emphasizing one segment over the other, or one line of business
within a particular segment over another, depending on market conditions.

Our reinsurance segment consists of property reinsurance, casualty
reinsurance and specialty reinsurance lines of business. We strive to
differentiate ourselves by providing our customers with innovative and
customized reinsurance solutions to complex risks by utilizing our intellectual
capital and our underwriters' extensive experience in the marketplace.

Our reinsurance operations are primarily centered in London, one of the
major reinsurance markets in the world which through its high concentration of
BROKERS and insurers attracts customers from all over the world. Our
operational base in London allows our management and underwriters to continue
to access their long-standing broker and client relationships in this highly
developed market. We believe that our presence in the London Market also gives
us the advantage of convenient access to extensive resources of underwriting
and other professional services, such as actuarial analysis, CLAIM adjustment
and consulting services.

In addition to the London Market, we have expanded our reinsurance
operations to the important and growing Bermuda market by establishing Aspen
Bermuda. We believe that Aspen

Bermuda will allow us to continue to diversify our portfolio and to take
advantage of the efficient operating environment that Bermuda provides.

Our insurance segment consists of commercial property insurance and
commercial liability insurance lines of business. We currently focus on
U.K.-based commercial risks placed through our established contacts with the
London and broader U.K. broker community, as well as U.S. surplus lines
insurance.

Our insurance operations are conducted in London and, most recently, in
the United States. In the United Kingdom and The Republic of Ireland
("Ireland"), we underwrite property and liability lines for small and
medium-sized commercial customers. We believe that we are able to underwrite
these risks successfully because of the specialized knowledge of our dedicated
underwriting team and our underwriters' credibility and relationships in the
London Market and throughout the U.K. regional markets. Generally, these lines
of insurance have experienced a considerable shortage of CAPACITY since 2001 as
a result of, among other things, the exit from the market of a large U.K.
insurance provider and events affecting the insurance industry generally.

For our U.S. surplus lines business we intend to write both property and
casualty insurance business. We expect this book of business to consist of
approximately 70% property risks and 30% casualty risks.

Our largest shareholders include affiliates of The Blackstone Group
("Blackstone"), Wellington, Candover Partners Limited ("Candover"), Credit
Suisse First Boston Private Equity ("CSFB Private Equity"), Montpelier Re
Holdings Ltd. ("Montpelier Re"), 3i Group plc ("3i"), Olympus Partners
("Olympus") and Phoenix Equity Partners ("Phoenix"). At September 30, 2003, we
had $990.9 million in shareholders' equity.

MARKET OPPORTUNITY

At the time we started Aspen Holdings, we identified unprecedented
opportunities for new insurers and reinsurers. In the late 1990s, the insurance
and reinsurance industry had suffered from excess underwriting capacity and
poor pricing conditions. The resulting underwriting LOSSES were progressively
recognized by the industry and continued to affect companies' earnings and
capital into the early years of the current decade. In addition, beginning in
2000, insurers and reinsurers suffered from a rapidly declining interest rate
environment and increasingly negative returns on their equity investments,
which further reduced the industry's capital and capacity for risk-taking.

As a result of these trends, pricing conditions in many lines of business
started improving by early 2001. The terrorist attacks of September 11th added
to the emerging reserve deficiencies of many insurers and reinsurers around the
world, contributing to a shortage of underwriting capacity in certain lines of
business, a retrenchment by many market players and a growing number of
insolvencies in the industry. Industry estimates suggest that the capital base
of the global property and casualty insurance and reinsurance markets
diminished by an estimated $180 billion from the beginning of 2001 through the
end of 2002. This equaled 25% of the approximately $700 billion in available
capital at the end of 2000.

These market conditions have led to sharp RATE increases as well as
tightening of coverage terms and conditions in certain business lines and have
created a favorable pricing environment for many segments of the reinsurance
and insurance industry. We believe that we have the experience and knowledge to
take advantage of these opportunities and to manage our business successfully
throughout the cycles of the industry.

OUR COMPETITIVE STRENGTHS

We believe we distinguish ourselves from both well-established global
players and recent new market participants as follows:

o Continuity of Business and Unencumbered Balance Sheet. Our portfolio
of reinsurance and insurance risks are managed and underwritten at our
Company by many of the same professionals who built and managed the
business at Syndicate 2020. This continuity distinguishes us from most
other new entrants in the marketplace. Like other new Bermuda
entrants, however, we benefit from an unencumbered balance sheet. We
do not have legacy EXPOSURE to any pre-2002 liabilities, except for
small portfolios of insurance obligations assumed by us as a result of
our acquisitions, for which we have net RESERVES of approximately
$12.5 million.

o Experienced Management and Underwriting Teams with Proven Execution.
Our team of underwriting and risk management professionals, many of
whom have worked together since 1996, has extensive experience
operating a large insurance and reinsurance franchise successfully
through underwriting cycles. For the years 1999, 2000, 2001 and 2002,
the COMBINED RATIOS for the Initial Lines of Business that they wrote
at Syndicate 2020 were 78%, 71%, 174% (including 103 percentage points
due to September 11th-related claims) and 93%, respectively, compared
with average combined ratios (weighted by NET PREMIUMS WRITTEN) of
112%, 112%, 128% and 107%, respectively, for the Standard & Poor's Top
25 Reinsurance Groups Ranked by Net Reinsurance Premiums Written for
the years 1999, 2000, 2001 and 2002.

o Strong Franchise with Ability to Influence Terms and Conditions. As a
result of our strong franchise and recognized expertise, we believe
that we have greater access to business opportunities than many of our
competitors and that we are able to play a leading role (in
approximately 75% of our business) in establishing the terms and
conditions with respect to the business that we underwrite.

o Financial Strength. We believe our capital base of $990.9 million
plus the net proceeds from this offering provide a high degree of
financial strength to support our operations. A.M. Best Company Inc.
("A.M. Best") assigned an "A" (Excellent) financial strength rating,
the third highest of fifteen rating levels, to Aspen U.K. and an "A-"
(Excellent) rating, the fourth highest of fifteen rating levels, to
Aspen Bermuda and to Aspen U.S. Standard & Poor's Rating Services
("S&P") assigned a rating of "A" (Strong), the sixth highest of
twenty-one rating levels, to both Aspen U.K. and Aspen Bermuda.
Moody's Investors Services, Inc. ("Moody's") assigned a rating of "A2"
(Good), the eighth highest of twenty-seven rating levels, to Aspen
U.K. These ratings reflect A.M. Best's, S&P's and Moody's respective
opinions of our financial strength and ability to meet ongoing
obligations to policyholders and are not applicable to the securities
offered by this prospectus.

OUR BUSINESS STRATEGY

The key aspects of our business strategy are to:

o Diversify Our Business Portfolio. We plan to continue to diversify
our insurance and reinsurance operations while remaining focused on
the same type of high value-added underwriting for which we enjoy a
strong reputation. We intend to expand into different lines of
business, offer new products within our existing lines of business,
selectively increase our exposure in parts of the world where we are
currently under-represented and increase the amount of insurance
business that we underwrite.

o Build on Our Presence in the London, Bermuda and U.S. Markets. Our
presence in both the London and Bermuda markets allows us to serve
more of our clients' needs by

offering a wider range of products. In addition to maintaining a
strong presence in the United Kingdom, we plan to expand our
underwriting capacity in Bermuda and the United States significantly
beginning in 2004.

o Deploy Our Capital Effectively. Our initial private equity funding,
net of issuance costs, of $836.9 million was sized to address our
initial capital needs, most of which was rapidly deployed to support
the business written by Aspen U.K. and Aspen Bermuda. We strive to
maintain an optimal level of capital relative to our business plan by
employing rigorous statistical modeling techniques to assess the risk
of loss to our capital base based upon our portfolio of risks. We
intend to manage our capital prudently relative to our risk exposure
to maximize profitability and long-term growth in shareholder value.

o Anticipate and Adapt to Changing Market Conditions. By anticipating
changing market conditions, we seek to access different lines of
business with complementary risk/return characteristics and to deploy
capital appropriately. At the current time, we plan to increase the
amount of insurance that we underwrite relative to the amount of
reinsurance. We believe this will improve the balance of our business.
We also plan to increase the amount of casualty lines we underwrite
relative to the amount of property lines because of attractive market
trends. We are prepared to reposition our underwriting and capital
management strategies in order to respond in a timely manner to the
changing market environment for all or some of our lines of business.

o Employ a Conservative Investment Policy. We protect our capital by
employing a conservative investment policy that focuses on highly
rated fixed income securities. We currently do not invest in equity
securities.

RECENT DEVELOPMENTS

On September 5, 2003, Aspen U.S. Holdings acquired Dakota Specialty
Insurance Company ("Dakota Specialty"), which we refer to as Aspen U.S. and has
been renamed Aspen Specialty Insurance Company. Aspen U.S. is a wholly-owned
surplus lines subsidiary incorporated in North Dakota eligible to write certain
lines of insurance on a surplus lines basis in the majority of states in which
we intend to write business. Aspen U.S. was subsequently capitalized with $101
million derived from our existing funds and funds from our credit facilities.

As of the date of acquisition, Aspen U.S. had reserves for gross LOSSES
AND LOSS ADJUSTMENT EXPENSES of $15.1 million. Reinsurance receivable balances
in respect of these amounts totaled $8.6 million (excluding amounts receivable
from the former parent company of Dakota Specialty and its affiliates),
resulting in net reserves for losses and loss adjustment expenses of $6.5
million. On September 5, 2003 Aspen U.S. received a cash payment of $5.6
million in consideration for the commutation of the reinsurance contracts with
its former parent company and affiliates of its former parent company.

OUTLOOK

Management believes that after several years of dramatically increased
relative rate levels, premium rates for property and casualty reinsurance will
remain firm for the remainder of 2003, with casualty rates continuing to
increase in 2004. In our insurance lines, management currently believes

that rates in our commercial property insurance lines will remain at attractive
levels while gradually softening from 2004, whereas the rates in our commercial
liability lines will continue to be strong.

RISKS RELATING TO OUR COMPANY

As part of your evaluation of the Company, you should take into account
the risks we face in our business. These risks include:

o Limited Assurance of Future Success from the Syndicate 2020's
Historical Operations. Aspen U.K. will be seeking to underwrite
classes of business similar to those underwritten by Syndicate 2020,
but that business could have a substantially different risk profile or
different pricing than those previously underwritten. In addition,
like all insurance companies in their initial stages of development,
our operations in Bermuda could face substantial business and
financial risks and may suffer significant losses. It is possible that
we will not be successful in duplicating the past performance of
Syndicate 2020.

o Uncertainty of Establishing Loss Reserves. Establishing and
maintaining an appropriate level of LOSS RESERVES is an inherently
uncertain process. Because of this uncertainty, it is possible that
our reserves at any given time will prove inadequate. This could cause
a material increase in our liabilities and a reduction in our
profitability, including operating losses and reduction of capital.

o Exposure to Natural and Man-Made Disasters. We may have substantial
exposure to large, unexpected losses resulting from natural and
man-made disasters and other catastrophic events. The incidence and
severity of such CATASTROPHES are inherently unpredictable and our
losses from catastrophes could be substantial. The occurrence of large
claims from catastrophic events may result in substantial volatility
in our financial condition or results of operations for any fiscal
quarter or year and could adversely affect our ability to write new
business.

o Dependence on the Pricing and Availability of Reinsurance
Purchased. In order to limit the effect of large and multiple losses
arising from a catastrophic event upon our financial condition, we
have purchased reinsurance protection. A reinsurer's insolvency or
inability or reluctance to make timely payments under the terms of its
reinsurance TREATY with us could have a material adverse effect on us.
In addition, we may not be able to obtain the types and amounts of
reinsurance that we consider adequate for our business needs.

o Uncertainty of Emerging Claim and Coverage Issues. Unexpected and
unintended issues related to claims and coverage may emerge as
industry practices and legal, judicial, social and other conditions
change. These issues may adversely affect our business by either
extending coverage beyond our underwriting intent or by increasing the
number or size of claims. In some instances, these changes may not
become apparent until some time after we have issued insurance or
reinsurance contracts that are affected by the changes.

o Dependence on Key Employees. Our success will depend in substantial
part upon our ability to retain our principal employees and to attract
additional employees. Although we are not aware of any planned
departures, if we were to lose the service of members of our
management team, our business could be adversely affected.

For more information about these and other risks, see "Risk Factors"
beginning on page 15. You should carefully consider these risk factors together
with all of the other information included in this prospectus before making an
investment decision.

SYNDICATES FINANCIAL INFORMATION

We have included in this prospectus the audited combined financial
statements of Syndicate 2020 and Lloyd's Syndicate 3030 ("Syndicate 3030";
together with Syndicate 2020, the "Syndicates") for the

years ended December 31, 2000, 2001 and 2002 (the "Syndicates Financial
Statements") because a significant part of our management team came from
Wellington and the Syndicates, while at the Syndicates this team developed the
business which would become our Initial Lines of Business, and we participated
in 2002 and 2003 in other business lines written by the Syndicates by way of a
quota share arrangement. "Quota share" is a form of reinsurance in which
premiums and losses are shared proportionately between the ceding company and
the reinsurer. Under quota share arrangements, the same percentage of premiums
and loss sharing applies to all reinsured policies in a given class of
business. During that period the Syndicates wrote a diverse range of business
(the "Syndicates Business"), including the Initial Lines of Business written by
the Company as well as other lines of business which are not currently written
directly by the Company. However, the Company has an interest in these other
lines as a result of Aspen U.K.'s participation in the quota share arrangements
with the Syndicates. Aspen U.K.'s participation in these arrangements with the
Syndicates constituted approximately 58% of our gross premiums written from our
formation through December 31, 2002, but only accounted for approximately 5% of
our gross premiums written for the nine months ended September 30, 2003.

We consider the Syndicates Financial Statements as reflective of the
performance of the Syndicates at a time when market conditions were very
different from those currently prevailing due to a variety of reasons,
including the impact of the unprecedented losses arising from the destruction
of the World Trade Center. Moreover, the business mix of the Company is
significantly different from the business mix of the Syndicates Business. The
results of the Syndicates Business are not therefore necessarily indicative of
the future results or performance of the Company.

The Company did not acquire or assume any assets, premiums or reserves of
the Syndicates Business for any years prior to 2002.

U.S. PERIODIC REPORTING REQUIREMENTS

As a foreign private issuer (as defined in rules under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), we are not required to
comply with the periodic reporting requirements imposed upon a U.S. domestic
private issuer of equity securities registered under the Exchange Act.
Nonetheless, pursuant to a provision in our bye-laws, we will file with the
Securities and Exchange Commission (the "SEC") all annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports with respect to specified
events on Form 8-K, as would be required of a U.S. domestic issuer subject to
those particular requirements of the Exchange Act (including the informational
and timing requirements for filing such reports). The audited consolidated
financial statements and financial schedules contained in such annual reports
and the unaudited quarterly financial information contained in such quarterly
reports will be prepared in accordance with U.S. GAAP and will include
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the relevant periods.
----------
Our principal executive offices are located at Victoria Hall, 11 Victoria
Street, Hamilton HM 11, Bermuda and our telephone number at that location is
(441) 295-8201.

THE OFFERING

Ordinary shares offered
by us........................ 9,524,000 ordinary shares

Over-allotment option......... 1,428,600 ordinary shares

Ordinary shares to be
outstanding after the
offering..................... 66,448,120 ordinary shares

Use of proceeds............... We estimate our net proceeds from the initial
public offering of 9,524,000 of our ordinary
shares, based on an assumed initial public
offering price of $21.00 per ordinary share
(the midpoint of the price range set forth on
the cover page of this prospectus) and after
deducting the underwriting discounts and
commissions and estimated offering expenses we
will pay, will be approximately $178.5 million.
We estimate that our net proceeds will be
approximately $206.4 million if the
underwriters exercise their over-allotment
option in full. We intend to use the net
proceeds of this offering to provide initial or
additional capital to our subsidiaries, to
repay a portion of the short-term debt under
our revolving credit facilities, which is
discussed in "Management's Discussion and
Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources,"
and for other general corporate purposes.

Dividend policy............... Our board of directors intends to authorize
the payment of a dividend of $0.03 per ordinary
share per fiscal quarter to our shareholders of
record, beginning in the first quarter of 2004.
Any determination to pay cash dividends will be
at the discretion of our board of directors and
will be dependent upon our financial position,
significant restrictions which are described
under "Dividend Policy" and "Regulatory
Matters" and any other factors our board of
directors deems relevant at the time.

Proposed NYSE symbol.......... AHL

The number of ordinary shares shown to be outstanding after the offering
is based upon 56,924,120 ordinary shares outstanding as of September 30, 2003
and excludes:

o 1,428,600 ordinary shares that may be issued under the underwriters'
over-allotment option;

o 6,787,880 non-voting shares (which automatically convert into
ordinary shares at a one-to-one ratio upon completion of this offering
once issued) that may be issued in their entirety or partially at the
time of this offering under options granted to Wellington exercisable
for 3,781,120 non-voting shares and to Harrington Trust Limited
("Names' Trustee"), as successor trustee of the Names' Trust (the
"Names' Trust"), for the benefit of

the members of Syndicate 2020 who are not corporate members of
Wellington (the "Unaligned Members"), exercisable for 3,006,760
non-voting shares, which options have an exercise price of (pounds
sterling)10 per share increased by 5% per annum from June 21, 2002 to
the date of exercise, less any dividends and distributions (assuming
an exercise date of December 19, 2003, the exercise price would be
(pounds sterling)10.75);

o 3,884,020 ordinary shares that may be issued pursuant to options that
have been granted under our share incentive plan at a weighted average
exercise price of (pounds sterling)10.70 per share;

o 1,840,550 ordinary shares available for future issuance under our
share incentive plan; and

o 100,000,000 authorized but not issued preference shares.

The Company currently expects that Wellington will not immediately
exercise any of its 3,781,120 options upon completion of this offering,
although it has the right to do so at such time and thereafter on terms
described in "Description of Share Capital -- Investor Options." The Names'
Trustee is in the process of polling the beneficiaries of the Names' Trust to
determine the extent to which it will exercise its 3,006,760 options upon
completion of this offering. Both the Names' Trustee and Wellington may
exercise their respective options in full or in part, on a cash or cashless
basis.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth our summary historical financial
information for the period ended and as of the dates indicated. The summary
income statement data for the period from our inception at May 23, 2002 through
December 31, 2002 and the balance sheet data as of December 31, 2002 are
derived from our audited consolidated financial statements included elsewhere
in this prospectus, which have been prepared in accordance with U.S. GAAP and
have been audited by KPMG Audit Plc, our independent auditors. The summary
income statement data for the nine months ended September 30, 2003 and the
balance sheet data as of September 30, 2003 are derived from our condensed
consolidated financial statements included elsewhere in this prospectus. The
condensed consolidated financial statements have been prepared on the same
basis as our audited consolidated financial statements and, in our opinion,
include all adjustments, consisting only of normal recurring adjustments which
we consider necessary for a fair presentation of our results of operations and
financial position for this period. These historical results are not
necessarily indicative of results to be expected from any future period, and
the results presented below are not necessarily indicative of our full year
performance. Due to our limited operating history, the ratios presented may not
be indicative of our future performance. You should read the following summary
consolidated financial information along with the information contained in this
prospectus, including "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the audited consolidated financial
statements, condensed consolidated financial statements and related notes
included elsewhere in this prospectus.

NINE MONTHS PERIOD FROM
ENDED MAY 23, 2002 TO
SEPTEMBER 30, DECEMBER 31,
2003 2002(1)
--------------- ----------------
($ AND SHARES IN MILLIONS, EXCEPT
PER SHARE AMOUNTS
AND PERCENTAGES)

SUMMARY INCOME STATEMENT DATA:
Gross premiums written ............................................. $ 1,161.8 $ 374.8
Net premiums written ............................................... 961.1 312.6
Net premiums earned ................................................ 539.0 120.3
Loss and loss adjustment expenses .................................. (276.4) (76.9)
Policy acquisition and general and administrative expenses ......... (140.8) (29.8)
Net investment income .............................................. 16.7 8.5
Net income ......................................................... 97.6 28.6

Basic earnings per share ........................................... 1.72 0.89
Fully diluted earnings per share ................................... 1.71 0.89
Basic weighted average shares outstanding .......................... 56.9 32.0
Diluted weighted average shares outstanding ........................ 57.3 32.0

SELECTED RATIOS (BASED ON U.S. GAAP INCOME STATEMENT DATA):
Loss ratio (on net premiums earned)(2) ............................. 51% 64%
Expense ratio (on net premiums earned)(3) .......................... 26 25
--------- --------
Combined ratio(4) .................................................. 77% 89%

AS OF AS OF
SEPTEMBER 30, 2003 DECEMBER 31, 2002
-------------------- ------------------
($ IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)

SUMMARY BALANCE SHEET DATA:
Cash and investments(5) ............................... $ 1,281.8 $ 932.0
Premiums receivable ................................... 635.5 214.5
Total assets .......................................... 2,252.2 1,211.8
Losses and loss adjustment expense reserves ........... 382.0 93.9
Reserve for unearned premium .......................... 727.6 215.7
Total Shareholders' equity ............................ 990.9 878.1

PER SHARE DATA (BASED ON U.S. GAAP BALANCE SHEET DATA):
Book value per share(6) ............................... $ 17.41 $ 15.44
Diluted book value per share(7) ....................... 17.30 15.44

- ----------
(1) The financial information for this period reflects our results for the
period from May 23, 2002, the date of our formation, to December 31,
2002.

(2) The LOSS RATIO is calculated by dividing losses and loss adjustment
expenses by NET PREMIUMS EARNED.

(3) The EXPENSE RATIO is calculated by dividing acquisition expense and
general and administrative expense by net premiums earned.

(4) The combined ratio is the sum of the loss ratio and the expense ratio.

(5) Investments include fixed maturities and short-term investments.

(6) Book value per share is based on total shareholders' equity divided by
the number of shares outstanding of 56,876,360 and 56,924,120 at December
31, 2002 and September 30, 2003, respectively.

(7) Fully diluted book value per share is calculated based on total
shareholders' equity at December 31, 2002 and September 30, 2003, divided
by the number of shares outstanding of 56,876,360 and 57,282,800 at
December 31, 2002 and September 30, 2003, respectively. Potentially
dilutive options were not dilutive at December 31, 2002, but at September
30, 2003 there were 358,680 dilutive options. Potentially dilutive shares
outstanding are calculated using the treasury method.

SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
AND OPERATING DATA

We have prepared our unaudited pro forma combined statement of
underwriting results for the year ended December 31, 2002 to describe the
underwriting results for the year ended December 31, 2002 as if Aspen Holdings
had itself commenced its operations on January 1, 2002.

We have based our presentation on Aspen Holdings' statement of operations
for the period ended December 31, 2002 and the Syndicates' combined statement
of operations for the year ended December 31, 2002. We have then adjusted these
historical results to remove the amounts in respect of Syndicate 2020's
business other than the Initial Lines of Business. The pro forma financial
information shows what the underwriting results of Aspen Holdings might have
been had it itself written the Initial Lines of Business from January 1, 2002
and also assumed responsibility for the Initial Lines of Business lines written
by Syndicate 2020 prior to January 1, 2002. The pro forma financial information
includes the results for the year ended December 31, 2002 of business written
by each of the Syndicates and Aspen Holdings in 2002 and also the results,
including premium and loss development, of business written by Syndicate 2020
in 2001 and prior years. The pro forma financial information is net of the
amounts retained by National Indemnity Company, a member of the Berkshire
Hathaway group of companies, under its quota share reinsurance of Syndicate
2020.

We have included a reconciliation of the underwriting results of each of
Aspen Holdings and the Syndicates to the net income included in their
respective audited financial statements for the period from May 23, 2002 to
December 31, 2002 and year ended December 31, 2002.

The following table sets forth our unaudited pro forma combined statement
of underwriting results to represent our business as if we had commenced our
operations as of January 1, 2002 and had underwritten for the entire period. We
have based our presentation on the actual underwriting results of the
Syndicates for the period presented.

ASPEN ASPEN
HOLDINGS SYNDICATES HOLDINGS
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ ------------- ----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

Net premiums earned ................................... $ 120.3 $ 863.0 $(497.4) $ 485.9
Insurance losses and loss adjustment expenses ......... (76.9) (523.0) 299.7 (300.2)
Policy acquisition expenses ........................... (21.1) (254.0) 137.6 (137.5)
Operating and administration expenses ................. (8.7) (36.0) 33.8 ( 10.9)
------- -------- --------- --------
Underwriting result ................................... $ 13.6 $ 50.0 $ (26.3) $ 37.3
======= ======== ========= ========
Loss Ratio (on net premiums earned) ................... 64% 61% 60% 62%
Expense Ratio (on net premiums earned) ................ 25 34 35 31
------- -------- --------- --------
Combined Ratio (on net premiums earned) ............... 89% 95% 95% 93%
======= ======== ========= ========

The "Adjustments" column presents amounts included in the Syndicates'
underwriting results on lines of business that Aspen Holdings will not write
and that Syndicate 2020 will continue to write.

Investment income and realized gains and losses have been excluded from
the pro forma financial information during the period from January 1, 2002 to
the date we commenced our operations because the Syndicates do not operate with
any paid-up capital. As such, it would be inappropriate to make assumptions on
investment income related to hypothetical capital and it would be confusing to
include investment income on only reserves and not capital. Additionally, we
have not included realized gains or losses because this would provide an
incomplete assessment of the investment portfolio.

The underwriting result of Aspen Holdings shown above can be reconciled to
the net income included in Aspen Holdings' Consolidated Statement of Operations
for the period from May 23, 2002 to December 31, 2002 as follows:

PERIOD FROM
MAY 23, 2002 TO
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

Net income ......................... $ 28.6
Income tax ......................... 6.5
Net investment income .............. (8.5)
Realized investment losses ......... 0.1
Foreign exchange gain .............. (12.7)
Other .............................. (0.4)
-------
Underwriting result ................ $ 13.6
=======

The underwriting result of the Syndicates shown above can be reconciled to
the net income included in the Syndicates' Combined Statement of Operations for
the year ended December 31, 2002 as follows:

YEAR ENDED
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

Net income ......................... $ 71.0
Net investment income .............. (31.0)
Realized investment losses ......... (4.0)
Foreign exchange losses ............ 14.0
-------
Underwriting result ................ $ 50.0
=======

We have assumed that from January 1, 2002, we wrote the Initial Lines of
Business directly, rather than assuming them by way of quota share
arrangements, together with the business we have bound directly since our
formation and our quota share reinsurance of the Syndicate 2020 and 3030
business that are not part of the Initial Lines of Business.

Our senior management team and the majority of the underwriters
responsible for our reinsurance and U.K. commercial property and liability
insurance business joined Aspen Holdings from WUAL, a wholly owned subsidiary
of Wellington and the managing agent of the Syndicates. Aspen Holdings did not
acquire and does not have the right to renew any business previously written by
the Syndicates, but Wellington has agreed not to compete with Aspen Holdings
until after March 31, 2004 in the Initial Lines of Business previously written
by the Syndicates. Aspen Holdings started to write renewals of the Initial
Lines of Business in the third and fourth quarters of 2002. Aspen Holdings has
not assumed responsibility for any business written by the Syndicates prior to
January 1, 2002 and has participated in business written by the Syndicates
after January 1, 2002 by way of quota share arrangements. These agreements are
described under "Certain Relationships and Related Transactions -- Transactions
and Relationships with Initial Investors."

We caution that the Aspen Holdings pro forma statement of underwriting
results presented herein is not indicative of the future underwriting results
that we will achieve. Many factors may cause our actual underwriting results to
differ materially from the pro forma results, including, but not limited to,
the following:

specifically described under "Certain Relationships and Related
Transactions -- Transactions and Relationships with Initial
Investors"; we are assuming no premium or loss development on Initial
Lines of Business written by Syndicate 2020 prior to January 1, 2002.
Therefore, our reported premiums written and earned and reported
losses and loss adjustment expenses in our initial years of operation
could be lower than as presented in our unaudited pro forma statement
of underwriting results.

o We have made no adjustments to illustrate the impact of Aspen
Holdings' reinsurance program other than the Syndicates' reinsurance
program on the unaudited pro forma statement of underwriting results,
as it is not practicable to do so.

o Our future results of operations will depend in part on the amount of
our investment income, which cannot be predicted and which will
fluctuate depending upon the types of investments we select, our
underwriting results and market factors.

o Actual tax expense in future periods will be based on underwriting
results plus investment income and other income and expense items not
reflected in the unaudited pro forma statement of underwriting
results.

RISK FACTORS

An investment in our ordinary shares involves a number of risks. You
should carefully consider the following information about these risks, together
with the other information contained in this prospectus, before investing in
our ordinary shares. The risks and uncertainties described below are not the
only ones we face. However, these are the risks our management believes are
material. Additional risks not presently known to us or that we currently deem
immaterial may also impair our future business or results of operations. Any of
the risks described below could result in a significant or material adverse
effect on our results of operations or financial condition, and cause a
corresponding decline in the market price of our ordinary shares. You could
lose all or part of your investment.

This prospectus also contains forward-looking statements about our
business and results of operations that could be impacted by various risks and
uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including the risks and uncertainties described below and elsewhere in this
prospectus. See "Forward-Looking Statements."

RISKS RELATED TO OUR COMPANY

THE HISTORICAL OPERATIONS AND RESULTS OF THE SYNDICATES MAY NOT BE INDICATIVE
OF OUR FUTURE PERFORMANCE.

We were formed on May 23, 2002 and began our business operations on June
21, 2002 when Aspen U.K. commenced its underwriting activities. The historic
operations of Syndicate 2020, a portion of whose business we began to reinsure
in 2002, do not form a meaningful basis on which to assess the value of an
investment in Aspen Holdings. Our management's past results were achieved
largely as contributors to the operation of Syndicate 2020 within the London
Market. Aspen U.K. also operates in the London Market and will be seeking to
underwrite classes of business with which our management is familiar, but that
business could have a substantially different risk profile or different pricing
than those previously underwritten by the Syndicates. In addition, we are still
in the initial stage of our operations in Bermuda. Insurance companies, such as
Aspen Bermuda, in their initial stages of development face substantial business
and financial risks and may suffer significant losses. They must establish
operating procedures, hire staff, install management information and other
systems and complete other tasks necessary to conduct their intended business
activities. It is possible that we will not be successful in duplicating the
past performance of the Syndicates, or in implementing our business strategy.
In addition, because we have not experienced any substantial claims to date,
our historical financial results may not accurately indicate our future
performance.

IF ACTUAL CLAIMS EXCEED OUR LOSS RESERVES, OUR FINANCIAL RESULTS COULD BE
SIGNIFICANTLY ADVERSELY AFFECTED.

Our results of operations and financial condition depend upon our ability
to assess accurately the potential losses associated with the risks that we
insure and reinsure. To the extent actual claims exceed our expectations, we
will be required to immediately recognize the less favorable experience. This
could cause a material increase in our provisions for liabilities and a
reduction in our profitability, including operating losses and reduction of
capital. To date, we have not been required to make any of these adjustments.
However, it is early in our history, and the number and size of reported claims
has been small. It is expected that in the future, the number of claims will
increase, and their size and severity could exceed our expectations.

We establish loss reserves to cover our estimated liability for the
payment of all losses and LOSS EXPENSES incurred with respect to PREMIUMS
EARNED on the policies that we write. Our current loss reserves are based on
estimates involving actuarial and statistical projections of our expectations
of the ultimate settlement and administration costs of claims INCURRED BUT NOT
REPORTED ("IBNR"). We utilize actuarial models as well as historical insurance
industry loss development patterns to establish appropriate loss reserves, as
well as estimates of future trends in claims severity, FREQUENCY and other
factors. Each of our Insurance Subsidiaries' reserving process and methodology
are subject to a

quarterly review, the results of which are presented to and reviewed by the
boards of directors of our Insurance Subsidiaries. Establishing an appropriate
level of loss reserves is an inherently uncertain process. Accordingly, actual
claims and loss expenses paid will likely deviate, perhaps substantially, from
the reserve estimates reflected in our consolidated financial statements.

OUR FUTURE PERFORMANCE MAY BE IMPACTED BY OUR LIMITED EXPERIENCE WITH CLAIMS
ACTIVITY.

As a newly formed company, we have not experienced any significant claims
activity to date, so our claims systems and processes have not yet been
utilized to the extent that we expect they will be going forward. We also rely
on third party service providers to assist us in handling some claims activity.
If these systems or our third party service providers fail to perform as
expected, as claims begin to be filed, it could have a negative impact on our
financial condition and results of operations.

WE COULD FACE UNANTICIPATED LOSSES FROM WAR, TERRORISM AND POLITICAL UNREST,
AND THESE OR OTHER UNANTICIPATED LOSSES COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We may have substantial exposure to large, unexpected losses resulting
from future man-made catastrophic events, such as acts of war, acts of
terrorism and political instability. Although we may attempt to exclude losses
from terrorism and certain other similar risks from some coverages we write, we
may not be successful in doing so. We generally exclude acts of terrorism and
losses stemming from nuclear, biological and chemical events; however, some
states in the United States do not permit exclusion of fires following
terrorist attacks from insurance policies and reinsurance treaties. Where we
believe we are able to obtain pricing that adequately covers our exposure, we
have written a limited number of reinsurance contracts covering solely the
peril of terrorism. These risks are inherently unpredictable and recent events
may lead to increased frequency and severity of losses. It is difficult to
predict the timing of these events with statistical certainty or to estimate
the amount of loss that any given OCCURRENCE will generate. To the extent that
losses from these risks occur, our financial condition and results of
operations could be materially adversely affected.

OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED
BY THE OCCURRENCE OF CATASTROPHIC EVENTS SUCH AS NATURAL DISASTERS.

As a part of our insurance and reinsurance operations, we have assumed
substantial exposure to losses resulting from natural disasters and other
catastrophic events. Catastrophes can be caused by various events, including
hurricanes, earthquakes, hailstorms, explosions, severe winter weather, floods,
tornadoes, and fires. The incidence and severity of such catastrophes are
inherently unpredictable and our losses from catastrophes could be substantial.
The occurrence of large claims from catastrophic events may result in
substantial volatility in our financial condition or results of operations for
any fiscal quarter or year and could have a material adverse effect on our
financial condition or results of operations and our ability to write new
business. In particular, we write a considerable amount of business that is
exposed to Florida windstorms and California earthquakes. This volatility is
compounded by accounting regulations that do not permit reinsurers to reserve
for such catastrophic events until they occur. We expect that increases in the
values and concentrations of insured property will increase the severity of
such occurrences per year in the future. Although we will attempt to manage our
exposure to these events, a single catastrophic event could affect multiple
geographic zones or the frequency or severity of catastrophic events could
exceed our estimates, either of which could have a material adverse effect on
our financial condition or results of operations. Events that are driven by
Florida windstorms and earthquakes in California in particular could have a
material adverse effect on our financial condition and results of operations.

OUR PURCHASE OF REINSURANCE SUBJECTS US TO THIRD-PARTY CREDIT RISK AND SUCH
REINSURANCE MAY NOT BE AVAILABLE ON FAVORABLE TERMS.

We purchase reinsurance for our own account in order to mitigate the
effect of certain large and multiple losses upon our financial condition. A
reinsurer's insolvency or its inability or reluctance to

make timely payments under the terms of its REINSURANCE AGREEMENT with us could
have a material adverse effect on us because we remain liable to the insured.

From time to time, market conditions have limited, and in some cases have
prevented, insurers and reinsurers from obtaining the types and amounts of
reinsurance that they consider adequate for their business needs. For example,
following the terrorist attacks of September 11, 2001, reinsurance and
retrocessional markets generally became less attractive for purchasers of
reinsurance as supply contracted, terms were tightened and premium rates
increased. Accordingly, we may not be able to obtain our desired amounts of
reinsurance to reduce specific exposures. In addition, even if we are able to
obtain such reinsurance, we may not be able to negotiate terms that we deem
appropriate or acceptable or obtain such reinsurance from entities with
satisfactory creditworthiness. As is typical in our industry, many of our
reinsurance contracts have a one-year term, and it is not certain that they can
be renewed on reasonable terms; however, based on our past experience and the
current state of the reinsurance market, we believe we will be able to renew
the majority of such contracts.

THE EFFECTS OF EMERGING CLAIM AND COVERAGE ISSUES ON OUR BUSINESS ARE
UNCERTAIN.

As industry practices and legal, judicial, social and other environmental
conditions change, unexpected and unintended issues related to claims and
coverage may emerge. These issues may adversely affect our business by either
extending coverage beyond our underwriting intent or by increasing the number
or size of claims. In some instances, these changes may not become apparent
until some time after we have issued insurance or reinsurance contracts that
are affected by the changes. In addition, we are unable to predict the extent
to which the courts may expand the theory of liability under a casualty
insurance contract, such as the range of the occupational hazards causing
losses under EMPLOYERS' LIABILITY insurance. In particular, our exposure to
casualty reinsurance and U.K. liability insurance increases our potential
exposure to this risk due to the uncertainties of expanded theories of
liability and the LONG TAIL nature of these lines of business. There has been a
recent, but inconclusive report, commissioned in the U.K. to address escalating
premium rates in response to this uncertainty. As a result, the full extent of
liability under our insurance or reinsurance contracts may not be known for
many years after a contract is issued.

WE COULD BE ADVERSELY AFFECTED BY THE LOSS OF ONE OR MORE PRINCIPAL EMPLOYEES
OR BY AN INABILITY TO ATTRACT AND RETAIN STAFF.

Our success will depend in substantial part upon our ability to retain our
principal employees and to attract additional employees. As of September 30,
2003, we had over 100 full-time employees and, accordingly, depend upon them
for the generation and servicing of our business. We rely substantially upon
the services of our senior management team. In particular, we rely
substantially upon the service of Paul Myners, Chairman of our board of
directors, Christopher O'Kane, our Chief Executive Officer, and Julian Cusack,
our Chief Financial Officer. Although we have employment agreements with all of
the members of our management team and we are not aware of any planned
departures or retirements, if we were to lose the services of members of our
management team, our business could be adversely affected. We do not currently
maintain key man life insurance policies with respect to any of our employees.

THE FAILURE OF ANY OF THE LOSS LIMITATION METHODS WE EMPLOY COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION OR OUR RESULTS OF
OPERATIONS.

We seek to mitigate our loss exposure by writing a number of our insurance
and reinsurance contracts on an EXCESS OF LOSS basis, such that we must pay
losses that exceed a specified RETENTION. In addition, we limit program size
for each client and purchase reinsurance for our own account. In the case of
PROPORTIONAL REINSURANCE treaties, we seek PER OCCURRENCE LIMITATIONS or loss
and loss expense ratio caps to limit the impact of losses from any one event.
We also seek to limit our loss exposure by geographic diversification.
Geographic zone limitations involve significant underwriting judgments,
including the determination of the area of the zones and the inclusion of a
particular policy within a particular zone's LIMITS. Various provisions of our
policies, such as limitations or EXCLUSIONS from

coverage or choice of forum, negotiated to limit our risks may not be
enforceable in the manner we intend. We cannot be sure that any of these loss
limitation methods will be effective. As a result of the risks we insure and
reinsure, unforeseen events could result in claims that substantially exceed
our expectations, which could have a material adverse effect on our financial
condition or results of operations.

OUR BUSINESS COULD BE ADVERSELY AFFECTED BY BERMUDA EMPLOYMENT RESTRICTIONS.

From time to time, we may need to hire additional employees to work in
Bermuda. Under Bermuda law, non-Bermudians (other than spouses of Bermudians)
may not engage in any gainful occupation in Bermuda without an appropriate
governmental work permit. Work permits may be granted or extended by the
Bermuda government upon showing that, after proper public advertisement in most
cases, no Bermudian (or spouse of a Bermudian) is available who meets the
minimum standard requirements for the advertised position. The Bermuda
government recently announced a new policy limiting the duration of work
permits to six years, with certain exemptions for key employees. Only one
member of Aspen Bermuda's management team (or other officers) based in Bermuda
is Bermudian. We currently have five employees in Bermuda. One of these
employees is Julian Cusack, our Chief Financial Officer. Julian Cusack is a
non-Bermudian and is working under a work permit that will expire on March 9,
2008. We plan to recruit additional employees by the end of 2003 to work in
Bermuda for the Company or Aspen Bermuda. None of our current Bermuda employees
for whom we have applied for a work permit has been denied. It is possible that
we could lose the services of Julian Cusack or another key employee who is
non-Bermudian if we were unable to obtain or renew their work permits, which
could have a material adverse affect on our business.

OUR CONCENTRATION ON A LIMITED NUMBER OF LINES OF BUSINESS COULD MAKE US MORE
SUSCEPTIBLE TO UNFAVORABLE MARKET CONDITIONS.

We have a portfolio of business that is currently dominated by a limited
number of lines of business, including property and casualty risk excess. Given
this reliance, there is risk that unfavorable market conditions in these lines
could have a disproportionate impact on our Company in comparison with our
industry in general.

THE AGGREGATED RISKS ASSOCIATED WITH REINSURANCE UNDERWRITING COULD ADVERSELY
AFFECT US.

In our reinsurance business, we do not separately evaluate each of the
individual risks assumed under most reinsurance treaties. This is common among
reinsurers. Therefore, we will be largely dependent on the original
underwriting decisions made by CEDING COMPANIES. We are subject to the risk
that the ceding companies may not have adequately evaluated the risks to be
reinsured and that the PREMIUMS CEDED may not adequately compensate us for the
risks we assume.

WE MAY BE UNABLE TO ENTER INTO SUFFICIENT REINSURANCE SECURITY ARRANGEMENTS AND
THE COST OF THESE ARRANGEMENTS MAY MATERIALLY IMPACT OUR MARGINS.

As non-U.S. reinsurers, Aspen Bermuda and Aspen U.K. are required to post
collateral security with respect to liabilities they assume from ceding
insurers domiciled in the United States. The posting of collateral security is
generally required in order for U.S. ceding companies to obtain credit in their
U.S. statutory financial statements with respect to liabilities ceded to
unlicensed or unaccredited reinsurers. Under applicable statutory provisions,
the security arrangements may be in the form of letters of credit, reinsurance
trusts maintained by third-party trustees or funds-withheld arrangements
whereby the trust assets are held by the ceding company. Aspen U.K. is required
to post letters of credit or establish other security for its U.S. CEDENTS in
an amount equal to 100% of reinsurance recoverables under the agreements to
which it is a party with the U.S. cedents. We have currently in place letters
of credit facilities and trust funds, as further described in "Management
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources," to satisfy these requirements. If these
facilities are not sufficient or if the Company is unable to renew these
facilities or is unable to arrange for other types of security on commercially
acceptable terms,

the ability of Aspen U.K. to provide reinsurance to U.S.-based clients may be
severely limited. Security arrangements may subject our assets to security
interests and/or require that a portion of our assets be pledged to, or
otherwise held by, third parties and, consequently, reduce the liquidity of our
assets. Although the investment income derived from our assets while held in
trust typically accrues to our benefit, the investment of these assets is
governed by the investment regulations of the state of domicile of the ceding
insurer, which may be more restrictive than the investment regulations
applicable to us under Bermuda or U.K. law. The restrictions may result in
lower investment yields on these assets, which could adversely affect our
profitability.

OUR INSURANCE SUBSIDIARIES ARE RATED BY A.M. BEST, S&P AND MOODY'S, AND A
DECLINE IN ANY OF THESE RATINGS COULD AFFECT OUR STANDING AMONG BROKERS AND
CUSTOMERS AND CAUSE OUR SALES AND EARNINGS TO DECREASE.

Ratings are a significant factor in establishing the competitive position
of insurance and reinsurance companies. A ratings downgrade, therefore, could
result in a substantial loss of business as insureds, ceding companies and
brokers that place such business move to other insurers and reinsurers with
higher ratings. A.M. Best maintains a letter scale rating system ranging from
"A++" (Superior) to "F" (in liquidation). S&P maintains a letter scale rating
system ranging from "AAA" (Extremely Strong) to "R" (under regulatory
supervision). Moody's maintains a letter and number scale rating system ranging
from "Aaa" (Exceptional) to "C" (Lowest). Aspen U.K. is currently rated "A"
(Excellent) by A.M. Best, which is the third highest of fifteen rating levels,
"A" (Strong) by S&P, which is the sixth highest of twenty-one rating levels,
and "A2" (Good) by Moody's, which is the eighth highest of twenty-seven rating
levels. Aspen Bermuda is currently rated "A-" (Excellent) by A.M. Best, which
is the fourth highest of fifteen rating levels, and "A" (Strong) by S&P, which
is the sixth highest of twenty-one rating levels. Aspen U.S. is currently rated
"A-" (Excellent) by A.M. Best, which is the fourth highest of fifteen rating
levels. The objective of A.M. Best's, S&P's and Moody's rating systems is
generally to provide an opinion of an insurer's financial strength and ability
to meet ongoing obligations to its policyholders. These ratings reflect A.M.
Best's, S&P's and Moody's opinions of the financial strength of our Insurance
Subsidiaries; they are not evaluations directed to investors in our ordinary
shares and are not recommendations to buy, sell or hold our ordinary shares.

The ratings of our Insurance Subsidiaries are subject to periodic review
by, and may be revised downward or revoked at the sole discretion of, A.M.
Best, S&P and/or Moody's. If our ratings are reduced from their current levels
by any of A.M. Best, S&P or Moody's, our competitive position in the insurance
and reinsurance industry would suffer, and it would be more difficult for us to
sell our products.

In addition, several agreements we have with third parties would be
impacted by a failure to maintain specified ratings. Under the framework
agreement dated May 28, 2002 among Wellington and its affiliates, Aspen U.K.
Services and Aspen Holdings, Aspen U.K. would need to provide a letter of
credit with respect to any quota share reinsurance it provides to Syndicate
2020 if Aspen U.K.'s insurer financial strength or similar rating is
down-graded below "A" by either S&P and A.M. Best or such lower rating (not
being lower than "A-") acceptable to Lloyd's from time to time. In addition,
the obligations to offer quota shares are subject to a condition that neither
the Lloyd's market nor Aspen U.K. be rated below "BBB" by either S&P or A.M.
Best.

OUR RELIANCE ON BROKERS SUBJECTS US TO THEIR CREDIT RISK.

In accordance with industry practice, we generally pay amounts owed on
claims under our insurance and reinsurance contracts to brokers, and these
brokers, in turn, pay these amounts over to the clients that have purchased
insurance or reinsurance from us. Although the law is unsettled and depends
upon the facts and circumstances of the particular case, in some jurisdictions,
if a broker fails to make such a payment, in a significant majority of business
that we write, it is highly likely that we will be liable to the client for the
deficiency because of local laws or contractual obligations. Likewise, when the
client pays premiums for these policies to brokers for payment over to us,
these premiums are considered to have been paid and, in most cases, the client
will no longer be liable to us for those

amounts, whether or not we have actually received the premiums. Consequently,
we assume a degree of credit risk associated with brokers around the world with
respect to most of our insurance and reinsurance business. However, due to the
unsettled and fact-specific nature of the law, we are unable to quantify our
exposure to this risk. To date, we have not experienced any material losses
related to such credit risks.

SINCE WE DEPEND ON A FEW BROKERS FOR A LARGE PORTION OF OUR INSURANCE AND
REINSURANCE REVENUES, LOSS OF BUSINESS PROVIDED BY ANY ONE OF THEM COULD
ADVERSELY AFFECT US.

We market our insurance and reinsurance worldwide primarily through
insurance and reinsurance brokers. Aon Corporation ("Aon"), Marsh & McLennan
Companies, Inc. ("Marsh"), Willis Group Holdings, Ltd. ("Willis"), Benfield
Group plc ("Benfield") and Ballantyne, McKean & Sullivan Ltd. ("Ballantyne")
provided 28.8%, 16.3%, 12.3%, 11.8% and 4.1% (for a total of 73.3%),
respectively, of our gross reinsurance premiums written for the nine months
ended September 30, 2003. R. L. Davison & Co. Ltd. ("R. L. Davison"), SBJ Group
Limited ("SBJ"), Aon and Marsh provided 5.8%, 12.1%, 20.8% and 7.3% (for a
total of 46.0%), respectively, of our gross insurance premiums written for the
nine months ended September 30, 2003. Several of these brokers also have, or
may in the future acquire, ownership interests in insurance and reinsurance
companies that compete with us, and these brokers may favor their own insurers
or reinsurers over other companies. Loss of all or a substantial portion of the
business provided by one or more of these brokers could have a material adverse
effect on our business.

ACQUISITIONS OR STRATEGIC INVESTMENTS THAT WE MAY MAKE COULD TURN OUT TO BE
UNSUCCESSFUL.

As part of our strategy, we may pursue growth through acquisitions and/or
strategic investments in businesses. The negotiation of potential acquisitions
or strategic investments as well as the integration of an acquired business or
new personnel could result in a substantial diversion of management resources.
Acquisitions could involve numerous additional risks such as potential losses
from unanticipated litigation or levels of claims and inability to generate
sufficient revenue to offset acquisition costs. As a newly formed company, we
have limited experience in identifying quality merger candidates, as well as
successfully acquiring and integrating their operations.

Our ability to manage our growth through acquisitions or strategic
investments will depend, in part, on our success in addressing these risks. Any
failure by us to effectively implement our acquisitions or strategic investment
strategies could have a material adverse effect on our business, financial
condition or results of operations.

OUR INVESTMENT PERFORMANCE MAY AFFECT OUR FINANCIAL RESULTS AND ABILITY TO
CONDUCT BUSINESS.

Our funds are invested by several professional investment management firms
under the direction of our investment committee in accordance with detailed
investment guidelines set by us. See "Business -- Investments." Although our
investment policies stress diversification of risks, conservation of principal
and liquidity, our investments are subject to market-wide risks and
fluctuations, as well as to risks inherent in particular securities. The
occurrence of large claims may force us to liquidate securities at an
inopportune time, which may cause us to incur capital losses. If we do not
structure our investment portfolio so that it is appropriately matched with our
insurance and reinsurance liabilities, we may be forced to liquidate
investments prior to maturity at a significant loss in order to cover such
liabilities. Large investment losses could significantly decrease our asset
base, thereby affecting our ability to underwrite new business. For the first
nine months ended September 30, 2003, 2.7% or $14.9 million of our total
revenue was derived from our invested assets. This represented 10.9% of our
income from operations before income tax for the same period.

WE MAY BE ADVERSELY AFFECTED BY INTEREST RATE CHANGES.

Our operating results are affected, in part, by the performance of our
investment portfolio. Our investment portfolio contains interest-sensitive
instruments, such as bonds, which may be adversely

affected by changes in interest rates. Changes in interest rates could also
have an adverse effect on our investment income and results of operations. For
example, if interest rates decline, funds reinvested will earn less than
expected.

Interest rates are highly sensitive to many factors, including
governmental monetary policies, domestic and international economic and
political conditions and other factors beyond our control. Although we attempt
to take measures to manage the risks of investing in a changing interest rate
environment, we may not be able to mitigate interest rate sensitivity
effectively. Our mitigation efforts include maintaining a portfolio,
diversified by obligor and emphasizing higher rated securities, with a
relatively short duration to reduce the effect of interest rate changes on book
value. Despite our mitigation efforts, a significant increase in interest rates
could have a material adverse effect on our book value.

PROFITABILITY MAY BE ADVERSELY IMPACTED BY INFLATION.

The effects of inflation could cause the severity of claims from
catastrophes or other events to rise in the future. Our calculation of reserves
for losses and loss expenses includes assumptions about future payments for
settlement of claims and claims-handling expenses, such as medical treatments
and litigation costs. We write liability business in the United States, the
United Kingdom and Australia, where claims inflation has grown particularly
strong in recent years. To the extent inflation causes these costs to increase
above reserves established for these claims, we will be required to increase
our loss reserves with a corresponding reduction in our net income in the
period in which the deficiency is identified.

WE MAY BE ADVERSELY AFFECTED BY FOREIGN CURRENCY FLUCTUATIONS.

Our reporting currency is the U.S. Dollar. The functional currencies of
our reinsurance and insurance segments are the U.S. Dollar and the British
Pound. For the nine months ended September 30, 2003, 10.8% of our gross
premiums were written in currencies other than the U.S. Dollar and the British
Pound and we expect that a similar proportion will be written in currencies
other than the U.S. Dollar and the British Pound for the remaining 2003. A
portion of our loss reserves and investments are also in currencies other than
the U.S. Dollar and the British Pound. We may, from time to time, experience
losses resulting from fluctuations in the values of these non-U.S./non-British
currencies, which could adversely affect our operating results.

Although we are not currently aware of any material exposures to loss
payments that will be paid in currencies other than the U.S. Dollar and the
British Pound, we may use hedges to manage probable significant losses that
will be paid in non-U.S./non-British currencies. However, it is possible that
we will not successfully structure those hedges so as to effectively manage
these risks.

THE REGULATORY SYSTEM UNDER WHICH WE OPERATE, AND POTENTIAL CHANGES THERETO,
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

General. Our insurance and reinsurance subsidiaries may not be able to
maintain necessary licenses, permits, authorizations or accreditations in
territories where we currently engage in business or obtain them in new
territories, or may be able to do so only at significant cost. In addition, we
may not be able to comply fully with, or obtain appropriate exemptions from,
the wide variety of laws and regulations applicable to insurance or reinsurance
companies or holding companies. Failure to comply with or to obtain appropriate
authorizations and/or exemptions under any applicable laws could result in
restrictions on our ability to do business or to engage in certain activities
that are regulated in one or more of the jurisdictions in which we operate and
could subject us to fines and other sanctions, which could have a material
adverse effect on our business. In addition, changes in the laws or regulations
to which our insurance and reinsurance subsidiaries are subject could have a
material adverse effect on our business. See "Regulatory Matters."

Aspen U.K. Aspen U.K. has authorization from the FSA to write certain
classes of insurance business in the United Kingdom. As an authorized insurer
in the United Kingdom, Aspen U.K. is able

to operate throughout the E.U., subject to compliance with certain notification
requirements of the FSA and in some cases, certain local regulatory
requirements. As an FSA authorized insurer, the insurance and reinsurance
businesses of Aspen U.K. will be subject to close supervision by the FSA. The
FSA regards Aspen U.K., for all intents and purposes, as a new insurer and has
stated that it wishes to closely monitor Aspen U.K.'s progress against its
business plans and related issues including business development, reinsurance,
underwriting controls and claims. More generally, the FSA is currently seeking
to strengthen its requirements for senior management arrangements, and for
systems and controls of insurance and reinsurance companies under its
jurisdiction. Furthermore, the FSA intends to place an increased emphasis on
risk identification and management in relation to the prudential regulation of
insurance and reinsurance business in the United Kingdom. Changes in the FSA's
requirements may have an adverse impact on the business of Aspen U.K.

If any entity were to hold 20% or more of the voting rights or 20% or more
of the issued ordinary shares in Aspen Holdings after this offering,
transactions between Aspen U.K. and such entity may have to be reported to the
FSA if the value of those transactions exceeds certain threshold amounts that
would render them material connected party transactions. In these
circumstances, we cannot assure you that these material connected party
transactions will not be subject to regulatory intervention by the FSA.

Aspen U.K. is required to provide the FSA with information about Aspen
Holdings' notional solvency, which involves calculating the solvency position
of Aspen Holdings in accordance with the FSA's rules. In this regard, if Aspen
Bermuda were to experience financial difficulties, it could affect the
"solvency" position of Aspen Holdings and in turn trigger regulatory
intervention by the FSA with respect to Aspen U.K. Furthermore, any
transactions between Aspen U.K., Aspen U.S. and Aspen Bermuda that are material
connected party transactions would also have to be reported to the FSA. We
cannot assure you that the existence or effect of such connected party
transactions and the FSA's assessment of the overall solvency of Aspen Holdings
and its subsidiaries, even in circumstances where Aspen U.K. has on its face
sufficient assets of its own to cover its required margin of solvency, would
not result in regulatory intervention by the FSA with regard to Aspen U.K.

There may be reforms in liability insurance practice in the United
Kingdom, in response to dramatic price increases that have greatly affected
businesses, which may adversely impact the Company. The Office of Fair Trading
("OFT") in the United Kingdom undertook a study as a result of concerns
regarding sharp increases in the cost of premiums charged for employers',
PUBLIC and PRODUCT LIABILITY insurance and PROFESSIONAL INDEMNITY insurance,
collectively referred to as liability insurance. The OFT has indicated that it
will continue to keep liability insurance markets under review, including
premiums charged during late 2004, as it anticipates the markets to have
adjusted by that date. The OFT does not presently have price controls in place
in relation to liability insurance. We are not aware at this time of any OFT
proposals to recommend such price controls. In addition, the U.K. Department
for Work and Pensions ("DWP") has conducted a specific study regarding
employers' liability. Both the OFT and the DWP have focused on the potential
benefit to businesses, as insureds, if insurers increased the renewal periods
during which insureds can renew their insurance coverage. The OFT has the power
to recommend wide ranging reforms to the extent that it finds competition has
been hindered as a result of the sharp increase in premiums charged, and to
refer the markets to the U.K. Competition Commission which may impose
structural and behavioral remedies on the market participants. Although no
particular regulatory or legislative reforms have been recommended, these
reports and any subsequent regulation may adversely affect our business and
results of operations. For example, if insurers were required to increase their
renewal periods, this may result in increased competition to retain existing
customers.

In addition, given that the framework for supervision of insurance and
reinsurance companies in the United Kingdom is largely formed by E.U.
directives (which are implemented by member states through national
legislation), changes at the E.U. level may affect the regulatory scheme under
which Aspen U.K. will operate. A general review of E.U. insurance directives is
currently in progress and may lead to changes such as increased or risk-based
minimum capital requirements. One such directive obliged the United Kingdom to
ensure that, in any insolvency or reorganization proceedings

concerning an insurer established in the United Kingdom, claims under insurance
contracts receive priority over claims under reinsurance contracts. These
rules, which were implemented into U.K. law in April 2003, may have the effect
that prospective reinsureds may seek security for future claims under
reinsurance policies issued by Aspen U.K. which would increase the cost to
Aspen U.K. of writing reinsurance business.

Aspen U.K. does not presently intend that it will be admitted to do
business in any jurisdiction other than the United Kingdom, Ireland and the
other member states of the EUROPEAN ECONOMIC AREA. We cannot assure you,
however, that insurance regulators in the United States, Bermuda or elsewhere
will not review the activities of Aspen U.K. and claim that Aspen U.K. is
subject to such jurisdiction's licensing requirements.

Aspen Bermuda. Aspen Bermuda is a registered Class 4 Bermuda insurance and
reinsurance company. Among other matters, Bermuda statutes, regulations and
policies of the BMA require Aspen Bermuda to maintain minimum levels of
statutory capital, SURPLUS and liquidity, to meet solvency standards, to obtain
prior approval of ownership and transfer of shares and to submit to certain
periodic examinations of its financial condition. These statutes and
regulations may, in effect, restrict Aspen Bermuda's ability to write insurance
and reinsurance policies, to make certain investments and to distribute funds.

Aspen Bermuda does not maintain a principal office, and its personnel do
not solicit, advertise, settle claims or conduct other activities that may
constitute the transaction of the business of insurance or reinsurance, in any
jurisdiction in which it is not licensed or otherwise not authorized to engage
in such activities. Although Aspen Bermuda does not believe it is or will be in
violation of insurance laws or regulations of any jurisdiction outside Bermuda,
inquiries or challenges to Aspen Bermuda's insurance or reinsurance activities
may still be raised in the future.

The offshore insurance and reinsurance regulatory environment has become
subject to increased scrutiny in many jurisdictions, including the United
States and various states within the United States. Compliance with any new
laws or regulations regulating offshore insurers or reinsurers could have a
material adverse effect on our business.

Aspen U.S. Aspen U.S. is organized in and has received a license to write
certain lines of insurance business in the State of North Dakota and, as a
result, is subject to North Dakota law and regulation under the supervision of
the Commissioner of Insurance of the State of North Dakota. The North Dakota
Commissioner of Insurance also has regulatory authority over a number of
affiliate transactions between Aspen U.S. and other members of our holding
company system. The purpose of the state insurance regulatory statutes is to
protect U.S. insureds and U.S. ceding insurance companies, not our
shareholders. Among other matters, state insurance regulations will require
Aspen U.S. to maintain minimum levels of capital, surplus and liquidity,
require Aspen U.S. to comply with applicable risk-based capital requirements
and will impose restrictions on the payment of dividends and distributions.
These statutes and regulations may, in effect, restrict the ability of Aspen
U.S. to write new business or distribute assets to Aspen Holdings.

In recent years, the U.S. insurance regulatory framework has come under
increased federal scrutiny, and some state legislators have considered or
enacted laws that may alter or increase state regulation of insurance and
reinsurance companies and holding companies. Moreover, the National Association
of Insurance Commissioners ("NAIC"), which is an association of the insurance
commissioners of all 50 states and the District of Columbia, and state
insurance regulators regularly examine existing laws and regulations. Changes
in these laws and regulations or the interpretation of these laws and
regulations could have a material adverse effect on our business.

For example, in response to the tightening of supply in certain insurance
and reinsurance markets resulting from, among other things, the World Trade
Center tragedy, the Terrorism Risk Insurance Act of 2002 (the "Terrorism Act")
was enacted to ensure the availability of insurance coverage for terrorist acts
in the United States. This law establishes a federal assistance program through
the end of 2005 to help the commercial property and casualty insurance industry
cover claims related to future

terrorism related losses and regulates the terms of insurance relating to
terrorism coverage. This law could adversely affect our business by increasing
underwriting capacity of our competitors as well as by requiring that coverage
for terrorist acts be offered by insurers. We are in the process of evaluating
the likely impact of this law on our future operations. We are currently unable
to predict the extent to which the foregoing new initiative may affect the
demand for our products or the risks which may be available for us to consider
underwriting.

Changes in these laws and regulations or the interpretation of these laws
and regulations could have a material adverse effect on our business or results
of operations.

OUR ABILITY TO PAY DIVIDENDS OR TO MEET ONGOING CASH REQUIREMENTS MAY BE
CONSTRAINED BY OUR HOLDING COMPANY STRUCTURE.

Aspen Holdings is a holding company and, as such, has no substantial
operations of its own. We do not expect to have any significant operations or
assets other than our ownership of the shares of our Insurance Subsidiaries.
Dividends and other permitted distributions from our Insurance Subsidiaries are
expected to be our sole source of funds to meet ongoing cash requirements,
including any future debt service payments and other expenses, and to pay
dividends, if any, to our shareholders. Our Insurance Subsidiaries are subject
to significant regulatory restrictions limiting their ability to declare and
pay dividends. The inability of our Insurance Subsidiaries to pay dividends in
an amount sufficient to enable us to meet our cash requirements at the holding
company level could have a material adverse effect on our business. See
"Regulatory Matters -- Bermuda Regulation -- Minimum Solvency Margin and
Restrictions on Dividends and Distributions," "-- U.K. Regulation --
Restrictions on Dividend Payments," and "-- U.S. Regulation -- North Dakota
State Dividend Limitations."

CERTAIN REGULATORY AND OTHER CONSTRAINTS MAY LIMIT OUR ABILITY TO PAY
DIVIDENDS.

Aspen Holdings is subject to Bermuda regulatory constraints that will
affect its ability to pay dividends on its ordinary shares and make other
payments. Under the Bermuda Companies Act 1981, as amended (the "Companies
Act"), Aspen Holdings may declare or pay a dividend out of DISTRIBUTABLE
RESERVES only if it has reasonable grounds to believe that it is, and would
after the payment be, able to pay its liabilities as they become due and if the
realizable value of its assets would thereby not be less than the aggregate of
its liabilities and issued share capital and share premium accounts. In
addition, our ability to pay dividends to our shareholders is limited under our
Credit Agreements, which provide that, subject to the requirements specified in
the agreements, Aspen Holdings may not during any fiscal year pay cash
dividends in an aggregate amount exceeding 50% of its consolidated net income
for such fiscal year. If you require dividend income you should carefully
consider these risks before investing in our company. For more information
regarding restrictions on the payment of dividends by us and our Insurance
Subsidiaries, see "Dividend Policy," "Regulatory Matters" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

SEVERAL OF OUR FOUNDING SHAREHOLDERS AND SOME OF OUR DIRECTORS MAY HAVE
CONFLICTS OF INTEREST WITH US.

Several of our founding shareholders and some of our directors engage in
commercial activities and enter into transactions or agreements with us or in
competition with us, which may give rise to conflicts of interest. Of our
directors, Julian Avery is the Chief Executive Officer of Wellington and
Anthony Taylor is President and Chief Executive Officer of Montpelier Re and
President and Chief Underwriting Officer of Montpelier Re Insurance Limited.
Upon expiration of our non-competition arrangement with Wellington on March 31,
2004, which is described in "Certain Relationships and Related Transactions --
Transactions and Relationships with Initial Investors," Wellington or its
affiliates may engage in lines of business that directly compete with ours. We
also have in place certain quota share agreements and an administrative
services agreement with Wellington and its affiliates, as discussed in greater
detail in "Certain Relationships and Related Transactions." Our existing
agreement with Montpelier Re limits the type and the amount of business we may
write in

Bermuda. This agreement is described in "Certain Relationships and Related
Transactions -- Transactions and Relationships with Initial Investors."
Montpelier Re is also a competitor of ours in reinsurance business.

In addition, several of our founding shareholders and some of our
directors have sponsored or invested in, and may in the future sponsor or
invest in, other entities engaged in or intending to engage in insurance and
reinsurance underwriting, some of which may compete with us. They have also
entered into, or may in the future enter into, agreements with companies that
may compete with us. We do not have any agreement or understanding with any of
these parties regarding the resolution of potential conflicts of interest.

In addition, we may not be in a position to influence any party's decision
to engage in activities that would give rise to a conflict of interest. These
parties may take actions that are not in our shareholders' best interests. See
"Business -- Reinsurance" and "Certain Relationships and Related Transactions."
Moreover, under Bermuda law and our bye-laws, any transaction entered into by
us in which a director has an interest is not voidable by us nor can such
director be accountable to us for any benefit realized under that transaction
provided that the nature of the interest is disclosed at the first opportunity
at a meeting of directors, or in writing to the directors. In addition, our
bye-laws allow a director to be taken into account in determining whether a
quorum is present and to vote on a transaction in which he has an interest
unless the majority of the disinterested directors determines otherwise.

WE MAY EXPERIENCE DIFFICULTY IN ATTRACTING AND RETAINING QUALIFIED INDEPENDENT
DIRECTORS IN THE INCREASINGLY REGULATED CORPORATE GOVERNANCE ENVIRONMENT.

We will be subject to the independent director requirements of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), SEC rules and the NYSE
corporate governance rules. Although these new rules have not yet come into
full effect, the Company has a sufficient number of independent directors to
comply with such rules applicable to the audit committee. The Company does not
currently have a sufficient number of independent directors to comply with the
requirements for independent nomination and compensation committees or to
comprise the majority of the board of directors, although each of such rules
allows a phase-in period of twelve months for newly listed companies such as
us. Independent directors are generally individuals, other than our employees,
officers or their family members or shareholders who hold more than a 10%
interest in us, who do not have a material relationship with us and have not
received certain compensation or other payments from us in previous years. The
ultimate determination of independence, however, is made by our board of
directors on a case-by-case basis based on all relevant facts and
circumstances.

We may experience difficulty in attracting and retaining qualified
independent directors to respond to the increasing regulation of public
companies. If we are unable to attract or retain independent directors prior to
the compliance deadlines stipulated by the various regulations, we may be faced
with delisting of our ordinary shares or a violation of the Sarbanes-Oxley Act.

WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE AVAILABLE OR
MAY ONLY BE AVAILABLE ON UNFAVORABLE TERMS.

Our future capital requirements depend on many factors, including our
ability to write new business successfully and to establish premium rates and
reserves at levels sufficient to cover losses. To the extent that the funds
generated by this offering are insufficient to fund future operating
requirements and/or cover claim losses, we may need to raise additional funds
through financings or curtail our growth and reduce our assets. Our additional
needs for capital will depend on our actual claims experience, especially any
catastrophic events. Any equity or debt financing, if available at all, may be
on terms that are not favorable to us. In the case of equity financings,
dilution to our shareholders could result, and in any case such securities may
have rights, preferences and privileges

that are senior to those of the shares offered pursuant to this prospectus. If
we cannot obtain adequate capital on favorable terms or at all, our business,
operating results and financial condition could be adversely affected.

RISKS RELATED TO OUR INDUSTRY

WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT, AND SUBSTANTIAL NEW CAPITAL
INFLOWS INTO THE INSURANCE AND REINSURANCE INDUSTRY WILL INCREASE COMPETITION.

The insurance and reinsurance industry is highly competitive. In
particular, we compete with General Re, Lloyd's, Montpelier Re, Munich Re,
Swiss Re and XL Re in the global reinsurance industry and with Lloyd's, Mitsui,
Royal & SunAlliance and Zurich in the U.K. insurance industry. See "Business --
Competition" for a more comprehensive list of our competitors. We compete
primarily on the basis of experience, the strength of our client relationships,
reputation, premiums charged, policy and contract terms and conditions,
products offered, speed of claims payment, overall financial strength, ratings
and scope of business (both by size and geographic location).

A number of newly-organized, Bermuda-based insurance and reinsurance
entities compete in the same market segments in which we operate. Many of these
entities derive their profits primarily through Bermuda operations and,
consequently, may achieve a lower overall global effective tax rate than us. In
addition, we may not be aware of other companies that may be planning to enter
the lines of business of the insurance and reinsurance market in which we
operate or of existing companies that may be planning to raise additional
capital. Increased competition could result in fewer SUBMISSIONS, lower premium
rates and less favorable policy terms and conditions, which could have a
material adverse impact on our growth and profitability.

Further, insurance/risk-linked securities and derivative and other
non-traditional risk transfer mechanisms and vehicles are being developed and
offered by other parties, including non-insurance company entities, which could
impact the demand for traditional insurance and reinsurance. A number of new,
proposed or potential legislative or industry developments could also increase
competition in our industries.

New competition could cause the demand for insurance or reinsurance to
fall or the expense of customer acquisition and retention to increase, either
of which could have a material adverse effect on our growth and profitability.

RECENT EVENTS MAY RESULT IN POLITICAL, REGULATORY AND INDUSTRY INITIATIVES
WHICH COULD ADVERSELY AFFECT OUR BUSINESS.

The supply of insurance and reinsurance coverage has decreased due to
withdrawal of capacity and substantial reductions in capital resulting from,
among other things, the terrorist attacks of September 11, 2001. This
tightening of supply may result in governmental intervention in the insurance
and reinsurance markets, both in the United States and worldwide. For example,
on November 26, 2002, the Terrorism Act was enacted to ensure the availability
of insurance coverage for terrorist acts in the United States. This law
requires insurers writing certain lines of property and casualty insurance to
offer coverage against certain acts of terrorism causing damage within the
United States or to U.S. flagged vessels or aircraft. In return, the law
requires the federal government to indemnify such insurers for 90% of insured
losses resulting from covered acts of terrorism, subject to a premium-based
deductible. The law expires automatically at the end of 2005. See "Regulation
- -- U.S. Regulation -- Legislative Changes." Currently, there is a great deal of
uncertainty as to what effect the law will have on the insurance industry. This
law could adversely affect our business by increasing underwriting capacity for
our competitors as well as by requiring that coverage for terrorist acts be
offered by insurers. We are in the process of evaluating this legislation and
have not yet determined how it will affect our future operations. We are
currently unable to predict the extent to which the foregoing and other new
initiatives may affect the demand for our products or the risks which may be
available for us to consider underwriting.

THE INSURANCE AND REINSURANCE BUSINESS IS HISTORICALLY CYCLICAL AND WE EXPECT
TO EXPERIENCE PERIODS WITH EXCESS UNDERWRITING CAPACITY AND UNFAVORABLE PREMIUM
RATES.

Historically, insurers and reinsurers have experienced significant
fluctuations in operating results due to competition, frequency of occurrence
or severity of catastrophic events, levels of capacity, general economic
conditions and other factors. The supply of insurance and reinsurance is
related to prevailing prices, the level of insured losses and the level of
industry surplus which, in turn, may fluctuate in response to changes in rates
of return on investments being earned in the insurance and reinsurance
industry. As a result, the insurance and reinsurance business historically has
been a cyclical industry characterized by periods of intense price competition
due to excessive underwriting capacity as well as periods when shortages of
capacity permitted favorable premium levels. Although premium levels for many
products have increased over the past two years, the supply of insurance and
reinsurance may increase, either by capital provided by new entrants or by the
commitment of additional capital by existing insurers or reinsurers, which may
cause prices to decrease. Any of these factors could lead to a significant
reduction in premium rates, less favorable policy terms and fewer submissions
for our underwriting services. In addition to these considerations, changes in
the frequency and severity of losses suffered by insureds and insurers may
affect the cycles of the insurance and reinsurance business significantly, and
we expect to experience the effects of such cyclicality. For a description of
recent trends in the property and casualty insurance and reinsurance
industries, please refer to "Industry Background."

RISKS RELATED TO OUR ORDINARY SHARES AND THIS OFFERING

THERE IS NO PRIOR PUBLIC MARKET FOR OUR ORDINARY SHARES AND THEREFORE WE CANNOT
ASSURE YOU THAT AN ACTIVE TRADING MARKET OR A SPECIFIC SHARE PRICE WILL BE
ESTABLISHED.

Currently, there is no public trading market for our ordinary shares and,
as a result of this risk, it is possible that an active trading market will not
develop and continue upon completion of this offering or that the market price
of our ordinary shares will decline below the initial public offering price. We
have applied to list our ordinary shares on the NYSE under the symbol "AHL."
The initial public offering price per ordinary share will be determined by
agreement among us and the representatives of the underwriters and may not be
indicative of the market price of our ordinary shares after our initial public
offering.

FUTURE SALES OF ORDINARY SHARES MAY AFFECT THEIR MARKET PRICE AND THE FUTURE
EXERCISE OF OPTIONS MAY RESULT IN IMMEDIATE AND SUBSTANTIAL DILUTION.

Upon completion of our initial public offering, there will be 66,448,120
ordinary shares outstanding. If the underwriters' over-allotment option for an
additional 1,428,600 ordinary shares is exercised, 67,876,720 ordinary shares
will be outstanding. Of these shares, the ordinary shares sold in this offering
will be freely transferable, except for any shares sold to our "affiliates," as
that term is defined in Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act"). The remaining shares will be "restricted securities"
subject to the volume limitations and the other conditions of Rule 144.
Moreover, an additional 6,787,880 non-voting shares will be issuable upon the
full exercise of outstanding options by Wellington and the Names' Trustee,
which non-voting shares will automatically convert into ordinary shares upon
the completion of this offering or, if issued after completion of this
offering, upon issuance. Wellington and the Names' Trustee may exercise their
options on a cashless basis, which allows them through the receipt of ordinary
shares, to realize the economic benefit of the difference between the
subscription price under the options and the then prevailing market price
without having to pay the subscription price for any such ordinary shares in
cash. Thus, the optionholder receives fewer shares upon exercise. This cashless
exercise feature may provide an incentive for Wellington and the Names' Trustee
to exercise their options more quickly. In the event that the over-allotment
option or any outstanding options to purchase ordinary shares are exercised,
you will suffer immediate and substantial dilution of your investment.

Aspen Holdings, our directors, executive officers, employee shareholders
and optionholders, and certain of our current shareholders have agreed to enter
into lock-up agreements with the underwriters not to, directly or indirectly,
dispose of or hedge any of their ordinary shares or securities convertible into
or exchangeable for ordinary shares or exercisable for ordinary shares
including options or any other equity securities of Aspen Holdings, whether
owned currently or later acquired, for a period of 180 days from the date of
this prospectus, without the prior written consent of Credit Suisse First
Boston LLC and Goldman, Sachs & Co., subject to certain exceptions. See
"Underwriting." All of the shareholders party to our registration rights
agreement are subject to similar restrictions. See "Description of Share
Capital -- Registration Rights Agreement."

In addition, following the consummation of this offering, we intend to
file one or more registration statements on Form S-8 under the Securities Act
to register ordinary shares issued or reserved for issuance under our share
incentive plan. Subject to the exercise of issued and outstanding options,
shares registered under the registration statement on Form S-8 will be
available for sale into the public markets after the expiration of the 180-day
lock-up agreements.

We cannot predict what effect, if any, future sales of our ordinary
shares, or the availability of ordinary shares for future sale, will have on
the market price of our ordinary shares. Sales of substantial amounts of our
ordinary shares in the public market following our initial public offering, or
the perception that these sales could occur, could adversely affect the market
price of our ordinary shares and may make it more difficult for you to sell
your ordinary shares at a time and price which you deem appropriate. See
"Description of Share Capital -- Registration Rights Agreement" and "Shares
Eligible for Future Sale" for further information regarding circumstances under
which additional ordinary shares may be sold.

PUBLIC INVESTORS WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION AS A RESULT OF
THIS OFFERING.

The initial public offering price per ordinary share is higher than our
net tangible book value per share. Accordingly, if you purchase ordinary shares
in this offering, you will suffer immediate and substantial dilution of your
investment. Based upon the issuance and sale of 9,524,000 ordinary shares at an
assumed initial public offering price of $21.00 per ordinary share (the
midpoint of the price range set forth on the cover page of this prospectus),
you will incur immediate dilution of approximately $3.53 in the net tangible
book value per ordinary share if you purchase ordinary shares in this offering.
See "Dilution."

THERE ARE PROVISIONS IN OUR CHARTER DOCUMENTS WHICH MAY REDUCE OR INCREASE THE
VOTING RIGHTS OF OUR ORDINARY SHARES.

In general, and except as provided below, shareholders have one vote for
each ordinary share held by them and are entitled to vote at all meetings of
shareholders. However, if, and so long as, the ordinary shares of a shareholder
are treated as "controlled shares" (as determined under section 958 of the
Internal Revenue Code of 1986, as amended (the "Code")) of any U.S. PERSON (as
defined in "Material Tax Considerations -- Taxation of Shareholders -- United
States Taxation") and such controlled shares constitute 9.5% or more of the
votes conferred by our issued shares, the voting rights with respect to the
controlled shares of such U.S. Person (a "9.5% U.S. Shareholder") shall be
limited, in the aggregate, to a voting power of less than 9.5%, under a formula
specified in our bye-laws. The formula is applied repeatedly until the voting
power of all 9.5% U.S. Shareholders has been reduced to less than 9.5%. In
addition, our board of directors may limit a shareholder's voting rights where
it deems it appropriate to do so to (i) avoid the existence of any 9.5% U.S.
Shareholder; and (ii) avoid certain material adverse tax, legal or regulatory
consequences to us or any of our subsidiaries or any shareholder or its
affiliates. "Controlled shares" includes, among other things, all shares of the
Company that such U.S. person is deemed to own directly, indirectly or
constructively (within the meaning of section 958 of the Code). Upon completion
of our initial public offering, there will be 66,448,120 ordinary shares
outstanding, of which 6,312,571 ordinary shares would constitute 9.5% of the
votes conferred by our issued and outstanding shares. If the underwriters'
over-allotment option for an additional 1,428,600 ordinary shares is exercised,
67,876,720 ordinary shares will be outstanding,

of which 6,448,288 ordinary shares would constitute 9.5% of the votes conferred
by our issued and outstanding shares. An investor who does not hold any of our
ordinary shares prior to this offering may purchase up to 6,312,571 ordinary
shares, or 6,448,288 ordinary shares if the underwriters' over-allotment option
is exercised, without being subject to voting cutback provisions in our
bye-laws.

Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. See "Description of Share
Capital -- Bye-laws." Moreover, these provisions could have the effect of
reducing the votes of certain shareholders who would not otherwise be subject
to the 9.5% limitation by virtue of their direct share ownership. Our bye-laws
provide that shareholders will be notified of their voting interests prior to
any vote to be taken by them. See "Description of Share Capital -- Voting
Adjustments."

As a result of any reallocation of votes, your voting rights might
increase above 5% of the aggregate voting power of the outstanding ordinary
shares, thereby possibly resulting in your becoming a reporting person subject
to Schedule 13D or 13G filing requirements under the Exchange Act. In addition,
the reallocation of your votes could result in your becoming subject to filing
requirements under Section 16 of the Exchange Act in the event that the Company
no longer qualifies as a foreign private issuer.

We also have the authority under our bye-laws to request information from
any shareholder for the purpose of determining whether a shareholder's voting
rights are to be reallocated under the bye-laws. If a shareholder fails to
respond to our request for information or submits incomplete or inaccurate
information in response to a request by us, we may, in our sole discretion,
eliminate such shareholder's voting rights.

THERE ARE PROVISIONS IN OUR BYE-LAWS WHICH MAY RESTRICT THE ABILITY TO TRANSFER
ORDINARY SHARES AND WHICH MAY REQUIRE SHAREHOLDERS TO SELL THEIR ORDINARY
SHARES.

Our board of directors may decline to register a transfer of any ordinary
shares if it appears to the board of directors, in their sole and reasonable
discretion, after taking into account the limitations on voting rights
contained in our bye-laws, that any non-de minimis adverse tax, regulatory or
legal consequences to us, any of our subsidiaries or any of our shareholders or
their affiliates may occur as a result of such transfer.

Our bye-laws also provide that if our board of directors determines that
share ownership by a person may result in material adverse tax consequences to
us, any of our subsidiaries or any shareholder or its affiliates, then we have
the option, but not the obligation, to require that shareholder to sell to us
or to third parties to whom we assign the repurchase right for fair market
value the minimum number of ordinary shares held by such person which is
necessary to eliminate the material adverse tax consequences. See "Description
of Share Capital -- Acquisition of Ordinary Shares by the Company."

LAWS AND REGULATIONS OF THE JURISDICTIONS WHERE WE CONDUCT BUSINESS COULD DELAY
OR DETER A TAKEOVER ATTEMPT THAT SHAREHOLDERS MIGHT CONSIDER TO BE DESIRABLE
AND MAY MAKE IT MORE DIFFICULT TO REPLACE MEMBERS OF OUR BOARD OF DIRECTORS AND
HAVE THE EFFECT OF ENTRENCHING MANAGEMENT.

Ordinary shares may be offered or sold in Bermuda only in compliance with
the provisions of the Investment Business Act of 1998 of Bermuda which
regulates the sale of securities in Bermuda. In addition, the BMA must approve
all issuances and transfers of shares of a Bermuda exempted company. We have
applied for and expect to obtain from the BMA their permission for the issue
and free transferability of the ordinary shares in the Company being offered
under this prospectus, as long as the shares are listed on the NYSE or other
appointed stock exchange, to and among persons who are non-residents of Bermuda
for exchange control purposes and of up to 20% of the ordinary shares to and
among persons who are residents in Bermuda for exchange control purposes. In
addition, we will deliver to and file a copy of this prospectus with the
Registrar of Companies in Bermuda in accordance with Bermuda law. The BMA and
the Registrar of Companies accept no responsibility for

the financial soundness of any proposal or for the correctness of any of the
statements made or opinions expressed in this prospectus.

The Financial Services and Markets Act 2000 ("FSMA") regulates the
acquisition of "control" of any U.K. insurance company authorized under FSMA.
Any company or individual that (together with its or his associates) directly
or indirectly acquires 10% or more of the shares of a U.K. authorized insurance
company or its parent company, or is entitled to exercise or control the
exercise of 10% or more of the voting power in such authorized insurance
company or its parent company, would be considered to have acquired "control"
for the purposes of FSMA, as would a person who had significant influence over
the management of such authorized insurance company or its parent company by
virtue of his shareholding or voting power in either. A purchaser of 10% or
more of our ordinary shares would therefore be considered to have acquired
"control" of Aspen U.K. Under FSMA, any person proposing to acquire "control"
over a U.K. authorized insurance company must notify the FSA of his intention
to do so and obtain the FSA's prior approval. The FSA would then have three
months to consider that person's application to acquire "control." In
considering whether to approve such application, the FSA must be satisfied both
that the acquirer is a fit and proper person to have such "control" and that
the interests of consumers would not be threatened by such acquisition of
"control." Failure to make the relevant prior application would constitute a
criminal offense.

There can be no assurance that the applicable regulatory body would agree
that a shareholder who owned greater than 10% of our ordinary shares did not,
because of the limitation on the voting power of such shares, control the
applicable Insurance Subsidiary.

These laws may discourage potential acquisition proposals and may delay,
deter or prevent a change of control of our company, including through
transactions, and in particular unsolicited transactions, that some or all of
our shareholders might consider to be desirable. These restrictions may also
operate to make it more difficult to replace members of our board of directors
and may have the effect of entrenching management regardless of their
performance.

A FEW LARGE SHAREHOLDERS MAY BE ABLE TO INFLUENCE SIGNIFICANT CORPORATE
ACTIONS.

Immediately upon completion of this offering, we expect to have 5
shareholder groups who would beneficially own 51,024,280 ordinary shares
representing 72.7% (assuming full exercise of Wellington's options) of the
beneficial ownership of our ordinary shares. As a result of their ownership
position, these shareholders voting together may have the ability to
significantly influence matters requiring shareholder approval, including,
without limitation, the election of directors and amalgamations,
consolidations, changes of control of our company and sales of all or
substantially all of our assets. A majority of our directors are directly or
indirectly affiliated with these large shareholders. If these directors and
shareholders were to act together, they would be able to exercise control over
most matters requiring approval by our shareholders, including the election of
directors and approval of significant corporate transactions. These actions may
be taken even if they are opposed by the other shareholders, including those
who purchase shares in this offering.

U.S. PERSONS WHO OWN OUR ORDINARY SHARES MAY HAVE MORE DIFFICULTY IN PROTECTING
THEIR INTERESTS THAN U.S. PERSONS WHO ARE SHAREHOLDERS OF A U.S. CORPORATION.

The Companies Act, which applies to us, differs in some material respects
from laws generally applicable to U.S. corporations and their shareholders. Set
forth below is a summary of certain significant provisions of the Companies Act
which includes, where relevant, information on modifications thereto adopted
under our bye-laws, applicable to us, which differ in certain respects from
provisions of Delaware corporate law (which is representative of the corporate
law of the various states comprising the United States). Because the following
statements are summaries, they do not discuss all aspects of Bermuda law that
may be relevant to us and our shareholders.

Interested Directors. Under Bermuda law and our bye-laws, a transaction
entered into by us, in which a director has an interest, will not be voidable
by us, and such director will not be accountable

to us for any benefit realized under that transaction, provided the nature of
the interest is disclosed at the first opportunity at a meeting of directors,
or in writing, to the directors. In addition, our bye-laws allow a director to
be taken into account in determining whether a quorum is present and to vote on
a transaction in which that director has an interest following a declaration of
the interest under the Companies Act, unless the majority of the disinterested
directors determine otherwise. Under Delaware law, the transaction would not be
voidable if:

o the material facts as to the interested director's relationship or
interests were disclosed or were known to the board of directors and
the board of directors in good faith authorized the transaction by the
affirmative vote of a majority of the disinterested directors;

o the material facts were disclosed or were known to the shareholders
entitled to vote on such transaction and the transaction was
specifically approved in good faith by vote of the majority of shares
entitled to vote thereon; or

o the transaction was fair as to the corporation at the time it was
authorized, approved or ratified.

Business Combinations with Large Shareholders or Affiliates. As a Bermuda
company, we may enter into business combinations with our large shareholders or
one or more wholly-owned subsidiaries, including asset sales and other
transactions in which a large shareholder or a wholly-owned subsidiary
receives, or could receive, a financial benefit that is greater than that
received, or to be received, by other shareholders or other wholly-owned
subsidiaries, without obtaining prior approval from our shareholders and
without special approval from our board of directors. Under Bermuda law,
amalgamations require the approval of the board of directors, and except in the
case of amalgamations with and between wholly-owned subsidiaries, shareholder
approval. However, when the affairs of a Bermuda company are being conducted in
a manner which is oppressive or prejudicial to the interests of some
shareholders, one or more shareholders may apply to a Bermuda court, which may
make an order as it sees fit, including an order regulating the conduct of the
company's affairs in the future or ordering the purchase of the shares of any
shareholders by other shareholders or the company. If we were a Delaware
company, we would need prior approval from our board of directors or a
supermajority of our shareholders to enter into a business combination with an
interested shareholder for a period of three years from the time the person
became an interested shareholder, unless we opted out of the relevant Delaware
statute. Bermuda law or our bye-laws would require board approval and, in some
instances, shareholder approval of such transactions.

Shareholders' Suits. The rights of shareholders under Bermuda law are not
as extensive as the rights of shareholders in many U.S. jurisdictions. Class
actions and derivative actions are generally not available to shareholders
under the laws of Bermuda. However, the Bermuda courts ordinarily would be
expected to follow English case law precedent, which would permit a shareholder
to commence a derivative action in our name to remedy a wrong done to us where
an act is alleged to be beyond our corporate power, is illegal or would result
in the violation of our memorandum of association or bye-laws. Furthermore,
consideration would be given by the court to acts that are alleged to
constitute a fraud against the minority shareholders or where an act requires
the approval of a greater percentage of our shareholders than actually approved
it. The winning party in such an action generally would be able to recover a
portion of attorneys' fees incurred in connection with the action. Our bye-laws
provide that shareholders waive all claims or rights of action that they might
have, individually or in the right of the Company, against any director or
officer for any act or failure to act in the performance of such director's or
officer's duties, except with respect to any fraud of the director or officer
or to recover any gain, personal profit or advantage to which the director or
officer is not legally entitled. Class actions and derivative actions generally
are available to shareholders under Delaware law for, among other things,
breach of fiduciary duty, corporate waste and actions not taken in accordance
with applicable law. In such actions, the court has discretion to permit the
winning party to recover attorneys' fees incurred in connection with the
action.

Indemnification of Directors and Officers. Under Bermuda law and our
bye-laws, we may indemnify our directors, officers, any other person appointed
to a committee of the board of directors or resident representative (and their
respective heirs, executors or administrators) to the full extent permitted by
law against all actions, costs, charges, liabilities, loss, damage or expense,
to the full extent permitted by law, incurred or suffered by such persons by
reason of any act done, conceived in or omitted in the conduct of our business
or in the discharge of their duties; provided that such indemnification shall
not extend to any matter which would render such indemnification void under the
Companies Act. Under Delaware law, a corporation may indemnify a director or
officer of the corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in defense of an action, suit or proceeding by reason of such position
if (i) such director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, such
director or officer had no reasonable cause to believe his conduct was
unlawful.

To further understand the risks associated with U.S. persons who own our
ordinary shares, see "Description of Share Capital -- Differences in Corporate
Law" for more information on the differences between Bermuda and Delaware
corporate laws.

ANTI-TAKEOVER PROVISIONS IN OUR BYE-LAWS COULD IMPEDE AN ATTEMPT TO REPLACE OR
REMOVE OUR DIRECTORS, WHICH COULD DIMINISH THE VALUE OF OUR ORDINARY SHARES.

Our bye-laws contain provisions that may entrench directors and make it
more difficult for shareholders to replace directors even if the shareholders
consider it beneficial to do so. In addition, these provisions could delay or
prevent a change of control that a shareholder might consider favorable. For
example, these provisions may prevent a shareholder from receiving the benefit
from any premium over the market price of our ordinary shares offered by a
bidder in a potential takeover. Even in the absence of an attempt to effect a
change in management or a takeover attempt, these provisions may adversely
affect the prevailing market price of our ordinary shares if they are viewed as
discouraging changes in management and takeover attempts in the future.

For example, our bye-laws contain the following provisions that could have
such an effect:

o election of directors is staggered, meaning that members of only one
of three classes of directors are elected each year;

o directors serve for a term of three years;

o our directors may decline to approve or register any transfer of
shares to the extent they determine, in their sole discretion, that
any non-de minimis adverse tax, regulatory or legal consequences to
Aspen Holdings, any of its subsidiaries, shareholders or affiliates
would result from such transfer;

o if our directors determine that share ownership by any person may
result in material adverse tax consequences to Aspen Holdings, any of
its subsidiaries, shareholders or affiliates, we have the option, but
not the obligation, to purchase or assign to a third party the right
to purchase the minimum number of shares held by such person solely to
the extent that it is necessary to eliminate such material risk;

o shareholders have limited ability to remove directors; and

o if the ordinary shares of any U.S. Person constitute 9.5% or more of
the votes conferred by the issued shares of Aspen Holdings, the voting
rights with respect to the controlled shares of such U.S. Person shall
be limited, in the aggregate, to a voting power of less than 9.5%.

In addition, none of the seats on our board of directors may be up for
election until 2005. As the shareholders may not be able to elect directors in
the interim, this may further impede an attempt to replace or remove our
directors and, consequently, diminish the value of our ordinary shares.

ASPEN HOLDINGS IS A BERMUDA COMPANY AND IT MAY BE DIFFICULT FOR YOU TO ENFORCE
JUDGMENTS AGAINST IT OR ITS DIRECTORS AND EXECUTIVE OFFICERS.

We are incorporated under the laws of Bermuda and our business is based in
Bermuda. In addition, certain of our directors and officers and some of the
experts named in this prospectus reside outside the United States, and all or a
substantial portion of our assets and the assets of such persons are located in
jurisdictions outside the United States. As such, it may be difficult or
impossible to effect service of process within the United States upon us or
those persons or to recover against us or them on judgments of U.S. courts,
including judgments predicated upon civil liability provisions of the U.S.
federal securities laws. Further, no claim may be brought in Bermuda against us
or our directors and officers in the first instance for violation of U.S.
federal securities laws because these laws have no extraterritorial
jurisdiction under Bermuda law and do not have force of law in Bermuda. A
Bermuda court may, however, impose civil liability, including the possibility
of monetary damages, on us or our directors and officers if the facts alleged
in a complaint constitute or give rise to a cause of action under Bermuda law.

We have been advised by Appleby Spurling & Kempe, our Bermuda counsel,
that there is no treaty in force between the U.S. and Bermuda providing for the
reciprocal recognition and enforcement of judgments in civil and commercial
matters. As a result, whether a U.S. judgment would be enforceable in Bermuda
against us or our directors and officers depends on whether the U.S. court that
entered the judgment is recognized by the Bermuda court as having jurisdiction
over us or our directors and officers, as determined by reference to Bermuda
conflict of law rules. A judgment debt from a U.S. court that is final and for
a sum certain based on U.S. federal securities laws will not be enforceable in
Bermuda unless the judgment debtor had submitted to the jurisdiction of the
U.S. court, and the issue of submission and jurisdiction is a matter of Bermuda
(not U.S.) law.

In addition to and irrespective of jurisdictional issues, the Bermuda
courts will not enforce a U.S. federal securities law that is either penal or
contrary to public policy. It is the advice of Appleby Spurling & Kempe that an
action brought pursuant to a public or penal law, the purpose of which is the
enforcement of a sanction, power or right at the instance of the state in its
sovereign capacity, will not be entertained by a Bermuda Court. Certain
remedies available under the laws of U.S. jurisdictions, including certain
remedies under U.S. federal securities laws, would not be available under
Bermuda law or enforceable in a Bermuda court, as they would be contrary to
Bermuda public policy. Further, no claim may be brought in Bermuda against us
or our directors and officers in the first instance for violation of U.S.
federal securities laws because these laws have no extraterritorial
jurisdiction under Bermuda law and do not have force of law in Bermuda. A
Bermuda court may, however, impose civil liability on us or our directors and
officers if the facts alleged in a complaint constitute or give rise to a cause
of action under Bermuda law.

RISKS RELATED TO TAXATION

WE MAY BECOME SUBJECT TO TAXES IN BERMUDA AFTER MARCH 28, 2016, WHICH MAY HAVE
A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AND YOUR INVESTMENT.

The Bermuda Minister of Finance, under the Exempted Undertakings Tax
Protection Act 1966, as amended, of Bermuda, has given each of Aspen Holdings
and Aspen Bermuda an assurance that if any legislation is enacted in Bermuda
that would impose tax computed on profits or income, or computed on any capital
asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of any such tax will not be applicable to
Aspen Holdings, Aspen Bermuda or any of their respective operations, shares,
debentures or other obligations until March 28, 2016. See "Material Tax
Considerations -- Taxation of Aspen Holdings and Subsidiaries -- Bermuda."
Given the limited duration of the Minister of Finance's assurance, we cannot be
certain that we will not be subject to any Bermuda tax after March 28, 2016.

OUR NON-U.S. COMPANIES MAY BE SUBJECT TO U.S. TAX THAT MAY HAVE A MATERIAL
ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AND YOUR INVESTMENT.

If Aspen Holdings or any of its foreign subsidiaries were considered to be
engaged in a trade or business in the United States, it could be subject to U.S.
corporate income and additional branch profits taxes on the portion of its
earnings effectively connected to such U.S. business, in which case its results
of operations and your investment (irrespective of the number of shares you own)
could be materially adversely affected (although its results of operations and
your investment should not be materially adversely affected if Aspen U.K. is
considered to be engaged in a U.S. trade or business solely as a result of the
WU Inc. binding authorities. Further, if Aspen Holdings or any of its
subsidiaries were considered a personal holding company subject to U.S. tax on a
portion of its U.S. income, its results of operations and your investment
(irrespective of the number of shares you own) could be materially adversely
affected.

Aspen Holdings and Aspen Bermuda are Bermuda companies, and Aspen U.K.
Holdings, Aspen U.K. and Aspen U.K. Services are U.K. companies. We intend to
manage our business so that each of these companies will operate in such a
manner that none of these companies will be subject to U.S. tax (other than U.S.
excise tax on insurance and reinsurance premium income attributable to insuring
or reinsuring U.S. risks and U.S. withholding tax on certain U.S. source
investment income and the possible imposition of U.S. corporate income and
additional branch profits tax on the profits attributable to the business of
Aspen U.K. produced pursuant to the binding authorities granted to Wellington
Underwriters, Inc. ("WU Inc."), a managing general agency owned by Wellington
with six offices in the United States) because none of these companies should be
treated as engaged in a trade or business within the United States (other than
possibly Aspen U.K. with respect to the business produced pursuant to the WU
Inc. binding authorities agreements. However, because there is considerable
uncertainty as to the activities which constitute being engaged in a trade or
business within the United States, we cannot be certain that the U.S. Internal
Revenue Service ("IRS") will not contend successfully that any of Aspen Holdings
or its foreign subsidiaries is/are engaged in a trade or business in the United
States. See "Material Tax Considerations -- Taxation of Aspen Holdings and
Subsidiaries -- United States."

Aspen Holdings or a subsidiary might be subject to U.S. tax on a portion
of its U.S. income if Aspen Holdings or such subsidiary is considered a
personal holding company ("PHC") for U.S. federal income tax purposes. This
status will depend on whether 50% or more of our shares could be deemed to be
owned (pursuant to certain constructive ownership rules) by five or fewer
individuals and whether 60% or more of Aspen Holdings' income, or the income of
any of its subsidiaries, as determined for U.S. federal income tax purposes,
consists of "personal holding company income." We believe based upon the
information made available to us regarding our existing shareholder base that
neither Aspen Holdings nor any of its subsidiaries should be considered a PHC
for U.S. federal income tax purposes for any prior year of operations or
immediately following the offering. Additionally, we intend to manage our
business to minimize the possibility that we will meet the 60% income threshold
so that neither Aspen Holdings nor any of its subsidiaries should be considered
a PHC. However, because of the legal and factual uncertainties regarding the
application of the constructive ownership rules, the makeup of our shareholder
base, our gross income and other circumstances, we cannot be certain that Aspen
Holdings and/or any of its subsidiaries will not be considered a PHC or that
the amount of U.S. tax that would be imposed if it were not the case would be
immaterial. See "Material Tax Considerations -- Taxation of Aspen Holdings and
Subsidiaries -- United States -- Personal Holding Companies."

OUR NON-U.K. COMPANIES MAY BE SUBJECT TO U.K. TAX THAT MAY HAVE A MATERIAL
ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.

None of us, except for Aspen U.K. Holdings, Aspen U.K. and Aspen U.K.
Services, are incorporated in the United Kingdom. Accordingly, none of us,
other than Aspen U.K. Holdings, Aspen U.K. and Aspen U.K. Services, should be
treated as being resident in the United Kingdom for

corporation tax purposes unless our central management and control is exercised
in the United Kingdom. The concept of central management and control is
indicative of the highest level of control of a company, which is wholly a
question of fact. Each of us, other than Aspen U.K. Holdings, Aspen U.K. and
Aspen U.K. Services, intend to manage our affairs so that none of us, other
than Aspen U.K. Holdings, Aspen U.K. and Aspen U.K. Services, are resident in
the United Kingdom for tax purposes.

A company not resident in the United Kingdom for corporation tax purposes
can nevertheless be subject to U.K. corporation tax if it carries on a trade
through a permanent establishment in the United Kingdom but the charge to U.K.
corporation tax is limited to profits (including revenue profits and capital
gains) attributable directly or indirectly to such permanent establishment.

Each of us, other than Aspen U.K. Holdings, Aspen U.K. and Aspen U.K.
Services (which should be treated as resident in the United Kingdom by virtue
of being incorporated and managed there), intend that we will operate in such a
manner so that none of us, other than Aspen U.K. and Aspen U.K. Services, carry
on a trade through a permanent establishment in the United Kingdom.
Nevertheless, because neither case law nor U.K. statute definitively defines
the activities that constitute trading in the United Kingdom through a
permanent establishment, the U.K. Inland Revenue might contend successfully
that any of us, other than Aspen U.K. Holdings, Aspen U.K. and Aspen U.K.
Services, are/is trading in the United Kingdom through a permanent
establishment in the United Kingdom.

The United Kingdom has no income tax treaty with Bermuda. There are
circumstances in which companies that are neither resident in the United
Kingdom nor entitled to the protection afforded by a double tax treaty between
the United Kingdom and the jurisdiction in which they are resident may be
exposed to income tax in the United Kingdom (other than by deduction or
withholding) on the profits of a trade carried on there even if that trade is
not carried on through a permanent establishment but each of us intend that we
will operate in such a manner that none of us will fall within the charge to
income tax in the United Kingdom (other than by deduction or withholding) in
this respect.

If any of us, other than Aspen U.K. Holdings, Aspen U.K. and Aspen U.K.
Services, were treated as being resident in the United Kingdom for U.K.
corporation tax purposes, or if any of us were to be treated as carrying on a
trade in the United Kingdom through a permanent establishment, our results of
operations and your investment could be materially adversely affected.

IF YOU ACQUIRE 10% OR MORE OF ASPEN HOLDINGS' SHARES, YOU MAY BE SUBJECT TO
U.S. INCOME TAXATION UNDER THE "CONTROLLED FOREIGN CORPORATION" ("CFC") RULES.

If you are a "10% U.S. Shareholder" of a foreign corporation (defined as a
U.S. Person (as defined in "Material Tax Considerations -- Taxation of
Shareholders -- United States Taxation") who owns (directly, indirectly through
foreign entities or "constructively" (as defined below) at least 10% of the
total combined voting power of all classes of stock entitled to vote of the
foreign corporation), that is a CFC for an uninterrupted period of 30 days or
more during a taxable year, and you own shares in the CFC directly or
indirectly through foreign entities on the last day of the CFC's taxable year,
you must include in your gross income for U.S. federal income tax purposes your
pro rata share of the CFC's "subpart F income," even if the subpart F income is
not distributed, in which case your investment could be materially adversely
affected. A foreign corporation is considered a CFC if "10% U.S. Shareholders"
own (directly, indirectly through foreign entities or by attribution by
application of the constructive ownership rules of section 958(b) of the Code
(i.e., "constructively")) more than 50% of the total combined voting power of
all classes of voting stock of that foreign corporation, or the total value of
all stock of that foreign corporation. For purposes of taking into account
insurance income, a CFC also includes a foreign insurance company in which more
than 25% of the total combined voting power of all classes of stock (or more
than 25% of the total value of the stock) is owned by 10% U.S. Shareholders on
any day during the taxable year of such corporation, if the gross

amount of premiums or other consideration for the reinsurance or the issuing of
insurance or annuity contracts exceeds 75% of the gross amount of all premiums
or other consideration in respect of all risks.

We believe that because of the anticipated dispersion of our share
ownership, provisions in our organizational documents that limit voting power
(these provisions are described in "Description of Share Capital") and other
factors, no U.S. Person who owns shares of Aspen Holdings directly or
indirectly through one or more foreign entities should be treated as owning
(directly, indirectly through foreign entities, or constructively) 10% or more
of the total voting power of all classes of shares of Aspen Holdings or any of
its foreign subsidiaries. It is possible, however, that the IRS could challenge
the effectiveness of these provisions and that a court could sustain such a
challenge. See "Material Tax Considerations -- Taxation of Shareholders --
United States Taxation -- Controlled Foreign Corporations."

U.S. PERSONS WHO HOLD ORDINARY SHARES MAY BE SUBJECT TO U.S. INCOME TAXATION AT
ORDINARY INCOME RATES ON THEIR PROPORTIONATE SHARE OF OUR "RELATED PARTY
INSURANCE INCOME" ("RPII").

If the RPII (determined on a gross basis) of any foreign Insurance
Subsidiary were to equal or exceed 20% of that company's gross insurance income
in any taxable year and direct or indirect insureds (and persons related to
those insureds) own directly or indirectly through entities 20% or more of the
voting power or value of Aspen Holdings, then a U.S. Person who owns any shares
of Aspen Holdings (directly or indirectly through foreign entities) on the last
day of the taxable year would be required to include in its income for U.S.
federal income tax purposes such person's pro rata share of such company's RPII
for the entire taxable year, determined as if such RPII were distributed
proportionately only to U.S. Persons at that date regardless of whether such
income is distributed, in which case your investment could be materially
adversely affected. In addition, any RPII that is includible in the income of a
U.S. tax-exempt organization may be treated as unrelated business taxable
income. The amount of RPII earned by a foreign Insurance Subsidiary (generally,
premium and related investment income from the DIRECT or indirect INSURANCE or
reinsurance of any direct or indirect U.S. holder of ordinary shares or any
person related to such holder) will depend on a number of factors, including
the identity of persons directly or indirectly insured or reinsured by the
company. We believe that the direct or indirect insureds of the foreign
Insurance Subsidiaries (and related persons) did not directly or indirectly own
20% or more of either the voting power or value of our ordinary shares in prior
years of operation and we do not expect this to be the case in the foreseeable
future. Additionally, we do not expect gross RPII of either foreign Insurance
Subsidiary to equal or exceed 20% of its gross insurance income in any taxable
year for the foreseeable future, but we cannot be certain that this will be the
case because some of the factors which determine the extent of RPII may be
beyond our control.

The RPII rules provide that if a U.S. Person disposes of shares in a
foreign insurance corporation in which U.S. Persons own 25% or more of the
shares (even if the amount of gross RPII is less than 20% of the corporation's
gross insurance income and the ownership of its shares by direct or indirect
insureds and related persons is less than the 20% threshold), any gain from the
disposition will generally be treated as ordinary income to the extent of the
holder's share of the corporation's undistributed earnings and profits that
were accumulated during the period that the holder owned the shares (whether or
not such earnings and profits are attributable to RPII). In addition, such a
holder will be required to comply with certain reporting requirements,
regardless of the amount of shares owned by the holder. These RPII rules should
not apply to dispositions of ordinary shares because Aspen Holdings will not
itself be directly engaged in the insurance business. The RPII provisions,
however, have never been interpreted by the courts or the Treasury Department
in final regulations, and regulations interpreting the RPII provisions of the
Code exist only in proposed form. It is not certain whether these regulations
will be adopted in their proposed form or what changes or clarifications might
ultimately be made thereto or whether any such changes, as well as any
interpretation or application of RPII by the IRS, the courts, or otherwise,
might have retroactive effect. The Treasury Department has authority to impose,
among other things, additional reporting

requirements with respect to RPII. Accordingly, the meaning of the RPII
provisions and the application thereof to us is uncertain. See "Material Tax
Considerations -- Taxation of Shareholders -- United States Taxation -- the
RPII Provisions."

U.S. PERSONS WHO HOLD ORDINARY SHARES WILL BE SUBJECT TO ADVERSE TAX
CONSEQUENCES IF WE ARE CONSIDERED TO BE A PASSIVE FOREIGN INVESTMENT COMPANY
("PFIC") FOR U.S. FEDERAL INCOME TAX PURPOSES.

If we are considered a PFIC for U.S. federal income tax purposes, a U.S.
Person who owns any shares of Aspen Holdings will be subject to adverse tax
consequences including subjecting the investor to a greater tax liability than
might otherwise apply and subjecting the investor to tax on amounts in advance
of when tax would otherwise be imposed, in which case your investment could be
materially adversely affected. We believe that we are not, have not been, and
currently do not expect to become, a PFIC for U.S. federal income tax purposes.
We cannot assure you, however, that we will not be deemed a PFIC by the IRS. If
we were considered a PFIC, it could have material adverse tax consequences for
an investor that is subject to U.S. federal income taxation, There are
currently no regulations regarding the application of the PFIC provisions to an
insurance company. New regulations or pronouncements interpreting or clarifying
these rules may be forthcoming. We cannot predict what impact, if any, such
guidance would have on an investor that is subject to U.S. federal income
taxation. See "Material Tax Considerations -- Taxation of Shareholders --
United States Taxation -- Passive Foreign Investment Companies."

U.S. PERSONS WHO HOLD ORDINARY SHARES WILL BE SUBJECT TO ADVERSE TAX
CONSEQUENCES IF WE OR ANY OF OUR FOREIGN SUBSIDIARIES ARE CONSIDERED TO BE A
FOREIGN PERSONAL HOLDING COMPANY ("FPHC") FOR U.S. FEDERAL INCOME TAX PURPOSES.

If we were considered an FPHC it could have material adverse tax
consequences for you if you are subject to U.S. federal income taxation,
including subjecting you to a greater tax liability than might otherwise apply
and subjecting you to tax on amounts in advance of when tax would otherwise be
imposed. In addition, if we were considered an FPHC, upon the death of any U.S.
individual owning ordinary shares, such individual's heirs or estate would not
be entitled to a "step-up" in the basis of the ordinary shares which might
otherwise be available under U.S. federal income tax laws. Aspen Holdings
and/or any of its foreign subsidiaries could be considered to be an FPHC for
U.S. federal income tax purposes if more than 50% of our shares could be deemed
to be owned by five or fewer individuals who are citizens or residents of the
United States, and 60% or more of Aspen Holdings income, or that of its foreign
subsidiaries, consists of "foreign personal holding company income," as
determined for U.S. federal income tax purposes. We believe, based upon
information made available to us regarding our existing shareholder base, that
neither Aspen Holdings nor any of its foreign subsidiaries should be considered
an FPHC for any prior year of operations or immediately following the offering.
Additionally, we intend to manage our business to minimize the possibility that
we will meet the 60% income threshold so that neither Aspen Holdings nor any of
its foreign subsidiaries should be considered an FPHC. However, because of the
legal and factual uncertainties regarding the application of the constructive
ownership rules, the makeup of our shareholder base, our gross income and other
circumstances, we cannot be certain that Aspen Holdings and/or any of its
foreign subsidiaries will not be considered an FPHC. See "Material Tax
Considerations -- Taxation of Shareholders -- United States Taxation -- Foreign
Personal Holding Companies."

U.S. TAX-EXEMPT ORGANIZATIONS WHO OWN OUR ORDINARY SHARES MAY RECOGNIZE
UNRELATED BUSINESS TAXABLE INCOME.

A U.S. tax-exempt organization may recognize unrelated business taxable
income if a portion of our insurance income is allocated to the organization,
which generally would be the case if either we are a CFC and the tax-exempt
shareholder is a U.S. 10% Shareholder or there is RPII, certain exceptions do
not apply and the tax-exempt organization owns any shares of Aspen Holdings.
Although we do not believe that any U.S. Persons should be allocated such
insurance income, we

cannot be certain that this will be the case. See "Material Tax Considerations
- -- Taxation of Shareholders -- United States Taxation -- Controlled Foreign
Corporations" and "Material Tax Considerations -- Taxation of Shareholders --
United States Taxation -- The RPII Provisions." Potential U.S. tax-exempt
investors are advised to consult their own tax advisors.

CHANGES IN U.S. FEDERAL INCOME TAX LAW COULD MATERIALLY ADVERSELY AFFECT AN
INVESTMENT IN OUR ORDINARY SHARES.

Legislation has been introduced in the U.S. Congress intended to eliminate
certain perceived tax advantages of companies (including insurance companies)
that have legal domiciles outside the United States but have certain U.S.
connections. In this regard, legislation has been introduced that includes a
provision which permits the IRS to reallocate or recharacterize items of
income, deduction or certain other items related to a reinsurance agreement
between related parties to reflect the proper source, character and amount for
each item (in contrast to current law, which only refers to source and
character). While there are no currently pending legislative proposals which,
if enacted, would have a material adverse effect on us or our shareholders, it
is possible that broader-based legislative proposals could emerge in the future
that could have an adverse impact on us, or our shareholders.

Additionally, the U.S. federal income tax laws and interpretations
regarding whether a company is engaged in a trade or business within the United
States, or is a PFIC, or whether U.S. Persons would be required to include in
their gross income the "subpart F income" or the RPII of a CFC are subject to
change, possibly on a retroactive basis. There are currently no regulations
regarding the application of the PFIC rules to insurance companies and the
regulations regarding RPII are still in proposed form. New regulations or
pronouncements interpreting or clarifying such rules may be forthcoming. We
cannot be certain if, when or in what form such regulations or pronouncements
may be provided and whether such guidance will have a retroactive effect.

THE IMPACT OF BERMUDA'S LETTER OF COMMITMENT TO THE ORGANIZATION FOR ECONOMIC
COOPERATION AND DEVELOPMENT TO ELIMINATE HARMFUL TAX PRACTICES IS UNCERTAIN AND
COULD ADVERSELY AFFECT OUR TAX STATUS IN BERMUDA.

The Organization for Economic Cooperation and Development, which is
commonly referred to as the OECD, has published reports and launched a global
dialogue among member and non-member countries on measures to limit harmful tax
competition. These measures are largely directed at counteracting the effects
of tax havens and preferential tax regimes in countries around the world. In
the OECD's report dated June 26, 2000, Bermuda was not listed as a tax haven
jurisdiction because it had previously signed a letter committing itself to
eliminate harmful tax practices by the end of 2005 and to embrace international
tax standards for transparency, exchange of information and the elimination of
any aspects of the regimes for financial and other services that attract
business with no substantial domestic activity. We are not able to predict what
changes will arise from the commitment or whether such changes will subject us
to additional taxes.

FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus may include
forward-looking statements which reflect our current views with respect to
future events and financial performance. These statements include
forward-looking statements both with respect to us in general and the insurance
and reinsurance sectors specifically, both as to underwriting and investment
matters. Statements which include the words "expect," "intend," "plan,"
"believe," "project," "anticipate," "seek," "will," and similar statements of a
future or forward-looking nature identify forward-looking statements for
purposes of the federal securities laws or otherwise.

All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that could
cause actual results to differ materially from those indicated in these
statements. We believe that these factors include, but are not limited to,
those set forth under "Risk Factors" and the following:

o the impact of acts of terrorism and acts of war;

o greater frequency or severity of claims and loss activity, including
as a result of natural or man-made catastrophic events, than our
underwriting, reserving or investment practices have anticipated;

o the effectiveness of our loss limitation methods;

o changes in the availability, cost or quality of reinsurance or
RETROCESSIONAL COVERAGE;

o loss of key personnel;

o the inability to maintain financial strength or claims-paying ratings
by one or more of our subsidiaries;

o changes in general economic conditions, including inflation, foreign
currency exchange rates, interest rates and other factors that could
affect our investment portfolio;

o increased competition on the basis of pricing, capacity, coverage
terms or other factors;

o the effects of terrorist-related insurance legislation and laws;

o decreased demand for our insurance or reinsurance products and
cyclical downturn of the industry;

o political stability in Bermuda;

o changes in regulations or tax laws applicable to us, our
subsidiaries, brokers or customers; and

o Aspen Holdings or Aspen Bermuda becomes subject to income taxes in
the United States or the United Kingdom.

The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary
statements that are included in this prospectus. We undertake no obligation to
publicly update or review any forward-looking statement, whether as a result of
new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if
our underlying assumptions prove to be incorrect, actual results may vary
materially from what we projected. Any forward-looking statements you read in
this prospectus reflect our current views with respect to future events and are
subject to these and other risks, uncertainties and assumptions relating to our
operations, results of operations, growth strategy and liquidity. All
subsequent written and oral forward-looking statements attributable to us or
individuals acting on our behalf are expressly qualified in their entirety by
this paragraph. You should specifically consider the factors identified in this
prospectus which could cause actual results to differ before making an
investment decision.

USE OF PROCEEDS

We estimate that our net proceeds from the initial public offering of
9,524,000 of our ordinary shares, based on an assumed initial public offering
price of $21.00 per ordinary share (the midpoint of the price range set forth
on the cover page of this prospectus) and after deducting the underwriting
discounts and commissions and our estimated offering expenses, will be
approximately $178.5 million. We estimate that our net proceeds will be
approximately $206.4 million if the underwriters exercise their over-allotment
option in full. We intend to use the net proceeds of this offering to provide
initial or additional capital to our subsidiaries, to repay a portion of the
short-term debt under our revolving credit facilities, which is discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," and for other general corporate
purposes.

DIVIDEND POLICY

Our board of directors currently has a policy whereby it intends to
authorize the payment of a dividend of $0.03 per ordinary share per fiscal
quarter to our shareholders of record, beginning in the first quarter of 2004.
Any determination to pay cash dividends will be at the discretion of our board
of directors and will be dependent upon our results of operations and cash
flows, our financial position and capital requirements, general business
conditions, legal, tax, regulatory and any contractual restrictions on the
payment of dividends and any other factors our board of directors deems
relevant at the time.

We are a holding company and have no direct operations. Our ability to pay
dividends depends, in part, on the ability of our Insurance Subsidiaries to pay
dividends to us. The Insurance Subsidiaries are subject to significant
regulatory restrictions limiting their ability to declare and pay dividends.

Additionally, we are subject to Bermuda regulatory constraints that will
affect our ability to pay dividends on our ordinary shares and make other
payments. Under the Companies Act, we may declare or pay a dividend out of
distributable reserves only if we have reasonable grounds for believing that we
are, and would after the payment be, able to pay our liabilities as they become
due and if the realizable value of our assets would thereby not be less than
the aggregate of our liabilities and issued share capital and share premium
accounts. For a further description of the restrictions on our ability and the
ability of our subsidiaries to pay dividends, see "Regulatory Matters --
Bermuda Regulation -- Minimum Solvency Margin and Restrictions on Dividends and
Distributions" and "Regulatory Matters -- U.K. Regulation -- Restrictions on
Dividend Payments."

Our credit facilities also restrict our ability to pay dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

CAPITALIZATION

The following table sets forth our consolidated capitalization on an
actual basis as of September 30, 2003, and as adjusted to give effect to the
sale of 9,524,000 ordinary shares offered by us in this offering at an assumed
initial public offering price of $21.00 per ordinary share, the midpoint of the
range set forth on the cover page of this prospectus, after deducting estimated
underwriting discounts and commissions and our estimated offering expenses.

You should read this table in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes that are included
elsewhere in this prospectus.

AS OF SEPTEMBER 30, 2003(1)
-----------------------------
ACTUAL AS ADJUSTED(2)
----------- ---------------
($ IN MILLIONS)

DEBT OUTSTANDING(3) .............................................. -- $ 40.0
SHAREHOLDERS' EQUITY(4):
Ordinary shares (par value 0.15144558(cents))(5) ................. $844.2 1,022.7
Retained earnings ............................................... 126.2 126.2
Accumulated other comprehensive income, net of taxes(6) ......... 20.5 20.5
------ --------
TOTAL SHAREHOLDERS' EQUITY ...................................... 990.9 1,169.4
------ --------
TOTAL CAPITALIZATION ............................................. $990.9 $1,209.4
====== ========

- ----------
(1) This table does not give effect to:

o the options granted to Wellington for 3,781,120 non-voting shares and
to the Names' Trustee for the benefit of the Unaligned Members for
3,006,760 non-voting shares, which options will become exercisable
upon completion of this offering as further described in "Description
of Share Capital -- Investor Options" and which non-voting shares will
automatically convert into ordinary shares at a one-to-one ratio upon
completion of this offering, or, if issued after completion of this
offering, upon issuance;

o 3,884,020 ordinary shares that may be issued pursuant to options that
have been granted under our share incentive plan at a weighted average
exercise price of (pounds sterling)10.70 per share; and

o 1,840,550 ordinary shares available for future issuance under our
share incentive plan.

(2) The "As Adjusted" column reflects the deduction of estimated underwriting
discounts and our estimated offering expenses and assumes that the
underwriters' over-allotment option is not exercised and excludes the
effect of the share premium issuance.

(3) On October 15, 2003, we made a drawdown of $90 million on our three-year
revolving credit facility. We anticipate that we will use $50 million of
the net proceeds from this offering to repay a portion of the outstanding
debt under our credit facility, resulting in $40 million outstanding
after the completion of this offering.

(4) As of September 30, 2003, we had 1,076,416,910 authorized ordinary shares
of par value 1.5144558(cents) per share, which par value was changed to
0.15144558(cents) on November 6, 2003 as a result of 10 for 1 share split.

(5) As of September 30, 2003, we had 56,924,120 ordinary shares outstanding.
No non-voting shares or preference shares were outstanding as of
September 30, 2003. As adjusted to give effect to the sale of ordinary
shares in this offering, we will have 66,448,120 ordinary shares
outstanding. The "as adjusted" number does not give effect to the
exercise of 6,787,880 options into non-voting shares by the Names'
Trustee or Wellington at the time of this offering, which non-voting
shares will automatically convert into ordinary shares at a one-to-one
ratio upon completion of this offering or upon issuance if issued after
completion of this offering. For a description of the terms of our
ordinary shares and preference shares, see "Description of Share
Capital."

(6) Includes unrealized gains on investments and unrealized gains on foreign
currency.

DILUTION

As of September 30, 2003, our net tangible book value was $982.4 million,
or $17.26 per ordinary share, assuming 56,924,120 ordinary shares outstanding.
As used below, our net tangible book value per ordinary share represents
shareholders' equity, minus the balance for intangible assets, divided by the
number of ordinary shares outstanding. After giving effect to the issuance of
9,524,000 of our ordinary shares at an assumed initial public offering price of
$21.00 per ordinary share (the midpoint of the range set forth on the cover
page of this prospectus) and after deducting the estimated underwriting
discount and our estimated offering expenses (assuming that the underwriters'
over-allotment option is not exercised), and the application of the estimated
net proceeds therefrom, our net tangible book value as of September 30, 2003
would have been $1,160.9 million, or $17.47 per ordinary share. This amount
represents an immediate increase of $0.21 per ordinary share to the existing
shareholders and an immediate dilution of $3.53 per ordinary share issued to
the new investors purchasing shares offered hereby at the assumed public
offering price. The following table illustrates this per share dilution:

Assumed initial public offering price per ordinary share ................. $21.00
Net tangible book value per ordinary share before the offering .......... 17.26
Increase attributable to the offering ................................... 0.21
Net tangible book value per ordinary share after the offering ............ 17.47
Dilution per ordinary share to new investors(1) .......................... $ 3.53

- ----------
(1) If the underwriters' over-allotment option is exercised in full, dilution
per ordinary share to new investors will be $3.49.

The following table sets forth as of September 30, 2003 the number of our
ordinary shares issued, the total consideration paid and the average price per
ordinary share paid by all of our existing shareholders and by new investors,
after giving effect to the issuance of 9,524,000 ordinary shares in the
offering at an assumed initial public offering price of $21.00 per ordinary
share (the midpoint of the range set forth on the cover page of this
prospectus, before deducting the estimated underwriting discount and our
estimated offering expenses and assuming that the underwriters' over-allotment
option is not exercised).

ORDINARY SHARES TOTAL
ISSUED CONSIDERATION AVERAGE PRICE
------------------------ ----------------------------- PER
NUMBER PERCENT AMOUNT PERCENT ORDINARY SHARE
------------ --------- ----------------- --------- ---------------

Existing shareholders ......... 56,924,120 86% $ 865,697,239 81% $15.21
New investors ................. 9,524,000 14% 200,004,000 19% 21.00
---------- -- -------------- -- ------
Total ........................ 66,448,120 100% $1,065,701,239 100% $16.04
========== === ============== === ======

This table does not give effect to:

o the options granted to Wellington for 3,781,120 non-voting shares and
to the Names' Trustee for the benefit of the Unaligned Members for
3,006,760 non-voting shares, which options will become exercisable or
lapse upon the earlier occurrence of several events including this
offering as further described in "Description of Share Capital --
Investor Options" and which non-voting shares automatically convert
into ordinary shares at a one-to-one ratio upon completion of this
offering or upon issuance, if the options are exercised after
completion of this offering;

o 3,884,020 ordinary shares that may be issued pursuant to options that
have been granted under our share incentive plan at a weighted average
exercise price of (pounds sterling)10.70 per share; and

o 1,840,550 ordinary shares available for future issuance under our
share incentive plan.

SELECTED FINANCIAL DATA

The following table sets forth our summary historical financial
information for the period ended and as of the dates indicated. The summary
income statement data for the period from our inception at May 23, 2002 through
December 31, 2002 and the balance sheet data as of December 31, 2002 are
derived from our audited consolidated financial statements included elsewhere
in this prospectus, which have been prepared in accordance with U.S. GAAP and
have been audited by KPMG Audit Plc, our independent auditors. The summary
income statement data for the nine months ended September 30, 2003 and the
summary balance sheet data as of September 30, 2003 are derived from our
condensed consolidated financial statements included elsewhere in this
prospectus. The condensed consolidated financial statements have been prepared
on the same basis as our audited consolidated financial statements and, in our
opinion, include all adjustments, consisting only of normal recurring
adjustments, which we consider necessary for a fair presentation for our
results of operations and financial position for this period. These historical
results are not necessarily indicative of results to be expected from any
future period, and the results presented below are not necessarily indicative
of our full year performance. Due to our limited operating history, the ratios
presented may not be indicative of our future performance. You should read the
following summary consolidated financial information along with the information
contained in this prospectus, including "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the audited consolidated
financial statements, condensed consolidated financial statements and related
notes included elsewhere in this prospectus.

PERIOD FROM
MAY 23, 2002 TO
NINE MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, 2003 2002 (1)
-------------------- ----------------
($ AND SHARES IN MILLIONS, EXCEPT
PER SHARE AMOUNTS
AND PERCENTAGES)

SUMMARY INCOME STATEMENT DATA:
Gross premiums written ............................................. $1,161.8 $ 374.8
Net premiums written ............................................... 961.1 312.6
Net premiums earned ................................................ 539.0 120.3
Loss and loss adjustment expenses .................................. (276.4) (76.9)
Policy acquisition and general and administrative expenses ......... (140.8) (29.8)
Net investment income .............................................. 16.7 8.5
Net income ......................................................... 97.6 28.6

AS OF
AS OF DECEMBER 31,
SEPTEMBER 30, 2003 2002
-------------------- -------------
($ IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)

SUMMARY BALANCE SHEET DATA:
Cash and investments(5) ............................... $1,281.8 $ 932.0
Premiums receivable ................................... 635.5 214.5
Total assets .......................................... 2,252.2 1,211.8
Losses and loss adjustment expense reserves ........... 382.0 93.9
Reserve for unearned premium .......................... 727.6 215.7
Total Shareholders' equity ............................ 990.9 878.1

PER SHARE DATA (BASED ON U.S. GAAP BALANCE SHEET DATA):
Book value per share(6) ............................... $ 17.41 $ 15.44
Diluted book value per share(7) ....................... 17.30 15.44

- ----------
(1) The financial information for this period reflects our results for the
period from May, 23 2002, the date of our formation, to December 31,
2002.

(2) The loss ratio is calculated by dividing losses and loss adjustment
expenses by net premiums earned.

(3) The expense ratio is calculated by dividing acquisition expense and
general and administrative expense by net premiums earned.

(4) The combined ratio is the sum of the loss ratio and the expense ratio.

(5) Investments include fixed maturities and short-term investments.

(6) Book value per share is based on total shareholders' equity divided by
the number of shares outstanding of 56,876,360 and 56,924,120 at December
31, 2002 and September 30, 2003, respectively.

UNAUDITED PRO FORMA FINANCIAL INFORMATION AND OPERATING DATA

ASPEN ASPEN
HOLDINGS SYNDICATES HOLDINGS
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ ------------- ----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

Net premiums earned ................................... $120.3 $ 863.0 $(497.4) $ 485.9
Insurance losses and loss adjustment expenses ......... (76.9) (523.0) 299.7 (300.2)
Policy acquisition expenses ........................... (21.1) (254.0) 137.6 (137.5)
Operating and administration expenses ................. (8.7) (36.0) 33.8 (10.9)
------ ------- ------- -------
Underwriting result .................................. $ 13.6 $ 50.0 $ (26.3) $ 37.3
====== ======= ======= =======
Loss Ratio (on net premiums earned) ................... 64% 61% 60% 62%
Expense Ratio (on net premiums earned) ................ 25 34 35 31
------ ------- ------- -------
Combined Ratio (on net premiums earned) .............. 89% 95% 95% 93%
====== ======= ======= =======

The "Adjustments" column presents amounts included in the Syndicates'
underwriting results on lines of business that Aspen Holdings will not write
and that Syndicate 2020 will continue to write.

PERIOD FROM
MAY 23, 2002 TO
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

The underwriting result of the Syndicates shown above can be reconciled to
the net income included in the Syndicates' Combined Statement of Operations for
the year ended December 31, 2002 as follows:

YEAR ENDED
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

o Our unaudited pro forma statement of underwriting results includes
premium and loss development on Initial Lines of Business lines
entered into by Syndicate 2020 prior to January 1, 2002. Given the
non-compete and other arrangements with Wellington as more
specifically described under "Certain Relationships and Related
Transactions -- Transactions and Relationships with Initial
Investors"; we are assuming no premium or loss development on Initial
Lines of Business written by Syndicate 2020 prior to January 1, 2002.
Therefore, our reported premiums written and earned and reported
losses and loss adjustment expenses in our initial years of operation
could be lower than as presented in our unaudited pro forma statement
of underwriting results.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our audited
consolidated financial statements and accompanying notes and our unaudited
consolidated financial statements and accompanying notes for the nine months
ended September 30, 2003 which appear elsewhere in this prospectus. It contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those discussed below and
elsewhere in this prospectus, particularly under the headings "Risk Factors"
and "Forward-Looking Statements."

REVENUES FROM INSURANCE AND REINSURANCE CONTRACTS

We derive our revenues primarily from our insurance and reinsurance
contracts. These revenues are included in our statement of operations after
taking into account amounts payable to our reinsurers.

The amount of net premiums included as revenue in any reporting period
depends on:

o the amount and type of contracts written and the premiums we are able
to charge to policyholders which are influenced by multiple factors,
including prevailing market prices;

o the amount and type of reinsurance ceded and the reinsurance premiums
payable;

o the distribution of the renewal dates of the business we write which
are fairly evenly distributed through the year for our insurance
business but are concentrated at the beginning of quarters
(particularly January 1st) for our reinsurance business; and

o the length of time over which the premiums receivable are earned and
reinsurance premiums are expensed.

OTHER REVENUES

Revenues also include investment income and realized investment gains
offset by realized investment losses. Investment income is derived from
holdings of cash and money market deposits and from fixed income investments.
Realized investment gains and losses are derived from the sale of fixed income
investments all of which are held as marketable securities available for sale.
These securities are carried at fair market value and any resulting unrealized
gains and losses are not included as revenue in our statement of operations but
are included in comprehensive income as a separate component of shareholders'
equity.

The statement of operations for the period from May 23, 2002 to December
31, 2002 includes a significant amount in respect of realized currency exchange
gains but such gains are not expected to be a material recurrent component of
our revenues.

EXPENSES

Our expenses are classified under four headings as set out below.

Losses and loss adjustment expenses. These expenses include claims paid
and payable under our insurance and reinsurance contracts and the internal and
external costs of settling these claims ("loss adjustment expenses").

The amount of these expenses is a function of the amount and type of
insurance and reinsurance contracts we write and, with respect to reinsurance
contracts, of the loss experience of the underlying risks. The amount of the
expense is reduced to the extent that we can make recoveries from our
reinsurers.

The amount reported under this heading in any period includes payments in
the period plus the change in the value of the reserves for unpaid losses and
loss adjustment expenses between the beginning and the end of the period.

Our method for setting the reserves for unpaid losses and loss adjustment
expenses at the end of any period is discussed below under "-- Critical
Accounting Policies."

Policy acquisition expenses. Policy ACQUISITION EXPENSES consist
principally of commissions and similar charges payable to brokers, other
intermediaries and ceding companies, many of which represent a percentage of
premiums receivable by us together with staff costs directly attributable to
underwriting. The amount of expenses varies according to the amount and types
of contracts written.

Operating and administrative expenses. These expenses consist primarily of
staff compensation, payroll taxes, accommodation costs, information technology
and other operating expenses and professional fees. This heading also includes
depreciation of tangible assets. Staff compensation includes salaries, bonuses
and benefits such as medical insurance and pension contributions.

Income tax expense. This expense represents corporation tax paid or
payable by our U.K. operating company.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements contain certain amounts that are
inherently subjective in nature and have required management to make
assumptions and best estimates to determine the reported values. If actual
events differ significantly from management's underlying assumptions or
estimates, there could be a material adverse effect on our results of
operations and financial condition and liquidity.

We believe that the following critical accounting policies affect the more
significant estimates used in the preparation of our consolidated financial
statements. The descriptions below are summarized and have been simplified for
clarity. A more detailed description of the significant accounting policies we
use to prepare our financial statements is included in the notes to the
consolidated financial statements. If factors such as those described in "Risk
Factors" cause actual events to differ from the assumptions used in applying
the accounting policy and calculating financial results, there could be a
material adverse effect on our results of operations and financial condition
and liquidity.

Premiums. Written premiums comprise the estimated premiums on contracts of
insurance and reinsurance entered into in the reporting period except in the
case of proportional reinsurance contracts where written premium relates only
to our proportional share of premiums due on contracts entered into by the
ceding company prior to the end of the reporting period.

Premiums written and ceded include estimates based on information received
from brokers, ceding companies and insureds. As actual premiums are reported by
the ceding companies, management evaluates the appropriateness of the premium
estimate and any adjustment to this estimate is recorded in the period in which
it becomes known. Premiums on our excess of loss and proportional reinsurance
contracts are estimated by management when the business is underwritten. For
excess of loss contracts, the minimum and deposit premium, as defined in the
contract, is generally considered to be the best estimate of the contract's
written premium at inception. Accordingly, this is the amount we generally
record as written premium in the period the underlying risks incept. Estimates
of premiums assumed under proportional contracts are recorded in the period in
which the underlying risks are expected to incept and are based on information
provided by brokers and ceding companies and estimates of the underlying
economic conditions at the time the risk is underwritten. Adjustments to
original premium estimates could be material and these adjustments may directly
and significantly impact earnings in the period they are determined because the
subject premium may be fully or substantially earned.

Premiums are recognized as earned evenly over the policy periods using the
daily pro rata method.

The proportion of the premium related to the unexpired portion of each
policy at the end of the reporting period is included in the balance sheet as
UNEARNED PREMIUMS.

Premiums receivable are recorded as amounts due less any required
provision for doubtful accounts.

Reserve for Losses and Loss Expenses. Provision is made at the year-end
for the estimated cost of claims incurred but not settled at the balance sheet
date, including the cost of IBNR claims to the Company. The estimated cost of
claims includes expenses to be incurred in settling claims and a deduction for
the expected value of salvage and other recoveries. As required under U.S.
GAAP, no provision is made for our exposure to natural or man-made catastrophes
other than for events occurring before the balance sheet date.

We take all reasonable steps to ensure that we have appropriate
information regarding our claims exposures. However, given the uncertainty in
establishing claims liabilities, it is likely that the final outcome will prove
to be different from the original provision established.

The following presents our loss reserves by business segment as at
September 30, 2003.

AS AT SEPTEMBER 30, 2003
-----------------------------------------------------
($ IN MILLIONS)
GROSS REINSURANCE RECOVERABLE NET
----------- ------------------------- -----------

Property Reinsurance ............................ $ 72.8 $ 10.6 $ 62.2
Casualty Reinsurance ............................ 92.5 2.4 90.1
Specialty Reinsurance ........................... 101.7 13.6 88.1
-------- ------- --------
Total Reinsurance .............................. 267.0 26.6 240.4
======== ======= ========
Commercial Property ............................. 16.1 1.4 14.7
Commercial Liability ............................ 98.9 17.2 81.7
-------- ------- --------
Total Insurance ................................ 115.0 18.6 96.4
======== ======= ========
Total Losses and Loss Expense Reserves ......... $ 382.0 $ 45.2 $ 336.8
======== ======= ========

In establishing the reserves set by the Company, the Company's actuary
employs a number of techniques to establish a "range of best estimates." The
insurance reserves are established for the total unpaid cost of claims and loss
adjustment expenses, which cover events that have occurred before the balance
sheet date. These reserves reflect the Company's estimates of the total cost of
IBNR claims to it. Estimated amounts recoverable from reinsurers on unpaid
losses and loss adjustment expenses are calculated to arrive at a net claims
reserve.

For reported claims, reserves are established on a case by case basis
within the parameters of coverage provided in the insurance policy or
reinsurance agreement. In estimating the cost of these claims, we consider
circumstances related to the claims as reported, any information available from
loss adjusters and information on the cost of settling claims with similar
characteristics in previous periods. For IBNR claims, reserves are estimated
using established actuarial methods. Both case and IBNR reserve estimates
consider such variables as past loss experience, changes in legislative
conditions and changes in judicial interpretation of legal liability policy
coverages and inflation.

For classes of business which are not related to catastrophe, and where
early claims experience may not provide a sound statistical basis to estimate
the loss reserves, our approach is to establish an initial expected loss and
loss expense ratio. This is based upon a combination of (a) an analysis of a
portfolio of similar business written by Syndicate 2020 adjusted by an index
reflecting how insurance rates, terms and conditions have changed, (b) market
benchmark data, and (c) a contract by contract analysis. This initial expected
loss and loss expense ratio is then modified in light of the actual experience
to date measured against the expected experience. Loss reserves for known
catastrophic events are based upon a detailed analysis of our reported losses
and potential exposures conducted in conjunction with our underwriters.

Because many of the coverages underwritten involve claims that may not be
ultimately settled for many years after they are incurred, subjective judgments
as to the ultimate exposure to losses are an integral and necessary component
of the loss reserving process. Reserves are established by the selection of a
best estimate from within a range of estimates. The Company continually reviews
its reserves, using a variety of statistical and actuarial techniques to
analyze current claims costs, frequency and severity data, and prevailing
economic, social and legal factors. Reserves established in prior periods are
adjusted as claims experience develops and new information becomes available.

The range of estimates established by the actuary is not intended to
include the minimum or maximum amount that the claims may ultimately be, but is
designed to provide management with a range from which it is reasonable to
select a single best estimate for inclusion in the financial statements taking
into account the impact that all the factors affecting the reserves may have.
The net actuarial range for reserves for losses and loss expenses established
as at September 30, 2003 was between $284.9 million and $344.7 million. The
actual net reserves established as at that date were $336.8 million.

In selecting our best estimates of the reserves for each line of business
we take into account all of the factors set out above, and in particular the
quality of the historical information the Company has on which to establish its
reserves and the degree of estimation where information is received from
cedents on an underwriting year basis and needs to be converted to an accident
year basis. In addition, consideration is given to the point estimate produced
by our independent consulting actuaries which was towards the upper end of the
range.

Loss reserves presented on an "underwriting year" basis represent claims
related to all policies incepting in a given year. In contrast, "accident year"
loss reserves represent claims for events that occurred during a given calendar
year, regardless of when the policy was written. Loss reserves on an
underwriting year basis may include claims from different accident years. For
example, a policy written during 2002 may have losses in accident year 2002 and
in accident year 2003. Therefore, underwriting year data as of a particular
evaluation date is less mature than accident year data.

While the reported reserves make a reasonable provision for unpaid loss
and loss adjustment expense obligations, it should be noted that the process of
estimating required reserves does, by its very nature, involve uncertainty. The
level of uncertainty can be influenced by such factors as the existence of
coverage with long duration payment patterns and changes in claims handling
practices, as well as the factors noted above. Ultimate actual payments for
losses and loss adjustment expenses could turn out to be significantly
different from our estimates.

In the nine months ended September 30, 2003, there was a reduction of our
estimate of the ultimate claims to be paid in respect of the 2002 accident year
of $9.5 million. An analysis of this reduction by line of business is as
follows:

($ IN MILLIONS)
----------------

Property Reinsurance .................................. $3.2
Casualty Reinsurance .................................. 0.6
Specialty Reinsurance ................................. 4.4
----
Total Reinsurance .................................... 8.2
====
Commercial Property ................................... 0.8
Commercial Liability .................................. 0.5
----
Total Insurance ...................................... 1.3
----
Total reduction in prior year loss reserves .......... $9.5
====

All of this reduction related to the business written in 2002. The
reserves as at December 31, 2002 were $93.9 million gross and $81.4 million net
of reinsurance.

The favorable development during the nine months ended September 30, 2003
of $9.5 million in respect of losses incurred during 2002 primarily resulted
from the nature of the business earned in

2002. The key elements that gave rise to the changes in the estimated reserves
and which enabled the actuarial projections to be refined were as follows:

o 64% of the net reserves as at December 31, 2002, amounting to $52
million, were in respect of business underwritten by way of the two
quota share contracts under which we reinsured part of the portfolio of
risks written in 2002 by the Syndicates and managed by WUAL (the
"Wellington quota share arrangements"). The level of information we
receive in respect of the business ceded under these arrangements is
more limited than that in respect of business written directly by the
Company, and is on an underwriting year basis which means that the
cedents do not allocate estimates of IBNR losses to accident years . We
reviewed this information and established our best estimate of the
accident year claims as at December 31, 2002 using the cedents'
estimates of ultimate losses and our own assessment of the allocation
of those losses to accident years. During the nine months ended
September 30, 2003, we requested and were given more information by the
cedents and this has enabled us to make a better assessment of how much
of the ultimate losses relate to the 2002 accident year. The Syndicates
have also experienced less severe development of incurred losses than
they did in the immediately preceding years which has led to reductions
in the actuarial estimates of ultimate losses. Both of these factors
have contributed to an overall reduction in the 2002 accident year
reserves for this business.

o The Company only commenced underwriting in 2002 and, although some of
the lines of business have been written for a number of years in the
Syndicates' operations, some lines were new to the Company. The
reserving process requires estimates to be made based on both the
current and historical information. For those lines of business new to
the Company, the historical information relies to a greater degree on
market information. As time progresses, the reserves in respect of
these lines of business are refined as additional data is received.

The analysis of the favorable development on a line of business basis is
as follows:

Property reinsurance: The net reserves of the property reinsurance line of
business as at December 31, 2002 were $24 million, of which $9 million related
to the Wellington quota share arrangements. Premiums and claims information
received from the Syndicates and other cedents during the nine months ended
September 30, 2003 has indicated both a reduction in the 2002 underwriting year
loss ratio and also an improvement in the accident year loss ratio for 2002.
This results from a lower development of the severity of reported claims than
is often observed in this line of business.

Casualty Reinsurance: The net reserves of the casualty reinsurance line of
business as at December 31, 2002 were $10 million. Although we do not receive
notice of most of the claims in this line of business until a considerable time
has passed, some claims have a shorter notification period due to some of the
more catastrophic elements of the business. The development of incurred losses
in the nine months subsequent to December 31, 2002 has enabled a small
reduction in the projected loss ratio for this business from that suggested by
the actuarial projection at December 31, 2002, giving rise to the reduction in
reserves shown above.

Specialty Reinsurance: The net reserves of the specialty reinsurance line
of business as at December 31, 2002 were $30.9 million. All of the business in
this segment as at December 31, 2002 was derived through the Wellington quota
share arrangements. The reserves established as at December 31, 2002 were based
upon the cedents' underwriting year estimates. Management assessed these
estimates and, with the data provided, determined the accident year loss ratio.
Premiums and claims information received from the cedent during the nine months
ended September 30, 2003 has enabled the Company to refine its accident year
assessment. This has resulted in a release in reserves of $4.4 million.

Commercial Property: The net reserves of the property insurance line of
business as at December 31, 2002 were $2.4 million. This account had only two
years of Syndicates history prior to its being

written by the Company. The reserves established as at December 31, 2002 were
partly based upon the historical performance experienced in those two years.
During the course of 2003, the historical information improved due in
particular to the settlement of one claim significantly below its case reserve.
This improvement enabled us to reassess the likely level of IBNR claims in
respect of the 2002 accident year, resulting in a reduction in reserves of $0.8
million.

Commercial Liability: The reserves for the commercial liability line of
business as at December 31, 2002 were $14.2 million. There was a release of
$0.5 million in reserves in the nine months ended September 30, 2003. This
resulted from a lower level of incurred claim development subsequent to the
balance sheet date than projected.

Other than the matters described above, the Company did not make any
significant changes in assumptions used in our reserving process. However,
because the period of time we have been in operation is short, our loss
experience is limited and reliable evidence of changes in trends of numbers of
claims incurred, average settlement amounts, numbers of claims outstanding and
average losses per claim will necessarily take years to develop.

Estimates of IBNR are generally subject to a greater degree of uncertainty
than estimates of the cost of settling claims already notified to the Company,
where more information about the claim event is generally available. IBNR
claims often may not be apparent to the insured until many years after the
event giving rise to the claims has happened. Lines of business where the IBNR
proportion of the total reserve is high, such as liability insurance, will
typically display greater variations between initial estimates and final
outcomes because of the greater degree of difficulty of estimating these
reserves. Lines of business where claims are typically reported relatively
quickly after the claim event tend to display lower levels of volatility
between initial estimates and final outcomes. Allowance is made, however, for
changes or uncertainties which may create distortions in the underlying
statistics or which might cause the cost of unsettled claims to increase or
reduce when compared with the cost of previously settled claims including:

o changes in our processes which might accelerate or slow down the
development and/or recording of paid or incurred claims;

o changes in the legal environment;

o the effects of inflation;

o changes in the mix of business; and

o the impact of large losses.

As at September 30, 2003 a 5% change in the reserve for net IBNR losses
would equate to a change of approximately $12 million in loss reserves which
would represent 9% of income from operations before income tax for the nine
months ended September 30, 2003.

Reinsurance recoveries in respect of estimated IBNR claims are assumed to
be consistent with the historical pattern of such recoveries, adjusted to
reflect changes in the nature and extent of our reinsurance program over time.
An assessment is also made of the collectability of reinsurance recoveries
taking into account market data on the financial strength of each of the
reinsurance companies. Provisions are calculated gross of any reinsurance
recoveries. A separate estimate is made of the amounts that will be recoverable
from reinsurers based upon the gross provisions and having due regard to
collectability.

Reinstatement Premiums. REINSTATEMENT premiums and additional premiums are
accrued as provided for in the provisions of assumed reinsurance contracts,
based on experience under such contracts. Reinstatement premiums are the
premiums charged for the restoration of the reinsurance limit of a catastrophe
contract to its full amount after payment by the reinsurer of losses as a
result of an occurrence. These premiums relate to the future coverage obtained
during the remainder of the initial policy term and are earned over the
remaining policy term. Additional premiums are premiums

charged after coverage has expired, related to experience during the policy
term, which are earned immediately. An allowance for uncollectible premiums is
established for possible non-payment of such amounts due, as deemed necessary.

IMPACT OF ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED IN THE FUTURE

In January 2003, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN
46"), which requires consolidation of all variable interest entities ("VIE") by
the primary beneficiary, as these terms are defined in FIN 46, effective
immediately for VIEs created after January 31, 2003. The consolidation
requirements apply to VIEs existing on January 31, 2003 for reporting periods
beginning after June 15, 2003. In addition, it requires expanded disclosure for
all VIEs. In October 2003, the FASB delayed the implementation date, for VIEs
existing on January 31, 2003, to reporting periods ending after December 15,
2003. The Company does not expect the adoption of FIN 46 to have a material
impact on our consolidated financial statements.

OUTLOOK

Management believes that premium rates for property and casualty
reinsurance will continue to be firm or increasing for the remainder of 2003
after several years of dramatically increased relative rate levels. With
respect to property reinsurance, management believes that the market has
generally reached a peak in 2003 and will gradually soften over the next
several years while maintaining good overall rate adequacy. Management believes
that any rate softening will be less, and adequacy will remain better, in the
more complex lines in which we intend to focus, such as clash and risk excess
covers. With respect to casualty reinsurance, we currently believe that rates
are continuing to increase, with 2003 rates stronger than anticipated and 2004
rates expected to remain firm in all our main territories, which are the United
Kingdom, Australia and (increasingly) the United States.

In our insurance lines, management currently believes that the rates,
which have increased strongly over the last several years in commercial
property lines covering risks in the United Kingdom, will remain at attractive
levels while gradually softening from 2004. In commercial liability lines in
the United Kingdom, the market continues to be strong and we have increased our
allocation of capital to this line during the course of 2003.

We monitor relative and absolute rate adequacy and movements and we adjust
the composition of our risk portfolio based on market conditions and
underwriting opportunities.

RESULTS OF OPERATIONS

Aspen Holdings was formed on May 23, 2002 and acquired The City Fire
Insurance Company Limited ("City Fire") on June 21, 2002. City Fire was
subsequently renamed as Wellington Reinsurance Limited ("Wellington Re") and
then as Aspen Insurance UK Limited. Aspen U.K. commenced underwriting on June
21, 2002. Aspen Bermuda was formed on November 6, 2002 and commenced insurance
operations on December 9, 2002. Our fiscal year ends on December 31. Our
financial statements are prepared in accordance with U.S. GAAP. The following
is a discussion and analysis of our consolidated results of operations for the
period from our incorporation on May 23, 2002 to December 31, 2002, for the
period from May 23, 2002 to September 30, 2002 and for the nine months ended
September 30, 2003.

In 2002 we derived a significant proportion of our premiums from two quota
share contracts under which we reinsured part of the portfolio of risks written
by the Syndicates and managed by WUAL (the "Wellington 2002 quota share
arrangements"). With effect from January 1, 2003 we renewed reinsurance
business and U.K. insurance business previously written by the Syndicates
within our own U.K. subsidiary. We did however continue to assume risks in
respect of other lines of business written by Syndicate 2020 from January 1,
2003 under a quota share contract under which we accept 7.5% of most of the
classes written by the Syndicate from that date. The 2003 quota share

arrangement with Syndicate 2020 is a much less significant part of our business
than were the Wellington 2002 quota share arrangements.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

Aspen Holdings was formed on May 23, 2002 but did not commence operations
until June 21, 2002. The condensed consolidated statement of operations for the
period from May 23, 2002 to September 30, 2002 therefore reflects the results
of our business operations for only nineteen weeks and comparisons with the
current period may not be meaningful.

Gross Premiums Written. In the nine months ended September 30, 2003 gross
premiums written were $1,161.8 million, including $58.9 million under the 2003
quota share arrangement with Syndicate 2020.

Reinsurance ceded. Reinsurance premiums ceded for the period were $200.7
million.

Net premiums written. Net premiums written for the period were $961.1
million.

Gross premiums earned. GROSS PREMIUMS EARNED for the period were $666.9
million which represents 57.4% of gross premiums written. We expect gross
premiums earned to continue to lag significantly behind gross premiums written
while our operations are in their initial growth phase.

Net premiums earned. Net premiums earned for the period were $539.0
million, representing 56.1% of net premiums written.

Insurance losses and loss adjustment expenses. Insurance losses and loss
adjustment expenses for the period were $276.4 million including paid claims of
$34.4 million. Of the total gross reserves for unpaid losses of $382.0 million
at the balance sheet date a total of $276.8 million represented IBNR claims.

Policy acquisition expenses. Policy acquisition expenses for the period
were $107.4 million representing 19.9% of net premiums earned.

Operating and administrative expenses. Operating and administrative
expenses for the period were $33.4 million, including provisions for fixed and
performance-related staff compensation.

Net investment income. Net investment income for the period was $16.7
million.

Income before tax. Income before tax for the period was $136.8 million,
including underwriting income of $120.1 million and investment returns of $14.9
million.

Income tax expense. Income tax expense for the period was $39.2 million.

Net income. Net income for the period was $97.6 million, equivalent to
$1.72 earnings per basic share and $1.71 fully diluted share on the basis of
the weighted average number of shares in issue during the period.

PERIOD FROM MAY 23, 2002 TO SEPTEMBER 30, 2002

During the period from commencement of operations on May 23, 2002 to
September 30, 2002 we wrote $297.8 million of gross premiums. Due to the short
duration of the period, net premiums earned were $51.7 million, net losses and
loss adjustment expenses were $35.5 million and total other expenses were $9.9
million. The net income for the period was $15.5 million.

PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002

Gross Premiums Written. For the period, gross premiums written were $374.8
million. This was derived in part from our own business and in part from the
Wellington 2002 quota share arrangements. The own business accounted for $158.4
million and the Wellington 2002 quota share arrangements for $216.4 million.
From January 1, 2003, a much smaller proportion of our gross premiums written
will be derived from the Syndicate quota share arrangements.

Reinsurance ceded. Reinsurance ceded for the period was $62.2 million
which includes $49.9 million in respect of reinsurance contracts placed by WUAL
for the benefit of its syndicates and their quota share reinsurers.

Net premiums written. Net premiums written for the period were $312.6
million of which $166.3 million were derived from the Wellington 2002 quota
share arrangements and the balance from our own business.

Gross premiums earned. Gross premiums earned for the period were $163.8
million which represents 43.7% of gross premiums written. We expect gross
earned premiums to continue to lag significantly behind gross premiums written
while our operations are in their initial growth phase. The amount of gross
earned premiums derived from the Wellington 2002 quota share arrangements was
$111.6 million.

Net premiums earned. Net premiums earned for the period were $120.3
million, representing 38.5% of net premiums written and including $74.5 million
in respect of the Wellington 2002 quota share arrangements.

Insurance losses and loss adjustment expenses. Insurance losses and loss
adjustment expenses for the period were $76.9 million, including paid claims of
$3.7 million. The only material claims incurred and reported during the period
arose from the European floods ($3 million) and an explosion in a United States
grain store ($1.8 million). Of the reserves of $93.9 million, at the balance
sheet date, a total of $83.6 million represents IBNR claims. The expense for
the period is stated after crediting reinsurance recoveries of $10.1 million
which mainly relate to estimated recoveries against IBNR claims.

Policy acquisition expenses. Policy acquisition expenses for the period
were $21.1 million including $14.1 million of ceding commissions and other
acquisition expenses in respect of the Wellington 2002 quota share
arrangements, the balance comprising brokerage in respect of our own business.

Operating and administrative expenses. Operating and administrative
expenses for the period were $8.7 million, including provisions for fixed and
performance-related staff compensation.

Net investment income. Net investment income of $8.5 million for the
period was mainly derived from bank deposits and holdings of money market
funds.

Other revenues. Other revenues mainly consist of a realized exchange gain
of $12.7 million arising from the sale of currency in an amount equal to
approximately 54% of the paid in capital of the Company to U.S. Dollars from
British Pounds at a date by which the value of British Pounds had risen
relative to U.S. Dollars since the date on which the capital was committed.
This forward exchange contract was undertaken so as to match the currency mix
of the company's capital base to the approximate currency mix of the exposures
we expected to assume.

Income before tax. Income before tax for the period was $35.1 million,
including underwriting income of $13.6 million, investment returns of $8.4
million and other revenues of $13.1 million.

Income tax expense. Income tax expense for the period was $6.5 million,
which was mainly driven by the current rate of U.K. corporation tax of 30%.

Net income. Net income for the period was $28.6 million, equivalent to
$0.89 earnings per basic and fully diluted share on the basis of the weighted
average number of shares in issue during the period.

UNDERWRITING RESULTS BY OPERATING SEGMENTS

Our business segments are based on how we monitor the performance of our
underwriting operations. Management measures segment results on the basis of
the combined ratio, which is obtained by dividing the sum of the losses and
loss expenses, acquisition expenses and general and administrative expenses by
net premiums earned. As a newly formed company, our historical

combined ratio may not be indicative of future underwriting performance. We do
not manage our assets by segment; accordingly, investment income and total
assets are not allocated to the individual segments. General and administrative
expenses are allocated to segments based on each segment's proportional share
of gross premiums written.

The following table summarizes gross and net written premium, underwriting
results, and combined ratios and reserves for each of our two business segments
for the period from incorporation on May 23, 2002 to December 31, 2002 and the
nine months ended September 30, 2003. Aspen Holdings was formed on May 23, 2002
but did not commence operations until June 21, 2002. The condensed consolidated
statement of operations for the period from May 23, 2002 to September 30, 2002
therefore reflects the results of our business operations for only nineteen
weeks and comparisons with the current period may not be meaningful.

NINE MONTHS ENDED PERIOD FROM MAY 23, 2002 TO
SEPTEMBER 30, 2003 DECEMBER 31, 2002
--------------------------------------- -------------------------------------
REINSURANCE INSURANCE TOTAL REINSURANCE INSURANCE TOTAL
------------- ----------- ------------- ------------- ----------- -----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

FINANCIAL RESULTS:
Gross premiums written ................. $ 939.6 $222.2 $1,161.8 $288.2 $ 86.6 $374.8
Net premiums written ................... 760.0 201.1 961.1 233.9 78.7 312.6
Gross premiums earned .................. 521.0 145.9 666.9 135.8 28.0 163.8
Net premiums earned .................... 403.7 135.3 539.0 96.9 23.4 120.3
Losses and loss adjustment expenses .... (193.3) (83.1) (276.4) (60.9) (16.0) (76.9)
Policy acquisition, operating and
administration expenses ............... (120.1) (20.7) (140.8) (24.4) (5.4) (29.8)
-------- ------ -------- ------ ------- ------
Underwriting profit before investment
income ................................ $ 90.3 $ 31.5 $ 121.8 $ 11.6 $ 2.0 $ 13.6
======== ====== ======== ====== ======= ======
Investment return ...................... 14.9 8.4
Other income ........................... 0.1 13.1
-------- ------
Income before income tax .............. $ 136.8 $ 35.1
======== ======
Net reserves for loss and loss
adjustment expenses as at
September 30, 2003 and
December 31, 2002 ..................... $ 240.4 $ 96.4 $ 336.8 $ 64.9 $ 16.5 $ 81.4
RATIOS:
Loss ratio ............................. 48% 61% 51% 63% 68% 64%
Expense ratio .......................... 30 15 26 25 23 25
-------- ------ -------- ------ ------- ------
Combined ratio ...................... 78% 76% 77% 88% 91% 89%
======== ====== ======== ====== ======= ======

REINSURANCE

We write reinsurance for both property and casualty risks. Our property
reinsurance line of business in 2002 was mainly written on a treaty basis but
some facultative property risks have been written from January 1, 2003. The
property treaty reinsurance we write includes catastrophe, risk excess and pro
rata, including retrocession.

Our casualty reinsurance line of business is written on both a treaty and
a facultative basis. The casualty treaty reinsurance is written mainly on an
excess of loss basis and includes coverage for claims arising from automobile
accidents, employers' liability, professional indemnity and other third party
liabilities. It is written in respect of cedents located mainly in the United
States, the United Kingdom, Europe and Australia. The casualty facultative
business in 2002 was restricted to automobile liability business in the United
States with a focus on liability relating to commercial vehicles. In 2003 we
have begun to accept other facultative casualty risks.

Our specialty reinsurance line of business includes aviation and marine
reinsurance. We also include under this heading our quota share reinsurances of
Syndicates 2020 and 3030 in respect of the lines of business that we do not
write under our own name, including marine, energy, accident and health and
aviation risks. Our quota share reinsurance of Syndicate 3030 did not continue
after 2002.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

Premiums. Gross premiums written for the period were $939.6 million,
comprising $555.4 million property, $260.3 million casualty and $123.9 million
specialty. The amount of property reinsurance premium written is greater than
expected for the second half of the year because of the predominance of
contracts incepting on January 1 in this market.

Losses and loss adjustment expenses. Losses and loss adjustment expenses
were $193.3 million for the period, representing 48% of net earned premiums for
the period. There were no significant reported property, casualty or specialty
reinsurance claims in the period other than relating to a series of tornadoes
in the mid-west of the United States between May 2, 2003 and May 11, 2003 from
which we have reported incurred property reinsurance claims of $9.8 million.

Policy acquisition, operating and administration expenses. Total expenses
were $120.1 million for the period, equivalent to 23.0% of gross earned
premiums.

The following table summarizes gross and net written premiums and
underwriting results for each of the lines of business within our reinsurance
segment for the nine months ended September 30, 2003:

NINE MONTHS ENDED SEPTEMBER 30, 2003
---------------------------------------------------
PROPERTY CASUALTY SPECIALTY TOTAL
---------- ---------- ----------- -----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

Gross premiums written .................................. $555.4 $260.3 $123.9 $ 939.6
Net premiums written .................................... 398.5 251.5 110.0 760.0
Gross premiums earned ................................... 295.0 106.6 119.4 521.0
Net premiums earned ..................................... 197.4 100.8 105.5 403.7
Losses and loss adjustment expenses ..................... (60.0) (72.0) (61.3) (193.3)
Policy acquisition, operating and administration
expenses ............................................... (76.8) (22.0) (21.3) (120.1)
------ ------ ------ -------
Underwriting profit before investment income ......... $ 60.6 $ 6.8 $ 22.9 $ 90.3
====== ====== ====== =======
Ratios:
Loss ratio .............................................. 30% 71% 58% 48%
Expense Ratio ........................................... 39 22 20 30
------ ------ ------ -------
Combined ratio ....................................... 69% 93% 78% 78%
====== ====== ====== =======

PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002

Premiums. Gross premiums written for the period were $288.2 million,
comprising $117.6 million property, $27.8 million casualty and $142.8 million
specialty. The specialty premium for this period comprises entirely that part
of the business assumed under the 2002 Wellington quota share arrangements that
is not included under any other heading.

Losses and loss adjustment expenses. The year 2002 developed well with
relatively few major property losses. The catastrophe account was impacted by
the European floods which have produced in excess of $3 million of claims. The
only material loss on the risk excess account was a $1.8 million loss at a U.S.
grain store. No material casualty reinsurance claims were reported in the
period, reflecting the long tail nature of the casualty reinsurance business
written. Total loss and loss adjustment expenses were $60.9 million
representing 63% of net premiums earned.

Policy acquisition, operating and administration expenses. Total expenses
were $24.4 million for the period, equivalent to 18.0% of gross earned
premiums. This is lower than we expect to experience in the future because the
premiums written under the Wellington 2002 quota share arrangements are ceded
to us net of the brokerage payable by the Syndicates on the original business.

The following table summarizes gross and net written premiums and
underwriting results for each of the lines of business within our reinsurance
segment for the period from May 23, 2002 to December 31, 2002:

PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002
---------------------------------------------------
PROPERTY CASUALTY SPECIALTY TOTAL
---------- ---------- ----------- -----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

Gross premiums written .................................. $ 117.6 $ 27.8 $ 142.8 $ 288.2
Net premiums written .................................... 95.5 26.5 111.9 233.9
Gross premiums earned ................................... 61.7 11.2 62.9 135.8
Net premiums earned ..................................... 44.4 10.4 42.1 96.9
Losses and loss adjustment expenses ..................... (18.5) (8.2) (34.2) (60.9)
Policy acquisition, operating and administration
expenses ............................................... (12.2) (2.4) (9.8) (24.4)
------- ------ ------- -------
Underwriting profit before investment income ......... $ 13.7 $ (0.2) $ (1.9) $ 11.6
======= ====== ======= =======
Ratios:
Loss ratio .............................................. 42% 79% 81% 63%
Expense Ratio ........................................... 27 23 23 25
------- ------ ------- -------
Combined ratio ....................................... 69% 102% 104% 88%
======= ====== ======= =======

INSURANCE

We write both commercial property and commercial liability insurance. Our
commercial property line of business is primarily composed of U.K. commercial
property insurance. No major claims have been notified in respect of this
business.

The commercial liability line of business consists of U.K. employers' and
public liability insurance. We have not received notice of any material claims
with respect to this business but this is normally the case for this class of
business at this early stage in its development and it may take many years
before all claims are reported, assessed and paid.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

Premiums. Gross premiums written for the period were $222.2 million,
comprising $59.1 million property and $163.1 million liability.

Losses and loss adjustment expenses. Losses and loss adjustment expenses
were $83.1 million for the period, representing 61.4% of net earned premiums
for the period.

Policy acquisition, operating and administration expenses. Total expenses
were $20.7 million for the period, equivalent to 14.2% of gross earned
premiums.

The following table summarizes gross and net written premiums and
underwriting results for each of the lines of business within our insurance
segment for the nine months ended September 30, 2003:

NINE MONTHS ENDED SEPTEMBER 30, 2003
----------------------------------------
COMMERCIAL COMMERCIAL
PROPERTY LIABILITY TOTAL
------------ ----------- -----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

Gross premiums written ................................ $ 59.1 $ 163.1 $ 222.2
Net premiums written .................................. 56.6 144.5 201.1
Gross premiums earned ................................. 30.8 115.1 145.9
Net premiums earned ................................... 28.0 107.3 135.3
Losses and loss adjustment expenses ................... (15.9) (67.2) (83.1)
Policy acquisition, operating and administration
expenses ............................................. (6.4) (14.3) (20.7)
------- ------- -------
Underwriting profit before investment income ......... $ 5.7 $ 25.8 $ 31.5
======= ======= =======
Ratios:
Loss ratio ............................................ 57% 63% 61%
Expense Ratio ......................................... 23 14 15
------ ------- -------
Combined ratio ....................................... 80% 77% 76%
====== ======= =======

PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002

Gross Premiums Written. Gross premiums written for the period were $86.6
million, comprising $10.9 million property, and $75.7 million liability.

Losses and loss adjustment expenses. Total loss and loss adjustment
expenses were $16.0 million representing 68.4% of net premiums earned.

Policy acquisition, operating and administration expenses. Total expenses
were $5.4 million for the period, equivalent to 19.3% of gross earned premiums.

The following table summarizes gross and net written premiums and
underwriting results for each of the lines of business within our insurance
segment for the period from May 23, 2002 to December 31, 2002:

PERIOD FROM MAY 23, 2002 TO DECEMBER
31, 2002
-----------------------------------
COMMERCIAL COMMERCIAL
PROPERTY LIABILITY TOTAL
------------ ----------- ----------
($ IN MILLIONS, EXCEPT PERCENTAGES)

Gross premiums written ................................ $ 10.9 $ 75.7 $ 86.6
Net premiums written .................................. 7.8 70.9 78.7
Gross premiums earned ................................. 4.5 23.5 28.0
Net premiums earned ................................... 2.6 20.8 23.4
Losses and loss adjustment expenses ................... (2.3) (13.7) (16.0)
Policy acquisition, operating and administration
expenses ............................................. (0.2) (5.2) (5.4)
------ ------ ------
Underwriting profit before investment income ......... $ 0.1 $ 1.9 $ 2.0
====== ====== ======
Ratios:
Loss ratio ............................................ 88% 66% 68%
Expense Ratio ......................................... 8 25 23
------ ------ ------
Combined ratio ....................................... 96% 91% 91%
====== ====== ======

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2003 Aspen Holdings had cash, cash equivalents and
short-term investments of $1.8 million that will be used to pay its operating
expenses and liabilities.

As decribed in "Dividend Policy," our board of directors has a policy
whereby it intends to authorize the payment of $0.03 per ordinary share per
quarter to our shareholders of record.

As of January 1, 2003, the maximum amount of distributions that our
Insurance Subsidiaries could pay to us under applicable laws and regulations
without prior regulatory approval was approximately $30 million. This amount
will increase to $60 million on January 1, 2004, subject to the availability of
distributable reserves. For a discussion of the various restrictions on the
ability of us and our Insurance Subsidiaries to pay dividends, please see
"Regulatory Matters."

On July 31, 2003 Aspen U.K. agreed to pay an interim dividend of $5.0
million to the Company and it was paid on August 11, 2003. An additional
dividend of $5.0 million was paid on September 5, 2003.

Cash flows for the nine months ended September 30, 2003. In the nine
months ended September 30, 2003 we generated net cash from operating activities
of $352.6 million, primarily relating to premiums and investment income
received offset by reinsurance premiums payable. We paid claims of $34.4
million in the period. We made net investments in the amount of $263.9 million
in market securities during the period. Cash and cash equivalents increased
from $9.6 million at the beginning of the period to $92.8 million at the end.

Aspen Holdings was formed on May 23, 2002 but did not commence operations
until June 21, 2002. The condensed consolidated statement of cash flows for the
period from May 23, 2002 to September 30, 2002 therefore reflects the results
for only nineteen weeks and comparisons with the current period may not be
meaningful.

Cash flows for the period from incorporation on May 23, 2002 to December
31, 2002. In the period from May 23, 2002 to December 31, 2002, we received
$836.9 million in cash from a private placement of our ordinary shares, net of
equity raising costs of $28.1 million. During this period, we generated an
operating net cash inflow of $78.1 million, primarily relating to net premiums
received by Aspen U.K. We did not make any significant capital expenditures
during the period from inception to December 31, 2002. We made net investments
of $899.7 million in market securities in the period, and had a cash balance of
$9.6 million at December 31, 2002.

Liquidity. Our liquidity depends on operating, investing and financing
cash flows, described as follows. On an ongoing basis, our Insurance
Subsidiaries' sources of funds primarily consist of premiums written,
investment income and proceeds from sales and redemptions of investments.

Cash is used primarily to pay reinsurance premiums, losses and loss
adjustment expenses, brokerage commissions, general and administrative expenses
and taxes and to purchase new investments. In the future, we may also use cash
to pay for any authorized share repurchases and dividends.

Our cash flows from operations represent the difference between premiums
collected and the losses and loss adjustment expenses paid, underwriting and
other expenses paid. The potential for a large claim under one of our
reinsurance contracts means that substantial and unpredictable payments may
need to be made within relatively short periods of time.

We intend to manage these risks by maintaining a substantial proportion of
our invested assets in securities having durations less than the durations of
our liabilities even though this may over time reduce the yield on our
investments below that which might be obtained if our asset durations were
perfectly matched to our liability durations. Notwithstanding this policy, if
our calculations with respect to these liabilities are incorrect, we could be
forced to liquidate investments prior to maturity, potentially at a significant
loss.

Aspen Bermuda is subject to the solvency requirements of the Insurance
Act. See "Regulatory Matters -- Bermuda Regulation." Aspen Bermuda's fully paid
up share capital was $1.0 million and statutory capital and surplus was $210.6
million at September 30, 2003.

Aspen U.K. is regulated by the FSA and is subject to the FSA's Handbook of
Rules and Guidance with respect to solvency requirements. See "Regulatory
Matters -- U.K. Regulation." As of September 30, 2003, Aspen U.K.'s margin of
solvency requirement was $168.8 million and the value of its surplus assets was
$754.6 million.

Our U.S.-domiciled insurance cedents require us to obtain letters of
credit or to provide trust funds to meet their regulatory obligations. The
banks that issue the letters of credit currently require us to collateralize
them with cash. To that end, we have established a facility for the issuance of
letters of credit in the amount of $50 million with Citibank, N.A. As at
September 30, 2003, letters of credit totaling $13.3 million had been issued by
Citibank. In addition, Barclays Bank plc has issued letters of credit totaling
(pounds sterling)47.4 million to policyholders of the Company. The Company has
provided collateral to Citibank and Barclays Bank plc for the full value of the
letters of credit issued on its behalf. On June 23, 2003 we established a trust
fund at the Bank of New York which will be used as an alternative to letters of
credit to satisfy our obligations to provide security to certain U.S.-domiciled
cedents. As at September 30, 2003 the balance on this fund was $25.5 million.
On July 16, 2003 we established an additional trust fund at the Bank of New
York, with a balance of $5.4 million, which will serve a similar purpose with
respect to certain U.S. insurance clients of Aspen U.K. for whom we provide
surplus lines insurance.

Capital Resources. On August 26, 2003, the Company entered into a 364-day
revolving credit facility in the aggregate principal amount of $50,000,000 and
a three-year revolving credit facility in the aggregate principal amount of
$150,000,000 (together, the "Credit Facilities") to provide additional
liquidity to our operations. Barclays Capital acts as lead arranger and
Barclays Bank plc acts as administrative agent and collateral agent for a
syndicate of lenders under the Credit Facilities. The syndicate consists of
Barclays Bank plc, Credit Lyonnais New York Branch, Credit Suisse First Boston
(acting through its Cayman Islands branch), ABN Amro Bank N.V., Deutsche Bank
AG New York Branch, Lloyds TSB Bank plc, The Bank of Bermuda, The Bank of N.T.
Butterfield & Son Ltd., Fleet National Bank and UBS AG Cayman Islands Branch.
The terms and conditions of the Credit Facilities are substantially identical.

The terms of the credit agreements entered into in connection with the
Credit Facilities (the "Credit Agreements") prohibit the combined outstanding
principal amount of all loans outstanding thereunder from exceeding
$120,000,000 until Aspen Holdings has received gross proceeds of at least
$200,000,000 from the additional issuance of its ordinary shares.

The terms of the Credit Agreements require Aspen Holdings and each
Material Subsidiary to pledge the capital stock owned by each of them in any
Material Subsidiary as collateral for the obligations under the loans.
Currently, the shares of stock of Aspen U.K. and Aspen Bermuda owned by us will
be pledged as collateral to the lenders. Each subsidiary, other than an
insurance subsidiary, existing on the closing date and each such subsidiary
formed after the closing date is required to become a guarantor under the
Credit Facilities. A subsidiary is a Material Subsidiary if the total
consolidated assets or total consolidated revenues of it and its subsidiaries
exceed 10% of the total assets or gross revenues of Aspen Holdings and its
subsidiaries on a consolidated basis, or if the net assets of such subsidiary
exceed $100,000,000 at the end of the most recently completed fiscal quarter of
the Company for which financial statements should have been delivered to the
lenders pursuant to the Credit Agreements. Accordingly, Aspen U.K. and Aspen
Bermuda are currently Material Subsidiaries.

The Credit Agreements include covenants which require the Company to (i)
maintain a ratio of consolidated debt to consolidated debt plus consolidated
tangible net worth of no greater than 30% for any period of four consecutive
fiscal quarters; (ii) maintain tangible net worth at all times of no less than
the sum of (a) $700,000,000, (b) 100% of the first $200,000,000 of net cash
proceeds of the issuance by Aspen Holdings of ordinary shares after the closing
date of the Credit Facilities and (c)

50% of the net cash proceeds of all other issuances by Aspen Holdings of
ordinary shares after the closing date; and (iii) maintain a SOLVENCY RATIO for
each of Aspen Holdings and any insurance subsidiary which is a Material
Subsidiary on the last day of any period of four consecutive fiscal quarters of
no more than 135%. Other covenants include restrictions on the types and
amounts of indebtedness Aspen Holdings and any subsidiary may create or incur,
prohibitions on the disposition of property by Aspen Holdings and any
subsidiary and restrictions on investments, loans and advances by Aspen
Holdings and any subsidiary. As of August 31, 2003, we were in compliance with
these covenants. Aspen Holdings and its subsidiaries are also prohibited from
paying any dividends or making any payments on account of a sinking or other
analogous fund for the purchase, redemption or other acquisition of any share
capital or capital stock of Aspen Holdings or any subsidiary; provided,
however, that any such payments may be made by any subsidiary to Aspen Holdings
or another subsidiary (other than an Insurance Subsidiary) and so long as no
default or event of default exists under the Credit Agreements or would result
from such payment, Aspen Holdings may during any fiscal year pay cash dividends
in an aggregate amount not to exceed 50% of its consolidated net income for
such fiscal year.

On October 15, 2003 we made a drawdown of $90 million on the three-year
credit facility. Of these borrowings, $81 million was used to provide part of
the initial capital to Aspen U.S and the balance was used to provide working
capital to Aspen Holdings. The initial interest rate is three-month LIBOR plus
60 basis points. We currently have $90 million in principal payments due and
payable by October 14, 2006 for outstanding borrowings on our three-year credit
facility.

We do not currently have any material commitments for any capital
expenditures over the next twelve months.

We expect that the proceeds of this offering, together with the capital
base we established in the private placement, the proceeds drawn under our
credit facilities and internally generated funds, to be sufficient to operate
our business.

CONTINGENT LIABILITIES

Taxation Funding Facility Agreement. On June 21, 2002, we entered into the
taxation funding facility agreement with the Names' Trustee, as trustee of the
Names' Trust. Under that agreement, we agreed to make available cash advances
to the Names' Trust to enable the Names' Trustee to make sub-advances to the
Unaligned Members to fund payment of taxation payable (i) on the value of the
rights granted to the Unaligned Members in respect of options granted to them
and (ii) in respect of contingent payments received pursuant to the profit
commission agreement. The value of these rights is the amount agreed in
principle by us with the U.K. Inland Revenue prior to December 31, 2003, or, if
no such agreement has been reached by then, the amount estimated by us in good
faith, with provisions for upward adjustment in the event that the amount
subsequently agreed with the U.K. Inland Revenue is higher. Any taxation
payable by the Unaligned Members on these rights, which we may have to advance,
will be based on such determination date. If no value is realized by the
Unaligned Members, or to the extent that the value realized (after tax) is less
than the advance, we have agreed to waive repayment. We expect that it is most
likely that we will not incur any liability under the Taxation Funding Facility
Agreement prior to 2006.

QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

We believe that we are principally exposed to three types of market risk:
interest rate risk, foreign currency risk and credit risk.

Interest rate risk. Our investment portfolio consists of fixed income
securities. Accordingly, our primary market risk exposure is to changes in
interest rates. Fluctuations in interest rates have a direct impact on the
market valuation of these securities. As interest rates rise, the market value
of our fixed-income portfolio falls, and the converse is also true. We expect
to manage interest rate risk by

selecting investments with characteristics such as duration, yield, currency
and liquidity tailored to the anticipated cash outflow characteristics of Aspen
U.K.'s and Aspen Bermuda's insurance and reinsurance liabilities.

Our strategy for managing interest rate risk also includes maintaining a
high quality portfolio with a relatively short duration to reduce the effect of
interest rate changes on book value. A significant portion of the investment
portfolio matures each year, allowing for reinvestment at current market rates.
The portfolio is actively managed and trades are made to balance our exposure
to interest rates.

As at September 30, 2003 our portfolio had an approximate duration of 1.04
years. The table below depicts interest rate change scenarios and the effect on
our interest-rate sensitive invested assets:

EFFECT OF CHANGES IN INTEREST RATES ON PORTFOLIO GIVEN A PARALLEL SHIFT IN THE
YIELD CURVE
($ IN MILLIONS, EXCEPT PERCENTAGES)

Movement in rates in basis points -100 -50 0 50 100
------- ------- ------- ------- -------
Market Value .................... $ 1,202.4 $ 1,195.8 $ 1,189.0 $ 1,182.2 $ 1,175.3
Gain/Loss ....................... 13.4 6.7 0.0 (6.8) (13.7)
Percentage of Portfolio ......... 1.1% 0.6% 0.0% (0.6)% (1.2)%

Foreign currency risk. Our reporting currency is the U.S. Dollar. The
functional currencies of our reinsurance and insurance segments are U.S.
Dollars and British Pounds. As of September 30, 2003, approximately 78% of our
assets are held in U.S. Dollars, approximately 18% are in British Pounds and
approximately 4% are in currencies other than the U.S. Dollar and the British
Pound. Other foreign currency amounts are remeasured to the appropriate
functional currency and the resulting foreign exchange gains or losses are
reflected in the statement of operations. Functional currency amounts of
monetary assets and liabilities are then translated into U.S. Dollars. The
unrealized gain or loss from this translation, net of tax, is recorded as part
of ordinary shareholders' equity. The change in unrealized foreign currency
translation gain or loss during the year, net of tax, is a component of
comprehensive income. Both the remeasurement and translation are calculated
using current exchange rates for the balance sheets and average exchange rates
for the statement of operations. Management estimates that a 10% change in the
exchange rate between British Pounds and U.S. Dollars as at September 30, 2003
would have impacted reported net comprehensive income by approximately $12.9
million for the nine months ended September 30, 2003.

We will attempt to manage our foreign currency risk by seeking to match
our liabilities under insurance and reinsurance policies that are payable in
foreign currencies with investments that are denominated in these currencies.
During 2002, we entered into a significant forward exchange contract for the
sale of British Pounds into U.S. dollars in anticipation of the receipt in
November 2002 of the second tranche of our initial capital. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Foreign currency exchange contracts will not eliminate fluctuations in the
value of our assets and liabilities denominated in foreign currencies but
rather allow us to establish a rate of exchange for a future point in time. We
do not expect going forward that we will enter into these contracts with
respect to a material amount of our assets. All realized gains and losses and
unrealized gains and losses on foreign currency forward contracts are
recognized in the statements of operations and comprehensive income. There were
no outstanding forward contracts as at September 30, 2003.

Credit risk. We have exposure to credit risk primarily as a holder of
fixed income securities. Our risk management strategy and investment policy is
to invest in debt instruments of high credit quality issuers and to limit the
amount of credit exposure with respect to particular ratings categories and any
one issuer. No more than 5% of the fixed-income securities in our investment
portfolio may be rated below "A-". In addition, we are exposed to the credit
risk of our insurance and reinsurance brokers to whom we make claims payments
for insureds and our reinsureds, as well as to the credit risk of our
reinsurers and retrocessionaires who assume business from us. The substantial
majority of our

reinsurers have a rating of "A" (Excellent), the third highest of fifteen
rating levels, or better by A.M. Best and the minimum rating of any of our
reinsurers is "B++" (Very Good), the fifth highest of fifteen rating levels, by
A.M. Best.

CURRENCY

Our reporting currency is the U.S. Dollar. The functional currencies of
our reinsurance and insurance segments are the U.S. Dollar and the British
Pound. For the first nine months ended September 30, 2003, 10.8% of our gross
premiums were written in currencies other than the U.S. Dollar and the British
Pound and we expect that a similar proportion will be written in currencies
other than the U.S. Dollar and the British Pound for the remainder of 2003.
During the same period, 9.3% of our loss reserves and 4.1% of our cash and
investments were also in currencies other than the U.S. Dollar and the British
Pound. As a result, we may experience exchange losses to the extent our foreign
currency exposure is not properly managed or otherwise hedged, which in turn
would adversely affect our results of operations and financial condition.

EFFECTS OF INFLATION

We do not believe that inflation has had a material effect on our
consolidated results of operations, except insofar as inflation may affect
interest rates. The potential exists, after a CATASTROPHE LOSS, for the
development of inflationary pressures in a local economy as the demand for
services such as construction typically surges. The effects of inflation are
also considered in pricing and in estimating reserves for unpaid claims and
claim expenses. The actual effects of inflation on our results cannot be
accurately known until claims are ultimately settled.

In addition to general price inflation we are exposed to a persisting
long-term upwards trend in the cost of judicial awards for damages. We take
this into account in our pricing and reserving of casualty business.

INDUSTRY BACKGROUND

TRENDS AND CONDITIONS

While prices had been improving in many lines of business by early 2001,
the property and casualty insurance industry experienced a significant turning
point in terms of a capacity shortfall and sharp rate increases following the
catastrophic losses relating to the terrorist attacks of September 11th.
Sustained poor pricing conditions and coverage expansion which characterized
the late 1990s environment, continued to affect underwriting results at the
turn of the millennium and have been exacerbated by negative equity investment
returns. The terrorist attacks of September 11th added to the emerging reserve
deficiencies of many insurers and reinsurers around the world, contributing to
a shortage of capacity in certain lines of business, a retrenchment of many
market players and a growing number of impaired balance sheets and insolvencies
in the industry.

Estimates by Swiss Re's Sigma ("Sigma") suggest that global property and
casualty insurance and reinsurance underwriting capacity diminished by an
estimated $180 billion from the end of 2000 through August of 2002. This
equals 25% of the approximately $700 billion in available capital at the end of
2000.

The following are the most important factors contributing to current
market conditions:

o Severe Reserve Shortfalls. Reserve shortfalls from asbestos- and
environment-related (A&E) claims as well as poor underwriting in the
late 1990s continue to plague the property and casualty insurance
industry. According to A.M. Best, the industry was under-reserved for
A&E claims by approximately $53 billion as of year end 2001 and is
likely to ultimately incur more than $121 billion in net losses
arising from the A&E claims. Furthermore, significant reserve charges
have been taken by several major insurers since January 2001 for
asbestos and 1997-2000 underwriting year results. These include
Hartford Financial Services ($2.6 billion - 24% of 2001 equity),
Employers Reinsurance Corporation ($3.4 billion -- 53% of 2001
equity), Travelers Property Casualty Corp. ($2.7 billion -- 26% of
2001 equity), Munich Re Group ("Munich Re"; $2.5 billion -- 14% of
2001 equity), ACE Limited ("ACE"; $2.2 billion -- 36% of 2001 equity)
and Zurich Financial Services Group ("Zurich"; $2.0 billion -- 11% of
2001 equity).

o Record Catastrophic Losses. The catastrophic losses relating to the
terrorist attacks of September 11th represented the largest insured
loss in history, with insurance payments for losses estimated by A.M.
Best ranging from $36 billion to $54 billion. In addition, the effect
of these losses has been compounded by other recent losses such as the
2002 European floods ($3.0 billion), Brazil's Petrobras oil platform
accident ($0.5 billion) and Japan's Princess Cruise ship fire ($0.5
billion). BestWeek reported in its May 26, 2003 issue that losses
caused by recent tornadoes could exceed $2.2 billion.

o Unfavorable Investment Returns. A sustained three-year bear market
across the United States and Europe, coupled with the lowest interest
rate environment in over 40 years, has created a very difficult
investment environment for insurers and has renewed the industry's
focus on underwriting profits. The S&P 500 and Eurotop 100 (index of
the 100 most liquid stocks of leading European companies) fell by
approximately 42% and 54%, respectively, from the beginning of 2000
through the first quarter of 2003, and interest rates have steadily
decreased. From 1999 through 2002, the investment yield for the Lehman
Brothers U.S. Aggregate Fixed Income Index (a proxy for the total U.S.
fixed income market) decreased by 38% from 7.65% to 4.76% over that
time period.

o Rating Downgrades. Rating agencies have downgraded an increasing
number of major insurers as a result of the reduction in their surplus
due to losses and poor investment results. According to Sigma, the
percentage of AAA-rated companies in the U.S. insurance industry has
declined to approximately 19% from approximately 38% two years
earlier.

o Exit of Key Players. In 2002, several market participants, including
AXA Group ("AXA"), CNA Re, Cox (Lloyd's), Gerling Group, Overseas
Partners Ltd., SCOR S.A., Trenwick and St. Paul Re either exited
particular business lines or significantly reduced their activities,
further depleting the industry's available underwriting capacity.

In our first year of operation, we believe we have been able to capitalize
on the rapidly changing industry environment. We were able to differentiate
ourselves from new and existing insurers because we had both a strong,
continuing presence and reputation in the London Market and a well-capitalized
and largely unencumbered balance sheet. We stressed diversification of our
business portfolio, effective deployment of our capital and reinsurance and
retrocessional risk management strategies. We plan to continue this strategy
going forward adapting as market conditions change.

THE LONDON MARKET

The London Market is one of the largest insurance and reinsurance markets
in the world, with total underwriting capacity estimated by
PricewaterhouseCoopers in a study entitled "The London Insurance Market --
Blueprint for the Future" to have been approximately $30 billion for 2002. The
London Market has a worldwide reputation as a major trading center for
specialized insurance and reinsurance on flexible terms for large risks from
all over the world. London possesses a unique market that offers a broad
spectrum of alternatives for risk management that attracts major international
players in the industry. By virtue of its proximity to clients and brokers,
London offers a pool of underwriting and brokering talents with pragmatic
approaches to problem-solving. Sigma estimates that the London Market has
approximately a 10-15% market share in terms of large industrial insurance
business. Over two-thirds of FTSE 100 companies and over 80% of Dow Jones Index
constituents have policies placed within the London Market, according to the
PricewaterhouseCoopers report mentioned above.

The London Market is essentially a brokered and syndicated market. The
brokers find takers for insurance risks on the market and establish the policy
terms with a leading underwriter, who also takes on a substantial share of the
risk. The broker then looks for further cover providers, known as following
underwriters, who accede to the terms established and accept a share of the
risk, until the entire risk has been placed. The intensity of communication
between the market players, between the brokers as agents for the demand and
the reinsurance and insurance companies as suppliers, gives the London Market
its most important competitive advantage and allows its participants to write
complex and difficult risks through a highly interactive process.

In addition, there are a number of other factors which make London an
attractive location from which to carry on insurance and reinsurance business,
including:

o a highly developed infrastructure;

o the quality of underwriting expertise, particularly in specialty
risks;

o specialized service providers such as actuaries, claims adjusters and
consultants;

o an established history as a world financial center which allows for
greater speed and efficiency in major placements; and

o an ability to handle more complex business than other newer insurance
centers.

THE BERMUDA INSURANCE INDUSTRY

The offshore insurance industry in Bermuda has existed for over 50 years,
experiencing rapid expansion since the 1970s beginning with the development of
the CAPTIVE INSURANCE industry and an initial focus on casualty risks. Over the
past two decades, Bermuda has become an increasingly important insurance market
with a growing base of capital and insurance expertise. Bermuda's favorable
regulatory and tax environment, which minimizes governmental involvement for
those companies that meet certain solvency and liquidity requirements, creates
an attractive platform for insurance and reinsurance companies. Bermuda's
growth as a third party reinsurance market began in

earnest in 1985 with the establishment of ACE and in 1986 with the
establishment of XL, which were formed to respond to an acute shortage of
underwriting capacity for certain (mainly U.S.) casualty lines of business.
After Hurricane Andrew, seven Bermuda-based property catastrophe companies were
formed, further expanding the lines of business underwritten by Bermuda-based
companies. As a result of these historical developments, Bermuda is now
recognized as one of the leading reinsurance and insurance markets, currently
serving as the headquarters for an increasing number of global insurance
companies. As of August 31, 2003, the market capitalization of the ten largest
public insurance companies in Bermuda was approximately $41.0 billion (ranked
by market capitalization and consisting of the following companies: XL Capital,
ACE, Everest Re, AXIS Capital Holdings, RenaissanceRe, PartnerRe, Arch Capital,
Montpelier Re, Endurance Specialty and IPC Holdings). Bermuda continues to
thrive as a growing reinsurance and insurance market. After the terrorist
attacks of September 11, 2001, an estimated $7.0 billion of capital was raised
to form seven new companies, including Aspen Holdings.

There are a number of factors that make Bermuda an attractive location
from which to carry on insurance and reinsurance business, including:

o an established history as a highly reputable offshore business
center;

o excellent professional and other business services;

o a regulatory system with a minimum of involvement for those companies
that meet certain solvency, liquidity and other requirements;

o political and economic stability;

o ease of access to global insurance markets; and

o a highly developed insurance and reinsurance market.

BUSINESS

OVERVIEW

We are a Bermuda holding company that provides property and casualty
reinsurance in the global market, property and liability insurance principally
in the United Kingdom and surplus lines insurance in the United States through
our wholly-owned subsidiaries located in London, Bermuda and the United States.
As of September 30, 2003, approximately 50.3% of our reinsurance gross premiums
written covered risks located in the United States and Canada, approximately
19.9% covered risks located in the United Kingdom and the balance covered
worldwide risks and risks located in Western Europe, Japan and Australia. Our
insurance business covers commercial risks predominantly located in the United
Kingdom, with a small portion in Ireland and the United States.

Although we are not part of Lloyd's market, our management and most of our
underwriters worked as a team at Syndicate 2020 and its predecessors. Syndicate
2020 is an underwriting operation in the London Market and is managed by WUAL,
a wholly-owned subsidiary of one of our largest shareholders, Wellington. When
we commenced operations on June 21, 2002, we secured from Wellington and WUAL
the opportunity to underwrite a substantial portion of the portfolio of risks
that had been developed over many years by the team of underwriters that joined
us from Syndicate 2020. This established book of business and the operational
continuity we enjoy give us a competitive advantage over other recent start-up
companies in the insurance and reinsurance sectors.

In our reinsurance segment, we strive to differentiate ourselves by
providing our customers with innovative and customized solutions to complex
risks by utilizing our intellectual capital and our underwriters' extensive
experience in the marketplace. By focusing on our customers' most difficult
reinsurance needs, our underwriting team has established strong and
long-standing relationships with a variety of insureds and brokers. These needs
are where our clients experience genuine uncertainty regarding the likelihood
of a loss occurring and, if such a loss event occurs, how much the ultimate
costs may be. Large infrequent losses such as earthquakes and windstorms
require considerable technical expertise to be able to be understood and priced
correctly.

Our reinsurance segment includes the following business lines:

o property reinsurance;

o casualty reinsurance; and

o specialty reinsurance.

Our reinsurance operations are primarily centered in London, one of the
major reinsurance markets in the world. The London Market attracts customers
from all over the world seeking flexible and innovative solutions for a wide
variety of property, casualty and specialty risks. The London Market is also
known for its high concentration of brokers and insurers, and for its highly
developed infrastructure. Our operational base in London allows our management
and underwriters to continue to access their long-standing broker and client
relationships in this important market. We believe that our presence in the
London Market also gives us the advantage of convenient access to extensive
resources of underwriting and other professional services, such as actuarial
analysis, claim adjustment and consulting services.

In addition to being a well-established reinsurer in the London Market, we
have expanded our reinsurance operations to the Bermuda market by establishing
Aspen Bermuda. Bermuda is an important and growing reinsurance market, and we
believe that Aspen Bermuda will allow us to continue to diversify our portfolio
and to take advantage of the efficient operating environment that Bermuda
provides.

In our insurance segment, we currently focus on U.K.-based commercial
risks placed through our established contacts with the London and broader U.K.
broker community, as well as U.S. surplus lines insurance. Our insurance
segment includes the following business lines:

o commercial property insurance; and

o commercial liability insurance.

Our insurance operations are conducted in London and, most recently, in
the United States. In the United Kingdom and Ireland we underwrite property and
liability lines for small and medium-sized commercial customers. We believe
that we are able to underwrite these risks successfully because of the
specialized knowledge of our dedicated underwriting team and our underwriters'
credibility and relationships in the London Market and throughout the U.K.
regional markets. Generally, these lines of insurance have experienced a
considerable shortage of capacity since 2001 as a result of, among other
things, the exit from the market of a large U.K. insurance provider and events
affecting the insurance industry generally.

COMPANY HISTORY AND ORGANIZATION

Aspen Holdings was incorporated in Bermuda under the name of Exali
Reinsurance Holdings Limited ("Exali") on May 23, 2002 under the Companies Act.
Exali subsequently changed its name to Aspen Insurance Holdings Limited on
November 20, 2002. On June 21, 2002, Aspen Holdings acquired the entire issued
share capital of City Fire, which is authorized by the FSA and which was
renamed Wellington Re and subsequently renamed Aspen Insurance UK Limited,
which we refer to as Aspen U.K. The total consideration paid for City Fire
including costs was (pounds sterling)16.1 million in cash, which at the
exchange rate prevailing on the date of the transaction was equal to US$24.2
million, with no additional consideration payable. Aspen U.K. was capitalized
with $610 million and commenced underwriting activities on June 21, 2002, after
it secured the opportunity to underwrite a substantial part of an established
portfolio of reinsurance and insurance risks that had been developed by
Syndicate 2020 and its predecessors. The insurance portfolio purchased from
City Fire is in run-off administered by Aspen U.K.

On November 6, 2002, Aspen Holdings established a wholly-owned Bermudian
insurance subsidiary. Originally incorporated as Exali Insurance Limited, the
subsidiary changed its name to Aspen Insurance Limited, which we refer to as
Aspen Bermuda, on November 22, 2002. Aspen Bermuda was capitalized with $200
million.

On September 5, 2003, Aspen U.S. Holdings acquired Dakota Specialty, which
we refer to as Aspen U.S. and has been renamed Aspen Specialty Insurance
Company upon completion of the acquisition. The total consideration paid for
Dakota Specialty including costs was US$20.8 million in cash, with no
additional consideration payable. Aspen U.S. is a wholly-owned surplus lines
subsidiary incorporated in North Dakota eligible to write certain lines of
insurance on a surplus lines basis in the majority of states in which it
intends to write business. Aspen U.S. was subsequently capitalized with
approximately $101 million, derived from our existing funds and the funds
available from our credit facilities.

Set forth below is a chart of our corporate organization:

[GRAPHIC OMITTED]

OUR COMPETITIVE STRENGTHS

We believe we distinguish ourselves from both well-established global
players and recent new market participants as follows:

o Continuity of Business and Unencumbered Balance Sheet. From our
formation, we have underwritten a portfolio of reinsurance and
insurance risks which had previously been underwritten by Syndicate
2020, a well-established participant in the marketplace. These risks
are managed and underwritten at our Company by many of the same
professionals who built and managed the business at Syndicate 2020. In
our Initial Lines of Business, for instance, 74% and 60% of our
property reinsurance premiums in force at September 30, 2003 were
derived from clients we have had relationships with for over five and
ten years, respectively, and 66% and 43% of our casualty reinsurance
premiums in force at September 30, 2003 were derived from clients we
have had relationships with for over five and ten years, respectively.
This continuity distinguishes us from most other new entrants in the
marketplace. Like other new Bermuda entrants, however, we benefit from
an unencumbered balance sheet. We do not have legacy EXPOSURE to any
pre-2002 liabilities, except for a small portfolio of insurance
obligations assumed by us as a result of our acquisition of Aspen
U.K., previously called City Fire, in 2002, and a small portfolio of
insurance obligations assumed by us as a result of our acquisition of
Aspen U.S., previously called Dakota Specialty, in 2003. We had $5.1
million in net reserves established for the insurance obligations of
City Fire at September 30, 2003 and $6.5 million in net reserves
established for the insurance obligations of Dakota Specialty at the
date of acquisition, and we believe these amounts to be adequate to
pay all claims related to the City Fire and Dakota Specialty books of
businesses.

o Experienced Management and Underwriting Teams with Proven
Execution. Our management and underwriting teams have extensive
experience operating a large insurance and reinsurance franchise
successfully through underwriting cycles. Our Chief Executive Officer
Christopher O'Kane and Chief Financial Officer Julian Cusack lead a
team of over 50 underwriting and risk management professionals, many
of whom have worked together as a team since 1996 in the insurance and
reinsurance industry. Our underwriting teams apply sophisticated
quantitative approaches to pricing and risk selection. For the years
1999, 2000, 2001 and 2002, the combined ratios for the Initial Lines
of Business that they wrote at Syndicate 2020 were 78%, 71%, 174%
(including 103 percentage points due to September 11th-related claims)
and 93%, respectively, compared with average combined ratios (weighted
by net premiums written) of 112%, 112%, 128% and 107%, respectively,
for the Standard & Poor's Top 25 Reinsurance Groups Ranked by Net
Reinsurance Premiums Written for the years 1999, 2000, 2001 and 2002.

o Strong Franchise with Ability to Influence Terms and Conditions. As a
result of our strong franchise and recognized expertise, we believe
that we have greater access to business opportunities than many of our
competitors and that we are able to play a leading role in
establishing the terms and conditions with respect to the business
that we underwrite. In our reinsurance segment, for instance, we LEAD
approximately 75% of the business we write which gives us the ability
to influence terms and conditions.

o Financial Strength. We believe our capital base of $990.9 million
plus the net proceeds from this offering provide a high degree of
financial strength to support our operations. A.M. Best assigned an
"A" (Excellent) financial strength rating, the third highest of
fifteen rating levels, to Aspen U.K. and an "A-" (Excellent) rating,
the fourth highest of fifteen rating levels, to Aspen Bermuda and to
Aspen U.S. S&P assigned a rating of "A" (Strong), the sixth highest of
twenty-one rating levels to both Aspen U.K. and Aspen Bermuda. Moody's
assigned a rating of "A2" (Good), the eighth highest of twenty-seven
rating levels, to Aspen U.K., which we believe was the first
post-September 11th new insurer/reinsurer to obtain a rating from
Moody's. These ratings reflect A.M. Best's, S&P's and Moody's
respective opinions of our financial strength and ability to meet
ongoing obligations to policyholders and are not applicable to the
securities offered by this prospectus.

OUR BUSINESS STRATEGY

The key aspects of our business strategy are to:

o Diversify Our Business Portfolio. We plan to continue to diversify
our insurance and reinsurance operations by expanding into different
lines of business, by offering new products within our existing lines
of business, by selectively increasing our exposure in parts of the
world where we are currently under-represented and by increasing the
amount of insurance business that we underwrite. For example, in 2003
we began writing aviation and marine reinsurance business, have
further expanded our U.K. liability insurance business and seek to
write U.S. surplus lines business. We intend to accomplish this
diversification by building on our established underwriting expertise
and analytical skills. As we expand the scope of our business, we
intend to remain focused on the same type of high value-added
underwriting for which we enjoy a strong reputation.

o Build on Our Presence in the London, Bermuda and U.S. Markets. We
believe that the London and Bermuda markets offer complementary
business opportunities. Our presence in both markets allows us to
serve more of our clients' needs by offering a wider range of
products. In addition to maintaining a strong presence in the United
Kingdom, we plan to expand our underwriting capacity in Bermuda and
the United States significantly

beginning in 2004. By developing operating centers in the London
Market and in Bermuda, as well as the U.S. surplus lines market, we
seek to expand our business opportunities and to gain access to the
different types of risks offered in such markets.

o Deploy Our Capital Effectively. Our initial private equity funding,
net of issuance costs, of $836.9 million was sized to address our
initial capital needs, most of which was rapidly deployed to support
the business written by our operating subsidiaries, Aspen U.K. and
Aspen Bermuda. We strive to maintain an optimal level of capital
relative to our business plan. To do this, we employ rigorous
statistical modeling techniques to assess the risk of loss to our
capital base based upon the portfolio of risks we underwrite. We
intend to manage our capital prudently relative to our risk exposure
to maximize profitability and long-term growth in shareholder value.

o Anticipate and Adapt to Changing Market Conditions. By anticipating
changing market conditions, we seek to access different lines of
business with complementary risk/return characteristics and to deploy
capital appropriately. We monitor relative and absolute rate adequacy
and movements and we adjust the composition of our risk portfolio
based on market conditions and underwriting opportunities. At the
current time, we plan to increase the amount of insurance that we
underwrite relative to the amount of reinsurance. We believe this will
improve the balance of our business. We also plan to increase the
amount of casualty lines we underwrite relative to the amount of
property lines because of attractive market trends. We are prepared to
reposition our underwriting and capital management strategies in order
to respond in a timely manner to the changing market environment for
all or some of our lines of business. This may include reducing our
gross premiums written for a business line, or for our overall
writings, should conditions warrant.

o Manage Risk Retention through the Purchase of Reinsurance. While we
seek to write business which is profitable on a gross basis, we manage
our net exposure to catastrophic losses and large individual risk
losses by selectively purchasing reinsurance. We seek the optimal
protection for the individual and aggregate exposures that we assume
under our reinsurance contracts and insurance policies, with a view to
reducing the volatility of our underwriting results on a long-term
basis. We continue to use many of the same reinsurers with whom our
management had built relationships while at Syndicate 2020. The
substantial majority of reinsurers that we currently use have a rating
of "A" (Excellent), the third highest of fifteen rating levels, or
better by A.M. Best.

o Employ a Conservative Investment Policy. We protect our capital by
employing, among other things, a conservative investment policy that
focuses on highly rated fixed income securities. We will manage the
duration of our fixed income investments having regard to the nature
of our reinsurance and insurance risks and wider market and economic
conditions. We currently do not invest in equity securities and we do
not expect that investments in equity securities will compose a
significant portion of our investment portfolio for the foreseeable
future.

BUSINESS SEGMENTS

We have two business segments: reinsurance and insurance. Our business
segments and the related gross premiums written, set forth by business segment,
are as follows:

GROSS PREMIUMS WRITTEN
---------------------------------------------------------------------
FOR THE PERIOD FROM
FOR THE NINE MONTHS % OF MAY 23, 2002 TO % OF
BUSINESS SEGMENT ENDED SEPTEMBER 30, 2003 TOTAL DECEMBER 31, 2002 TOTAL
- --------------------- -------------------------- ---------- -------------------- ----------
($ IN MILLIONS, EXCEPT FOR PERCENTAGES)

Reinsurance ......... $ 939.6 80.9% $ 288.2 76.9%
Insurance ........... 222.2 19.1 86.6 23.1
---------- ----- --------- -----
Total .............. $ 1,161.8 100.0% $ 374.8 100.0%
========== ===== ========= =====

REINSURANCE. Our reinsurance segment consists of the following lines of
business: property reinsurance, casualty reinsurance and specialty reinsurance.

The reinsurance business we write directly (including the quota share
business) can be analyzed by geographic region as follows for the period from
January 1, 2003 to September 30, 2003:

NINE MONTHS ENDED SEPTEMBER 30, 2003
------------------------------------
PERCENTAGE GROSS PREMIUMS WRITTEN
------------ -----------------------
($ IN MILLIONS)

Australia/Asia ............................... 7.4% $ 69.1
Caribbean .................................... 0.8% 7.6
Europe ....................................... 5.8% 54.9
United Kingdom ............................... 19.9% 187.2
United States and Canada(1) .................. 50.3% 472.3
Worldwide excluding United States(2) ......... 2.6% 24.9
Worldwide including United States(3) ......... 11.5% 107.3
Others ....................................... 1.7% 16.3
----- --------
Total ........................................ 100.0% $ 939.6
===== ========

- ----------
(1) "United States and Canada" comprise individual policies that insure risks
specifically in the United States and/or Canada, but not elsewhere.

(2) "Worldwide excluding the United States" comprise individual policies that
insure risks wherever they may be across the world but specifically
exclude the United States.

(3) "Worldwide including the United States" comprise individual policies that
insure risks wherever they may be across the world but specifically
include the United States.

Property Reinsurance. Our property reinsurance line of business is written
on both a treaty and a facultative basis. Property treaty and FACULTATIVE
REINSURANCE accounted for, respectively, $112.9 million and $4.7 million of our
gross premiums written during the period from incorporation on May 23, 2002 to
December 31, 2002. For the nine months ended September 30, 2003, property
treaty and facultative reinsurance accounted for, respectively, $527.9 million
and $27.5 million of our gross premiums written. The property treaty
reinsurance we write includes catastrophe, risk excess and pro rata, including
retrocession. Treaty reinsurance contracts provide for automatic coverage of a
type or category of risk underwritten by our ceding clients. Our mix of
property treaty reinsurance business, as measured by gross premiums written
during the period from May 23, 2002 to December 31, 2002, was approximately
36.8% catastrophe, 54.1% risk excess and 9.1% pro rata. For the nine months
ended September 30, 2003, our mix of property treaty reinsurance business, as
measured by gross premiums written, was approximately 43% catastrophe, 46% risk
excess and 11% pro rata. As at September 30, 2003, approximately 62.4% of the
gross premiums written in our property reinsurance line of business are in the
United States and Canada, although we expect this percentage to gradually
decline as we

expand our activities in Europe and the United Kingdom through Aspen U.K. The
remaining reinsured risks represent worldwide exposures, including in the
United States.

Treaty Catastrophe. Treaty CATASTROPHE REINSURANCE contracts are
typically "all risk" in nature, providing protection against losses from
earthquakes and hurricanes, as well as other natural and man-made catastrophes
such as floods, tornadoes, fires and storms. Coverage for other perils may be
negotiated on a given treaty. The predominant exposures covered are losses
stemming from property damage and business interruption resulting from a
covered peril. Coverage can also be more limited by extending to only specified
perils such as windstorm.

Property catastrophe reinsurance is generally written on an excess of loss
basis. Excess of loss reinsurance provides coverage to primary insurance
companies when aggregate claims and claim expenses from a single occurrence
from a covered peril exceed a certain amount specified in a particular
contract. Under these contracts, we provide protection to an insurer for a
portion of the total losses in excess of a specified loss amount, up to a
maximum amount per loss specified in the contract. In the event of a loss, most
contracts provide for coverage of a second occurrence following the payment of
a premium to reinstate the coverage under the contract, which is referred to as
a reinstatement premium. A loss from a single occurrence is limited to the
initial policy limit and would not include the policy limit available following
the payment of a reinstatement premium. The coverage provided for under excess
of loss reinsurance contracts may be on a worldwide basis or limited in scope
to selected regions or geographical areas.

Treaty Risk Excess. We also write RISK EXCESS OF LOSS PROPERTY TREATY
REINSURANCE. This type of reinsurance provides coverage to a reinsured where it
experiences a loss in excess of its retention level on a single "risk" basis,
rather than to aggregate losses for all covered risks, as does catastrophe
reinsurance. A "risk" in this context might mean the insurance coverage on one
building or a group of buildings due to fire or explosion or the insurance
coverage under a single policy which the reinsured treats as a single risk.
This line of business is generally less exposed to accumulations of exposures
and losses but can still be impacted by natural catastrophes, particularly
earthquakes.

Treaty Pro Rata. Our treaty pro rata reinsurance product provides
coverage based on the original risks written by the ceding client, rather than
the loss incurred by that client. Under our pro rata reinsurance treaties, we
share risks in the same proportion as our share of premium and policy amounts.
Pro rata contracts can be particularly prone to accumulations of exposure and
losses due to catastrophic events. We write pro rata contracts where we believe
historical results and the quality of information provided by the reinsured
justify the writing of such coverage.

We also provide retrocessional property coverage, which is reinsurance
protection to other reinsurers or RETROCEDENTS. Approximately 1.4% of the
reinsurance protection that we provided was retrocessional coverage, based on
the written premiums for the nine months ended September 30, 2003. Our
retrocessional coverage is focused on catastrophe protections of U.K. and
non-U.S. treaty accounts and London Market direct and facultative accounts. We
believe, based on the historical experience of management, the most opportune
time to write retrocessional coverage follows major catastrophes.
Retrocessional coverage typically carries a higher degree of volatility versus
reinsurance as it covers the concentration of catastrophe exposure written by
retrocedents, which in turn may have an aggregation of losses from a single
catastrophic event. In addition, the information available in pricing
retrocessional coverage can be less precise than the information received
directly from the primary companies.

A very high percentage of the reinsurance contracts that we write exclude
coverage for losses arising from the peril of terrorism involving nuclear,
biological or chemical attack outside the U.S. With respect to personal lines
risks, losses arising from the peril of terrorism that do not involve nuclear,
biological or chemical attack are sometimes covered by our reinsurance
contracts. Such losses relating to commercial lines risks are generally covered
on a limited basis; for example, where the covered risks fall below a stated
insured value or into classes or categories we deem less likely to be targets
of terrorism than others. We have written a limited number of reinsurance
contracts, both on a pro rata and risk excess basis, covering solely the peril
of terrorism. We have done so only in instances

where we believe we are able to obtain pricing that is commensurate with our
exposure. These contracts typically exclude coverage protecting against
nuclear, biological or chemical attack.

Facultative Property. Our facultative property reinsurance line of
business is underwritten by WU Inc. The business is written on an excess of
loss basis for U.S. primary insurance policyholders both in the United States
and for their overseas interests. In facultative reinsurance, the reinsurer
assumes all or part of a risk under a single insurance contract. Facultative
reinsurance is negotiated separately for each contract. Facultative reinsurance
is normally purchased by insurers where individual risks are not covered by
their reinsurance treaties, for amounts in excess of the dollar limits of their
reinsurance treaties or for unusual risks. There is typically a greater amount
of underwriting expertise required in facultative underwriting as compared to
treaty underwriting. WU Inc. underwrites this business and has authority to
bind us on reinsurance policies within the defined limits we have agreed.

Casualty Reinsurance. Our casualty reinsurance line of business is written
on both a treaty and a facultative basis. The casualty treaty reinsurance we
write includes excess of loss and pro rata reinsurance. We also write U.S.
casualty facultative reinsurance. Our mix of casualty reinsurance business as
measured by gross premiums written during the period from May 23, 2002 to
December 31, 2002 was approximately 17.6% U.S. treaty, 72.5% non-U.S. treaty
and 9.9% facultative casualty. For the nine months ended September 30, 2003,
our mix of casualty reinsurance business as measured by gross premiums written
was approximately 35.7% U.S. treaty, 54.4% non-U.S. treaty and 9.9% facultative
casualty. For the nine months ended September 30, 2003, 87.9% of premiums were
derived from the United Kingdom, Australia and the United States, with the
remainder representing risks in the rest of the world. Our excess of loss
positions come most commonly from layered reinsurance structures with
underlying ceding company retentions. We also write pro rata reinsurance
contracts that are applied to portfolios of excess of loss insurance policies.

U.S. Treaty. Our U.S. casualty reinsurance business is composed of
treaty contracts protecting U.S. cedents mostly on an excess of loss basis. We
reinsure exposures with respect to automobile liability, WORKERS' COMPENSATION,
medical malpractice, and PROFESSIONAL LIABILITY for lawyers, regional
accountants, architects and engineers. Our U.S. casualty reinsurance business
was one of our smaller lines in terms of premiums written in 2002 due to the
current pricing environment. As of the nine months ended September 30, 2003,
our U.S. casualty reinsurance business comprised 39.6% of our total casualty
treaty business as measured by gross written premiums. We expect to increase
our writings in this line of business.

Non-U.S. Treaty. Our non-U.S. casualty reinsurance business is composed
of long tail treaty contracts. Approximately 90% of the non-U.S. casualty
reinsurance business is written on an excess of loss basis and the remaining
10% is written on a pro rata basis. The exposures that we cover in the non-U.S.
casualty business include automobile liability, workers' compensation,
employers' liability, public and product liability, FIDELITY BUSINESS and
professional indemnity. We focus on business that is exposed to severe losses
but not expected to produce high levels of claims frequency.

Facultative Casualty. Our facultative casualty reinsurance line of
business consists of automobile liability reinsurance written through WU Inc.
for U.S. clients. We focus primarily on short haul trucking clients, rather
than long distance or interstate trucking. Currently, approximately all
exposures reinsured in this line of business are located in the United States.
This is facultative reinsurance written on an excess of loss basis.

Specialty Reinsurance. Our specialty reinsurance line of business is
composed of specialty risks such as those covered by aviation and marine
reinsurance, including exposure to catastrophes. This line also includes quota
share reinsurance to Syndicate 2020 for various specialty lines including
energy, property and aviation. We also provide CONTINGENCY REINSURANCE, such as
event cancellation risks. Our mix of specialty reinsurance business as measured
by gross premiums written during the period from May 23, 2002 to December 31,
2002 was approximately 96.6% quota share reinsurance from Syndicate 2020 and
3.4% contingency reinsurance. For the nine months ended September 30, 2003, our
mix of specialty reinsurance business as measured by gross premiums written was

approximately 47.6% quota share reinsurance from Syndicate 2020, 20.9%
contingency reinsurance and 29.8% aviation and marine reinsurance. The coverage
provided for under our specialty reinsurance line of business may be on a
worldwide basis.

For 2002, we acquired certain of our specialty lines business by
reinsuring through quota share reinsurance approximately 13% of the business
written by Syndicate 2020 and 70% of the business written by Syndicate 3030.
Under the framework agreement between WUAL and Aspen U.K. entered into at our
formation, WUAL agreed to offer to Aspen U.K. a quota share of up to 20% of the
business written by Syndicate 2020 and Aspen U.K. agreed to offer Syndicate
2020 a quota share of up to 20% of its business in each calendar year. The
benefit of these arrangements is that they help us to diversify our
underwriting portfolio. For 2003, we have elected to take a 7.5% quota share of
the Syndicate 2020 lines, whereas Syndicate 2020 has elected not to take a
quota share of any of our lines because of capacity restraint and its existing
exposure to our business through its shareholding in the Company. Our quota
share reinsurance of Syndicate 3030 was for 2002 only. Syndicate 3030 did not
continue into 2003 or beyond. Aspen U.K.'s participation in these arrangements
with the Syndicates constituted approximately 58% of our gross premiums written
from our formation through December 31, 2002 and approximately 5% of our gross
premiums written for the nine months ended September 30, 2003. See also
"Certain Relationships and Related Transactions."

INSURANCE. Our insurance segment consists of the following lines of
business: commercial property insurance, commercial liability insurance and
U.S. Surplus lines.

The insurance business we write can be analyzed by geographic region as
follows for the nine months ended September 30, 2003:

NINE MONTHS ENDED SEPTEMBER 30, 2003
------------------------------------
PERCENTAGE GROSS PREMIUMS WRITTEN
------------ -----------------------
($ IN MILLIONS)

Europe ................. 2.6% $ 5.8
United Kingdom ......... 97.4% 216.4
----- -------
Total .................. 100.0% $ 222.2
===== =======

Commercial Property Insurance. Our commercial property insurance line of
business focuses on providing insurance coverage with respect to losses to a
business' premises, inventory and equipment as a result of weather, fire, theft
and other causes. Our client base is predominantly U.K. middle market corporate
and public sector clients and property owners. Our maximum limit for coverage
under each policy is (pounds sterling)40 million Estimated Maximum Loss
("EML") per location.

Commercial Liability Insurance. Our commercial liability insurance line of
business focuses on providing employers' liability coverage and public
liability coverage for insureds domiciled in both the United Kingdom and
Ireland. The maximum coverage is (pounds sterling)10 million for employers'
liability and (pounds sterling)5 million for public liability.

In the United Kingdom, all employers must maintain employers' liability
insurance. This insurance covers employers' liability for bodily injury or
disease sustained by employees, and arising out of and in the course of
employment. In the United Kingdom, employees are required to show breach of
statute or tort prior to being entitled to any compensation. As opposed to the
United States, there is no set scale of compensation in the United Kingdom, as
claims are settled in accordance with legal precedent and official damages
guidelines. Most claims are settled out of court; however, most employees
engage legal representation that increases claim costs but in a predictable
way. Insurance cover is written on an "occurrence" basis, that is, the monetary
limits of the insurance apply to all claims relating to any one occurrence,
with the minimum legal requirement being (pounds sterling)5 million for any
one occurrence. However, the usual limit for employers' coverage is (pounds
sterling)10 million for any one occurrence.

Public liability insurance covers employers for claims made against them
by members of the public or other businesses, but not for claims by employees.
Public liability insurance is generally not required by regulation.

U.S. Surplus Lines. For our U.S. surplus lines business we intend to write
both property and casualty insurance business. We expect this book of business
to consist of approximately 70% property risks and 30% casualty risks. The
property account will consist predominantly of mercantile, manufacturing and
commercial real estate business, with habitation-related risks expected to
contribute less than 20% of the overall business. The casualty account will
focus on general liability exposures relating to property risks, service
contractors and light to medium hazard products.

We have also formed Aspen Specialty Management, a licensed surplus lines
brokerage company based in Boston, Massachusetts. Aspen Specialty Management
was formed for the primary purpose of transacting business as a licensed
insurance producer and surplus lines broker. It has applied for, and expects to
receive, resident licenses to transact such business in Massachusetts and plans
to seek such licenses in other jurisdictions on a non-resident basis as needed.
All business originated by Aspen Specialty Management is currently intended to
be placed with Aspen U.S.

UNDERWRITING AND RISK MANAGEMENT

Our objective is to create a balanced portfolio of insurance and
reinsurance risks, diversified across classes, products, geographic areas of
coverage, cedents and source. We undertake a detailed risk analysis in our risk
management program which identifies the risks we are exposed to, and rates the
impact of each risk on our business. We analyze projected catastrophe exposures
to which we could be exposed and attempt to limit the amount of potential loss
that may arise from a single catastrophic event. We also manage our exposure by
reference to the CORRELATION between the risk characteristics of our business
portfolios.

Our underwriting team is led by our Chief Executive Officer, Christopher
O'Kane. We underwrite to specific disciplines, with the aim of maintaining the
following principles:

o follow maximum underwriting authority limits;

o make consistent use of peer review -- no risk will be accepted
without being reviewed by at least one qualified peer reviewer;

o use teams of independent reviewers;

o use risk assessment models such as RMS, EQE and AIR to assist in the
treaty underwriting process and use RMS to quantify our catastrophe
aggregate exposures;

o employ dedicated personnel who monitor the aggregation of our risks;
and

o prepare monthly aggregation reports for review by our executive
committee.

We delegate underwriting authority to our underwriters in accordance with
an understanding of each individual's capabilities. We issue detailed letters
of underwriting authority to each of our underwriters, which contain authority
limits tailored to the classes of business written by the particular
underwriter. The underwriting authority limits are regularly reviewed by
management and are reviewed by the boards of directors of our Insurance
Subsidiaries yearly.

Our reinsurance and insurance segments have different risk acceptance
guidelines, authority limits and accumulations. In our reinsurance segment,
prior to quoting a price for a risk, the underwriter must seek at least one
qualified peer review. In our insurance segment, although peer review is
required, it may take place after the price is quoted but in any event prior to
the acceptance of the risk. These peer reviews are in place to ensure high
standards of underwriting discipline and consistency. In addition, all risks
are entered into a customized risk clearing system.

With respect to our U.S. facultative property and casualty reinsurance
lines of business, WU Inc. writes reinsurance under explicit authority limits
in accordance with binding authority agreements. These agreements are effective
for a one-year period beginning January 1, 2003 and are automatically

renewable each year. The property agreements can be cancelled upon 30 days
written notice by either party. The automobile casualty agreements can be
cancelled upon 90 days written notice by either party. These agreements contain
our operating guidelines, commissions, claims settlement authority limits,
limits per risk coverage and aggregate premiums. In addition, WU Inc. imposes
authority limits on its individual underwriters. For risks falling outside an
underwriter's authority, the underwriter consults the relevant branch manager,
senior or specialist underwriter, and ultimately the chief underwriting officer
of WU Inc., as needed.

MARKETING

With respect to our reinsurance segment, our business is produced
principally through brokers and reinsurance intermediaries and, in most cases,
it is produced through the London Market broker communities. The brokerage
distribution channel provides us with access to an efficient, variable cost and
global distribution system without the significant time and expense which would
be incurred in creating wholly-owned distribution networks. The brokers and
reinsurance intermediaries typically act in the interest of ceding clients or
insurers; however, they are instrumental to our continued relationship with our
clients. WU Inc. underwrites and markets our U.S. facultative property and
casualty products.

The following table shows our gross reinsurance premiums written by broker
as of the nine months ended September 30, 2003:

REINSURANCE
------------------------
NINE MONTHS ENDED
SEPTEMBER 30, 2003
------------------------
($ IN MILLIONS, EXCEPT
PERCENTAGES)

Aon ....................... $ 270.3 28.8%
Marsh ..................... 152.9 16.3
Willis .................... 115.4 12.3
Benfield .................. 111.3 11.8
Ballantyne ................ 39.0 4.1
Others .................... 250.7 26.7
-------- -----
Total ..................... $ 939.6 100.0%
======== =====

Our commercial lines of business are mostly produced through the U.K.
regional and London broker network. The following table shows our gross
insurance premiums written by brokers as of the nine months ended September 30,
2003:

INSURANCE
-----------------------
NINE MONTHS ENDED
SEPTEMBER 30, 2003
-----------------------
($ IN MILLIONS, EXCEPT
PERCENTAGES)

Aon .......................... $ 46.1 20.8%
SBJ Limited .................. 27.0 12.1
Marsh ........................ 16.2 7.3
R. L. Davison ................ 13.0 5.8
Others ....................... 119.9 54.0
------- -----
Total ........................ $ 222.2 100.0%
======= =====

CLAIMS MANAGEMENT

As a relatively new company, we have not experienced a high volume of
claims. Notwithstanding the lack of significant claims activity to date, we
have a well-developed process in place for identifying, tracking and settling
potential claims based in part on our management's and staff's experience at
Syndicate 2020. We have a staff of claims adjusters that will expand as needed
to service our clients and to ensure claims consistency. The responsibilities
of the claims department include reviewing loss

reports, monitoring claims handling activities of clients, requesting
additional information where appropriate, establishing initial CASE RESERVES
and approving payment of individual claims. We have established authority
levels for all individuals involved in the reserving and settlement of claims.
Our underwriters do not make the final decisions regarding the ultimate
determination of reserves and settlement of claims; rather this is a function
separately determined by our claims department. In addition, we regularly
report to our board of directors on the status of our reserves and settlement
of claims.

Under our claims management process, upon notification of a claim, a
member of our staff performs an initial review and prepares a control sheet. If
claims fall outside our claims adjusters' authorities, then they consult our
underwriters to adjust the claim, if necessary, after which such claims are
submitted to our Chief Executive Officer for his final review and approval for
payment. We recognize that fair interpretation of our reinsurance agreements
with our customers and timely payment of covered claims is a valuable service
to our clients and enhances our reputation.

We have outsourced our handling of claims for the U.K. commercial property
and liability lines of business to third-party specialist service providers.
They have authority to handle claims of up to (pounds sterling)25,000 for
property claims and (pounds sterling)10,000 for liability claims. Claims above
this level must be referred to our internal claim adjusters for all decisions.
We may enter into additional outsourcing agreements for our U.K. commercial
liability insurance claims. Our Chief Operating Officer oversees these
outsourcing agreements. We manage, review and audit those claims settled under
our outsourcing arrangements.

WU Inc., with respect to our U.S. property and casualty facultative
reinsurance, also has claims settlement authority for up to $250,000 per claim
beyond which all claims settlements require our approval.

REINSURANCE

We purchase retrocession and reinsurance to limit and diversify our own
risk exposure and to increase our own insurance underwriting capacity. These
agreements provide for recovery of a portion of losses and loss expenses from
reinsurers.

A significant portion of our business accumulates property exposures in
catastrophe exposed zones throughout the world. At levels of likelihood up to 1
in 250 years, we consider Florida windstorms and California earthquakes to be
our peak natural catastrophe exposures. In order to mitigate those and other
exposures, we purchase, through several contracts, reinsurance to limit our
losses in the event of a large catastrophic event. For example, we buy a
catastrophe retrocession program that covers us for a single catastrophic loss
in excess of $50 million up to $350 million arising from our property
catastrophe class of business and a separate program that protects us against
catastrophe or individual risk losses (e.g., a large fire or explosion) in
excess of $40 million up to $225 million arising from our property facultative,
property pro rata treaty and property risk excess classes of business.

Many of the reinsurance contracts which we underwrite and which we
purchase include terms under which individual payments, known as reinstatement
premiums, are payable if claims are made. We take these terms into account when
assessing our overall exposure to catastrophic events, together with exposures
arising from parts of our business, such as the property retrocession business
that we write, but are excluded from our reinsurance cover.

We have also entered into four quota share reinsurance contracts with
Montpelier Re. See "Certain Relationships and Related Transactions."

As is the case with most reinsurance treaties, we remain liable to the
extent that reinsurers do not meet their obligations under these agreements,
and therefore we evaluate the financial condition of our reinsurers and monitor
concentrations of credit risk. Ninety-nine percent (99%) of our reinsurance
limits is provided by reinsurers who have been assigned a rating of "A"
(Excellent; the third highest of fifteen rating levels) or better by A.M. Best
or "A-" (Strong; the seventh highest of twenty-one rating

levels) or better by S&P. As of the date of this prospectus, we have no exposure
to reinsurers rated by A.M. Best below "B++" (Very Good; the fifth highest of
fifteen rating levels), except for approximately $600,000 of recoveries against
which we have established a provision of approximately $200,000.

We are also a member of Pool Reinsurance Company Limited, commonly known
as Pool Re, which is authorized to write reinsurance relating to terrorist
risks on commercial property insurance in the United Kingdom. Pool Re reinsures
its liabilities with the U.K. government, to which it pays a reinsurance
premium and from which it will recover any claims that exceed its resources.
Pool Re provides an indemnity in respect of Aspen U.K.'s ultimate net loss
relating to damage to commercial property in the United Kingdom caused by an
act of terrorism, in excess of our retention. Our retention is calculated by
reference to our market share of this type of coverage and for 2003 is (pounds
sterling)100,000 per event.

RESERVES

Our policy is to establish prudent loss and loss adjustment reserves for
the ultimate settlement costs of all losses and loss adjustment expenses
incurred. In our reinsurance segment, we rely significantly on our ceding
clients' judgments in establishing reserves, while in our insurance segment, we
establish our own reserves. Each of our Insurance Subsidiaries' reserving
process and methodology are subject to a quarterly review, the results of which
are presented to and reviewed by our board of directors.

Generally, reserves will be established without regard to whether we
believe we may subsequently contest a future claim. Except for property
catastrophe reinsurance, any reserve for losses and loss adjustment expenses
may also include IBNR. These reserves are estimated by our management based
upon reports received from ceding companies, as supplemented by our own
estimates of reserves for which ceding company reports have not been received,
and our own historical experience. To the extent that in the future our own
historical experience is inadequate for estimating reserves, such estimates may
be actuarially determined based upon industry experience and our management's
judgment. Our reserve estimates will be continually reviewed and as adjustments
to these reserves become necessary, these adjustments will be reflected in
current operations.

Loss and loss adjustment reserves represent estimates, including actuarial
and statistical projections at a given point in time, of an insurer's or
reinsurer's expectations of the ultimate settlement and administration costs of
claims incurred, and it is likely that the ultimate liability may exceed or be
less than such estimates, perhaps even significantly. These estimates are not
precise in that, among other things, they are based on predictions of future
developments and estimates of future trends in loss severity and frequency and
other variable factors such as inflation. During the loss settlement period, it
often becomes necessary to refine and adjust the estimates of liability on a
claim either upward or downward. Even after such adjustments, ultimate
liability may exceed or be less than the revised estimates. To assist us in
establishing appropriate loss and loss adjustment reserves, we have access to
commercially available databases showing historical catastrophe losses. In
addition, when reviewing a proposed reinsurance contract, we typically receive
loss experience information with respect to the insured on such contract.
However, reserve estimates by new reinsurers may be inherently less reliable
than the reserve estimates of a reinsurer with a stable volume of business and
an established claim history.

INVESTMENTS

Our Investment Committee establishes investment guidelines and supervises
our investment activity. The Investment Committee regularly monitors our
overall investment results and reviews compliance with our investment
objectives and guidelines. These guidelines specify minimum criteria on the
overall credit quality and liquidity characteristics of the portfolio. They
include limitations on the size of certain holdings as well as restrictions on
purchasing certain types of securities or investing in certain industries.

We follow a conservative investment strategy designed to emphasize the
preservation of invested assets and provide sufficient liquidity for the prompt
payment of claims. The composition of the

investments is a diversified portfolio of highly rated, liquid, fixed income
securities of one to five years duration. We do not expect that investments in
equity securities will be a significant component of our investment portfolio
for the foreseeable future. We do not plan to have any exposure to alternative
asset classes, such as hedge funds or private equity funds.

We utilize several third party investment managers to manage our assets.
We agree to separate investment guidelines with each investment manager. These
investment guidelines cover, among other things, limits on investments in the
securities of any one issuer, credit quality, and limits on investments in any
one sector. We expect our investment managers to adhere to strict overall
portfolio credit and duration limits and a minimum AA- portfolio credit rating
for the portion of the assets they manage.

The following presents the cost, gross unrealized gains and losses, and
estimated fair value of investments in fixed maturities and other investments:

AS AT SEPTEMBER 30, 2003
------------------------------------------------------------------
($ IN MILLIONS)
AMORTIZED
COST(1) GROSS GAINS GROSS LOSSES FAIR MARKET VALUE
INVESTMENTS (EXCLUDING CASH) ------------ ------------- -------------- ------------------

Fixed Income Investments
U.K. Government ............................... $ 70.3 $ 0.1 $ 1.4 $ 69.0
U.S. Government and Agency Securities ......... 320.4 2.0 0.0 322.4
Mortgage-Backed Securities .................... 72.5 0.4 0.1 72.8
Asset-Backed Securities ....................... 129.9 0.3 0.3 129.9
Corporate Securities .......................... 23.2 0.1 0.0 23.3
--------- ------ ------ ---------
Total Fixed Income .......................... 616.3 2.9 1.8 617.4
--------- ------ ------ ---------
Short-Term Investments ......................... 569.7 1.9 0.0 571.6
--------- ------ ------ ---------
Total Investments ........................... $ 1,186.0 $ 4.8 $ 1.8 $ 1,189.0
========= ====== ====== =========

- ----------
(1) The cost for short-term investments are stated at original cost, while
the cost for the fixed maturity investments are stated at amortized cost.

U.K. Government. U.K. government securities are composed of bonds issued
by the U.K. government.

U.S. Government and Agency Securities. U.S. government and agency
securities are composed of bonds issued by the U.S. Treasury and municipal
securities issued by states, cities, counties and towns in the United States to
fund public capital projects like roads, schools, sanitation facilities and
bridges, as well as operating budgets.

Mortgage-Backed Securities. Mortgage-backed securities are securities that
represent ownership in a pool of mortgages. Both principal and income are
backed by the group of mortgages in the pool.

Asset-Backed Securities. Asset-backed securities are securities backed by
notes or receivables against assets other than real estate.

Corporate Securities. Corporate securities are composed of both short-term
and medium-term debt issued by corporations.

Short-term investments. Short-term investments are both units in a U.S.
denominated bond fund operated by Wellington Management Company and money
market funds. The bond fund is rated "AA+" by S&P. The fund invests in
government securities, corporate securities, asset-backed securities,
mortgage-backed securities, commercial paper and U.S. Treasury obligations. The
money market funds are rated "AAA" by S&P and Moody's and invest in a variety
of short-term instruments such as commercial paper, certificates of deposit,
floating rate notes and medium term notes.

The maturity distribution and ratings for fixed income securities held as
of September 30, 2003 was as follows:

AMORTIZED FAIR MARKET AVERAGE RATINGS BY
COST VALUE MATURITY
----------- ------------- -------------------
($ IN MILLIONS)

Maturity & Ratings (excluding cash)
Due in one year or less ........................ $ 11.2 $ 11.2 AAA
Due after one year through five years .......... 397.5 398.2 AAA
Due after five years through ten years ......... 5.2 5.3 AAA
--------- ---------
Subtotal .................................... 413.9 414.7
--------- ---------
Mortgage- and Asset-Backed Securities .......... 202.4 202.7 AAA
Short-Term Investments ......................... 569.7 571.6 AAA
--------- ---------
Total ....................................... $ 1,186.0 $ 1,189.0
========= =========

The securities with a maturity over one year consist of U.S. and U.K.
Government securities, supra-national securities as well as high grade
corporate bonds, mortgage- and asset-backed securities. The securities with
duration of one year or less consist of U.S. Government and Agency securities.

We have engaged BlackRock Financial Management, Weiss, Peck & Greer LLC,
Wellington Management Company (not an affiliate of Wellington) and HSBC to
provide investment advisory and management services for our portfolio of
assets. As of September 30, 2003, we had approximately $617.4 million of
investments and $30.9 million of cash under management by outside firms. We
have agreed to pay investment management fees based on the average market
values of total assets held under custody at the end of each calendar quarter,
or in the case of HSBC, the market value of the total assets as at the end of
each calendar quarter. These agreements may be terminated generally by either
party on short notice without penalty.

The total return of our portfolio of fixed income investments, cash and
cash equivalents for the nine months ended September 30, 2003 was 1.57%, as
compared with the total return of 1.77% of the Lehman Brothers 1-3 Year
Treasury Index for the same period. Total return is calculated based on total
net investment return, including interest on cash equivalents, divided by the
average of the sum of amortized cost and cash balances at January 1, 2003 and
at September 30, 2003.

COMPETITION

The insurance and reinsurance industries are highly competitive. We
compete with major U.S., U.K., Bermuda and other international insurers and
reinsurers and underwriting syndicates, some of which have greater financial,
marketing and management resources than we do. In particular, we generally
compete with insurers that provide property-based lines of insurance and
reinsurance, such as ACE, Aviva, Converium, Everest Re, General Re, Hannover
Re, IPC, Lloyd's of London, Munich Re, PartnerRe, Platinum Underwriters, PXRE,
Renaissance Re, Swiss Re and XL Re. In addition, there are other new Bermuda
reinsurers competing in similar lines, such as Allied World, Arch, AXIS,
Endurance Specialty and Montpelier Re. In our insurance lines of business, we
compete with Affiliated FM, Allianz, AIG, Amlin, AXA, Iron Trades, Liberty
Mutual, Mitsui, Norwich Union, Royal & SunAlliance and Zurich.

In addition, since the terrorist attacks of September 11, 2001,
established competitors have completed or may be planning to complete
additional capital raising transactions. Competition in the types of business
that we underwrite is based on many factors, including:

o the experience of the management in the line of insurance or
reinsurance to be written;

o financial ratings assigned by independent rating agencies and actual
and perceived financial strength;

o responsiveness to clients, including speed of claims payment;

o services provided, products offered and scope of business (both by
size and geographic location);

o relationships with brokers;

o premiums charged and other terms and conditions offered; and

o reputation.

Increased competition could result in fewer submissions, lower premium
rates, and less favorable policy terms, which could adversely impact our growth
and profitability. In addition, capital market participants have recently
created alternative products that are intended to compete with reinsurance
products. We are unable to predict the extent to which these new, proposed or
potential initiatives may affect the demand for our products or the risks that
may be available for us to consider underwriting.

RATINGS

Ratings by independent agencies are an important factor in establishing
the competitive position of insurance and reinsurance companies and are
important to our ability to market and sell our products. Rating organizations
continually review the financial positions of insurers, including us. Aspen
U.K. currently has a financial strength rating of "A" (Excellent) by A.M. Best,
the third highest of fifteen rating levels, "A" (Strong) by S&P, the sixth
highest of twenty-one rating levels, and "A2" (Good) by Moody's, the eighth
highest of twenty-seven rating levels. Aspen Bermuda currently has a financial
strength rating of "A-" (Excellent) by A.M. Best, the fourth highest of
fifteen rating levels, and "A" (Strong) by S&P. Aspen U.S. is currently rated
"A-" (Excellent) by A.M. Best, which is the fourth highest of fifteen rating
levels. These ratings reflect A.M. Best's, S&P's and Moody's opinions of Aspen
U.K.'s and Aspen Bermuda's ability to pay claims and are not evaluations
directed to investors in our ordinary shares and are not recommendations to
buy, sell, or hold our ordinary shares. A.M. Best maintains a letter scale
rating system ranging from "A++" (Superior) to "F" (in liquidation). S&P
maintains a letter scale rating system ranging from "AAA" (Extremely Strong) to
"R" (under regulatory supervision). Moody's maintains a letter scale rating
system ranging from "Aaa" (Exceptional) to "C" (Lowest). These ratings are
subject to periodic review by, and may be revised downward or revoked at the
sole discretion of, A.M. Best, Moody's and S&P.

PROPERTIES

We currently rent office space in Hamilton, Bermuda for our holding
company and Bermuda operations. In June 2003 we entered into a sublease with
ACE Global Markets Ltd. to occupy space within their offices at 100 Leadenhall
Street, London. The lease covers one and a half floors of the building (up to
14,000 square feet in total) and is for a three-year period with an option to
terminate upon 6 months notice at any time after 18 months. We also license
office space within the Lloyd's building on the basis of a renewable
twelve-month lease.

EMPLOYEES

As of September 30, 2003, we employed over 100 persons through Aspen
Holdings and our wholly-owned subsidiaries, Aspen Bermuda, Aspen U.K. Services
and Aspen U.S., none of whom was represented by a labor union. As of September
30, 2003, the significant majority of our employees are based in the United
Kingdom, except for five employees who are based in Bermuda and nine employees
who are based in the United States.

LEGAL PROCEEDINGS

We are not currently involved in any litigation or arbitration. We
anticipate that, similar to the rest of the insurance and reinsurance industry,
we will be subject to litigation and arbitration in the ordinary course of
business.

REGULATORY MATTERS

GENERAL

The business of insurance and reinsurance is regulated in most countries,
although the degree and type of regulation varies significantly from one
jurisdiction to another. Reinsurers are generally subject to less direct
regulation than primary insurers. In Bermuda, we operate under a relatively
less intensive regulatory regime than most other jurisdictions.

New legislative changes may impact the worldwide demand for insurance and
reinsurance. In response to the tightening of supply in certain insurance and
reinsurance markets resulting from, among other things, the September 11th
terrorist attack, the Terrorism Risk Insurance Act of 2002 was enacted to
ensure the availability of insurance coverage for certain terrorist acts in the
United States. This law establishes a federal assistance program through the
end of 2005 to help the commercial property and casualty insurance industry
cover claims related to future terrorism-related losses and regulates the terms
of insurance relating to terrorism coverage. This law could adversely affect
our business by increasing underwriting capacity for our competitors as well as
by requiring that coverage for terrorist acts be offered by insurers. We are in
the process of evaluating this legislation and have not yet determined how it
will affect our future operations. We are currently unable to predict the
extent to which the foregoing new initiative may affect the demand for our
products or the risks which may be available for us to consider underwriting.

The discussion below summarizes the material laws and regulations
applicable to the Company's Insurance Subsidiaries. We do not believe that any
of our Insurance Subsidiaries is in violation of any such laws and regulations.
In addition, our Insurance Subsidiaries have met and exceeded the solvency
margins and ratios applicable to them.

BERMUDA REGULATION

The Insurance Act 1978 of Bermuda and related regulations, as amended (the
"Insurance Act"), regulates insurance and reinsurance business and provides
that no person may carry on any insurance business in or from within Bermuda
unless registered as an insurer by the BMA under the Insurance Act; the
day-to-day supervision of insurers is the responsibility of the BMA.
Accordingly, the Insurance Act regulates the insurance business of Aspen
Bermuda which has been registered as a Class 4 insurer by the BMA; however, as
a holding company, Aspen Holdings is not subject to Bermuda insurance
regulations. The BMA, in deciding whether to grant registration, has broad
discretion to act as it thinks fit in the public interest. The BMA is required
by the Insurance Act to determine whether the applicant is a fit and proper
body to be engaged in the insurance business and, in particular, whether it
has, or has available to it, adequate knowledge and expertise to operate an
insurance business. The continued registration of an applicant as an insurer is
subject to it complying with the terms of its registration and such other
conditions as the BMA may impose from time to time. An Insurance Advisory
Committee appointed by the Bermuda Minister of Finance advises the BMA on
matters connected with the discharge of the BMA's functions. Sub-committees of
the Insurance Advisory Committee supervise and review the law and practice of
insurance in Bermuda, including reviews of accounting and administrative
procedures. The Insurance Act also imposes on Bermuda insurance companies
solvency and liquidity standards and auditing and reporting requirements and
grants the BMA powers to supervise, investigate, require information and the
production of documents and intervene in the affairs of insurance companies.
Certain significant aspects of the Bermuda insurance regulatory framework are
set forth below.

Classification of Insurers. The Insurance Act distinguishes between
insurers carrying on long-term business and insurers carrying on general
business. There are four classifications of insurers carrying on general
business, with Class 4 insurers subject to the strictest regulation. Aspen
Bermuda, which is incorporated to carry on general insurance and reinsurance
business, is registered as a Class 4 insurer in Bermuda and is regulated as
such under the Insurance Act. Aspen Bermuda is not licensed to carry on
long-term business.

Cancellation of Insurer's Registration. An insurer's registration may be
cancelled by the Supervisor of Insurance of the BMA on certain grounds
specified in the Insurance Act, including failure of the insurer to comply with
its obligations under the Insurance Act or if, in the opinion of the BMA after
consultation with the Insurance Advisory Committee, the insurer has not been
carrying on business in accordance with sound insurance principles.

Principal Representative. An insurer is required to maintain a principal
office in Bermuda and to appoint and maintain a principal representative in
Bermuda. For the purpose of the Insurance Act, Aspen Bermuda's principal office
is Victoria Hall, Victoria Street, Hamilton HM 11, Bermuda, and Aspen Bermuda's
principal representative is Marsh Management Services (Bermuda) Limited.
Without a reason acceptable to the BMA, an insurer may not terminate the
appointment of its principal representative, and the principal representative
may not cease to act as such, unless 30 days' notice in writing to BMA is given
of the intention to do so. It is the duty of the principal representative,
within 30 days of reaching the view that there is a likelihood that the insurer
will become insolvent or that a reportable "event" has, to the principal
representative's knowledge, occurred or is believed to have occurred, to make a
report in writing to the BMA setting forth all the particulars of the case that
are available to the principal representative. For example, the failure by the
insurer to comply substantially with a condition imposed upon the insurer by
the BMA relating to a solvency margin or a liquidity or other ratio would be a
reportable "event."

Independent Approved Auditor. Every registered insurer must appoint an
independent auditor who will audit and report annually on the statutory
financial statements and the statutory financial return of the insurer, both of
which, in the case of Aspen Bermuda, are required to be filed annually with the
BMA. Aspen Bermuda's independent auditor must be approved by the BMA and may be
the same person or firm that audits Aspen Holdings' consolidated financial
statements and reports for presentation to its shareholders. Aspen Bermuda's
independent auditor is KPMG.

Loss Reserve Specialist. As a registered Class 4 insurer, Aspen Bermuda is
required to submit an opinion of its approved loss reserve specialist with its
statutory financial return in respect of its losses and loss expenses
provisions. The loss reserve specialist, who will normally be a qualified
casualty actuary, must be approved by the BMA. Mr. David Hindley of B&W
Deloitte, a member of the General Insurance Board of the Institute of
Actuaries, has been approved to act as Aspen Bermuda's loss reserve specialist.

Statutory Financial Statements. An insurer must prepare annual statutory
financial statements. The Insurance Act prescribes rules for the preparation
and substance of these statutory financial statements (which include, in
statutory form, a balance sheet, an income statement, a statement of capital
and surplus and notes thereto). The insurer is required to give detailed
information and analyses regarding premiums, claims, reinsurance and
investments. The statutory financial statements are not prepared in accordance
with U.S. GAAP and are distinct from the financial statements prepared for
presentation to the insurer's shareholders under the Companies Act, which
financial statements, in the case of the Company, will be prepared in
accordance with U.S. GAAP. As a general business insurer, Aspen Bermuda is
required to submit the annual statutory financial statements as part of the
annual statutory financial return. The statutory financial statements and the
statutory financial return do not form part of the public records maintained by
BMA. Aspen Bermuda's first official insurance filing with the Bermuda insurance
regulators will be for the period beginning November 6, 2002 and ending
December 31, 2002.

Annual Statutory Financial Return. Aspen Bermuda is required to file with
the BMA a statutory financial return no later than four months after its
financial year end (unless specifically extended upon application to the BMA).
The statutory financial return for a Class 4 insurer includes, among other
matters, a report of the approved independent auditor on the statutory
financial statements of the insurer, solvency certificates, the statutory
financial statements, the opinion of the loss reserve specialist and a schedule
of reinsurance ceded. The solvency certificates must be signed by the principal
representative and at least two directors of the insurer certifying that the
minimum solvency margin has been met and whether the insurer complied with the
conditions attached to its certificate

of registration. The independent approved auditor is required to state whether,
in its opinion, it was reasonable for the directors to make these
certifications. If an insurer's accounts have been audited for any purpose
other than compliance with the Insurance Act, a statement to that effect must
be filed with the statutory financial return.

Minimum Solvency Margin and Restrictions on Dividends and
Distributions. Under the Insurance Act, the value of the general business
assets of a Class 4 insurer, such as Aspen Bermuda, must exceed the amount of
its general business liabilities by an amount greater than the prescribed
minimum solvency margin. Aspen Bermuda:

(1) is required, with respect to its general business, to maintain a
minimum solvency margin equal to the greatest of:

(A) $100,000,000;

(B) 50% of net premiums written (being gross premiums written
less any premiums ceded by Aspen Bermuda, but Aspen
Bermuda may not deduct more than 25% of gross premiums
when computing net premiums written); or

(2) is prohibited from declaring or paying any dividends during any
financial year if it is in breach of its minimum solvency margin or
minimum liquidity ratio or if the declaration or payment of such
dividends would cause it to fail to meet such margin or ratio (and
if it has failed to meet its minimum solvency margin or minimum
liquidity ratio on the last day of any financial year, Aspen Bermuda
will be prohibited, without the approval of the BMA, from declaring
or paying any dividends during the next financial year);

(3) is prohibited from declaring or paying in any financial year
dividends of more than 25% of its total statutory capital and
surplus (as shown on its previous financial year's statutory balance
sheet) unless it files with the BMA (at least 7 days before payment
of such dividends) an affidavit stating that it will continue to
meet the required margins;

(4) is prohibited, without the approval of the BMA, from reducing by
15% or more its total statutory capital as set out in its previous
year's financial statements, and any application for such approval
must include an affidavit stating that it will continue to meet the
required margins; and

(5) is required, at any time it fails to meet its solvency margin,
within 30 days (45 days where total statutory capital and surplus
falls to $75 million or less) after becoming aware of that failure
or having reason to believe that such failure has occurred, to file
with the BMA a written report containing certain information.

Additionally, under the Companies Act, Aspen Holdings and Aspen Bermuda
may only declare or pay a dividend if Aspen Holdings or Aspen Bermuda, as the
case may be, has no reasonable grounds for believing that it is, or would after
the payment be, unable to pay its liabilities as they become due, or if the
realizable value of its assets would not be less than the aggregate of its
liabilities and its issued share capital and share premium accounts.

While generally neither the Companies Act nor the Insurance Act restricts
Aspen Bermuda's ability to provide loans or advances to Aspen Holdings, any
such loans or advances will be subject to the principle that any action taken
by a company (e.g., Aspen Bermuda) must have a corporate benefit for that
company.

Minimum Liquidity Ratio. The Insurance Act provides a minimum liquidity
ratio for general business insurers, like Aspen Bermuda. An insurer engaged in
general business is required to maintain the value of its relevant assets at
not less than 75% of the amount of its relevant liabilities. Relevant assets
include, but are not limited to, cash and time deposits, quoted investments,
unquoted bonds and debentures, first liens on real estate, investment income
due and accrued, accounts and premiums

receivable and reinsurance balances receivable. There are certain categories of
assets which, unless specifically permitted by the BMA, do not automatically
qualify as relevant assets, such as unquoted equity securities, investments in
and advances to affiliates and real estate and collateral loans. The relevant
liabilities are total general business insurance reserves and total other
liabilities less deferred income tax and sundry liabilities (by interpretation,
those not specifically defined).

Supervision, Investigation and Intervention. The BMA may appoint an
inspector with extensive powers to investigate the affairs of Aspen Bermuda if
the BMA believes that such an investigation is in the best interests of its
policyholders or persons who may become policyholders. In order to verify or
supplement information otherwise provided to the BMA, the BMA may direct Aspen
Bermuda to produce documents or information relating to matters connected with
its business. In addition, the BMA has the power to require the production of
documents from any person who appears to be in possession of such documents.
Further, the BMA has the power, in respect of a person registered under the
Insurance Act, to appoint a professional person to prepare a report on any
aspect of any matter about which the BMA has required or could require
information. If it appears to the BMA to be desirable in the interests of the
clients of a person registered under the Insurance Act, the BMA may also
exercise these powers in relation to any company which is or has at any
relevant time been (a) a parent company, subsidiary company or related company
of that registered person, (b) a subsidiary company of a parent company of that
registered person, (c) a parent company of a subsidiary company of that
registered person or (d) a company in the case of which a shareholder
controller of that registered person, either alone or with any associate or
associates, holds 50 per cent or more of the shares or is entitled to exercise,
or control the exercise, of more than 50 per cent of the voting power at a
general meeting. If it appears to the BMA that there is a risk of Aspen Bermuda
becoming insolvent, or that Aspen Bermuda is in breach of the Insurance Act or
any conditions imposed upon its registration, the BMA may, among other things,
direct Aspen Bermuda (i) not to take on any new insurance business, (ii) not to
vary any insurance contract if the effect would be to increase its liabilities,
(iii) not to make certain investments, (iv) to liquidate certain investments,
(v) to maintain in, or transfer to the custody of a specified bank, certain
assets, (vi) not to declare or pay any dividends or other distributions or to
restrict the making of such payments and/or (vii) to limit Aspen Bermuda's
premium income. The BMA intends to meet with each Class 4 insurance company on
a voluntary basis, every two years.

Disclosure of Information. In addition to powers under the Insurance Act
to investigate the affairs of an insurer, the BMA may require certain
information from an insurer (or certain other persons) to be produced to them.
Further, the BMA has been given powers to assist other regulatory authorities,
including foreign insurance regulatory authorities, with their investigations
involving insurance and reinsurance companies in Bermuda but subject to
restrictions. For example, the BMA must be satisfied that the assistance being
requested is in connection with the discharge of regulatory responsibilities of
the foreign regulatory authority. Further, the BMA must consider whether
cooperation is in the public interest. The grounds for disclosure are limited
and the Insurance Act provides sanctions for breach of the statutory duty of
confidentiality.

Under the Companies Act, the Minister of Finance (the "Minister") has been
given powers to assist a foreign regulatory authority which has requested
assistance in connection with enquires being carried out by it in the
performance of its regulatory functions. The Minister's powers include
requiring a person to furnish him with information, to produce documents to
him, to attend and answer questions and to give assistance in connection with
enquiries. The Minister must be satisfied that the assistance requested by the
foreign regulatory authority is for the purpose of its regulatory functions and
that the request is in relation to information in Bermuda which a person has in
his possession or under his control. The Minister must consider, among other
things, whether it is in the public interest to give the information sought.

CERTAIN OTHER BERMUDA LAW CONSIDERATIONS

Aspen Holdings and Aspen Bermuda will each also need to comply with the
provisions of the Companies Act regulating the payment of dividends and making
of distributions from contributed

surplus. A company is prohibited from declaring or paying a dividend, or making
a distribution out of contributed surplus, if there are reasonable grounds for
believing that: (a) the company is, or would after the payment be, unable to
pay its liabilities as they become due; or (b) the realizable value of the
company's assets would thereby be less than the aggregate of its liabilities
and its issued share capital and share premium accounts.

Although Aspen Bermuda is incorporated in Bermuda, it is classified as a
non-resident of Bermuda for exchange control purposes by the BMA. Pursuant to
its non-resident status, Aspen Bermuda may engage in transactions in currencies
other than Bermuda dollars and there are no restrictions on its ability to
transfer funds (other than funds denominated in Bermuda dollars) in and out of
Bermuda or to pay dividends to United States residents who are holders of its
ordinary shares.

Under Bermuda law, exempted companies are companies formed for the purpose
of conducting business outside Bermuda from a principal place of business in
Bermuda. As "exempted" companies, Aspen Holdings and Aspen Bermuda may not,
without the express authorization of the Bermuda legislature or under a license
or consent granted by the Minister of Finance, participate in certain business
transactions, including: (1) the acquisition or holding of land in Bermuda
(except that held by way of lease or tenancy agreement which is required for
its business and held for a term not exceeding 50 years, or which is used to
provide accommodation or recreational facilities for its officers and employees
and held with the consent of the Bermuda Minister of Finance, for a term not
exceeding 21 years); (2) the taking of mortgages on land in Bermuda to secure
an amount in excess of $50,000; or (3) the carrying on of business of any kind
for which it is not licensed in Bermuda, except in certain limited
circumstances such as doing business with another exempted undertaking in
furtherance of Aspen Holdings' business or Aspen Bermuda's business (as the
case may be) carried on outside Bermuda. Aspen Bermuda is a licensed insurer in
Bermuda, and so may carry on activities from Bermuda that are related to and in
support of its insurance business.

Ordinary shares may be offered or sold in Bermuda only in compliance with
the provisions of the Investment Business Act of 1998 of Bermuda which
regulates the sale of securities in Bermuda. In addition, the BMA must approve
all issuances and transfers of shares of a Bermuda exempted company. We have
applied for and expect to obtain from the BMA their permission for the issue
and free transferability of the ordinary shares in the Company being offered
pursuant to this prospectus, as long as the shares are listed on the NYSE or
other appointed stock exchange, to and among persons who are non-residents of
Bermuda for exchange control purposes and of up to 20% of the ordinary shares
to and among persons who are residents in Bermuda for exchange control
purposes. In addition, we will deliver to and file a copy of this prospectus
with the Registrar of Companies in Bermuda in accordance with Bermuda law. The
BMA and the Registrar of Companies accept no responsibility for the financial
soundness of any proposal or for the correctness of any of the statements made
or opinions expressed in this prospectus.

The Bermuda government actively encourages foreign investment in
"exempted" entities like Aspen Holdings and Aspen Bermuda that are based in
Bermuda, but do not operate in competition with local businesses. As well as
having no restrictions on the degree of foreign ownership, Aspen Holdings and
Aspen Bermuda are not currently subject to taxes computed on profits or income
or computed on any capital asset, gain or appreciation, or any tax in the
nature of estate duty or inheritance tax or to any foreign exchange controls in
Bermuda. See "Material Tax Considerations -- Certain Bermuda Tax
Considerations."

Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may
not engage in any gainful occupation in Bermuda without an appropriate
governmental work permit. Work permits may be granted or extended by the
Bermuda government upon showing that, after proper public advertisement in most
cases, no Bermudian (or spouse of a Bermudian) is available who meets the
minimum standard requirements for the advertised position. The Bermuda
government recently announced a new policy limiting the duration of work
permits to six years, with certain exemptions for key employees. All of our
Bermuda-based professional employees who require work permits have

been granted permits by the Bermuda government. The terms of these permits
range from three to five years depending on the individual.

U.K. REGULATION

General. On December 1, 2001, the FSA assumed its full powers and
responsibilities as the single statutory regulator responsible for regulating
the financial services industry in respect of the carrying on of "regulated
activities" (including deposit taking, insurance, investment management and
most other financial services business by way of business in the U.K.), with
the objective of maintaining confidence in the U.K. financial system, providing
public understanding of the system, securing a proper degree of protection for
consumers and helping to reduce financial crime. It is a criminal offense for
any person to carry on a regulated activity in the U.K. unless that person is
authorized by the FSA and has been granted permission to carry on that
regulated activity or falls under an exemption.

Insurance business (which includes reinsurance business) is authorized and
supervised by the FSA. Insurance business in the United Kingdom is divided
between two main categories: long-term insurance (which is primarily
investment-related) and general insurance. It is not possible for an insurance
company to be authorized in both long-term and general insurance business.
These two categories are both divided into "classes" (for example: permanent
health and pension fund management are two classes of long-term insurance;
damage to property and motor vehicle liability are two classes of general
insurance). Under FSMA, effecting or carrying out contracts of insurance,
within a class of general or long-term insurance, by way of business in the
United Kingdom, constitutes a regulated activity requiring individual
authorization. An authorized insurance company must have permission for each
class of insurance business it intends to write.

Aspen U.K. has received authorization from the FSA to effect and carry out
in the United Kingdom contracts of insurance in all classes of general business
except credit and assistance business. As an authorized insurer in the United
Kingdom, Aspen U.K. would be able to operate throughout the E.U., subject to
certain regulatory requirements of the FSA and in some cases, certain local
regulatory requirements. An insurance company with FSA authorization to write
insurance business in the United Kingdom may provide cross-border services in
other member states of the E.U. subject to notifying the FSA prior to
commencement of the provision of services and to the FSA not having good reason
to refuse consent. As an alternative, such insurance company may establish a
branch office within another member state subject to notifying the FSA prior to
the establishment of the branch and the FSA not having good reason to refuse to
consent; in both cases the FSA will also notify the local regulatory body that
may advise additional requirements specific to its jurisdiction that applies to
the operation of the proposed classes of business.

As an FSA authorized insurer, the insurance and reinsurance businesses of
Aspen U.K. will be subject to close supervision by the FSA. The FSA is
currently seeking to strengthen its requirements for senior management
arrangements, systems and controls of insurance and reinsurance companies under
its jurisdiction and intends to place an increased emphasis on risk
identification and management in relation to the prudential regulation of
insurance and reinsurance business in the United Kingdom. There are a number of
proposed changes to the FSA's rules that will affect insurance and reinsurance
companies authorized in the U.K. For example, the FSA is currently in
consultation on a number of proposals, including the regulation of the sale of
general insurance, insurance mediation, capital adequacy and proposals aimed at
ensuring adequate diversification of an insurer's or reinsurer's exposures to
any credit risks of its reinsurers. Changes in the scope of the FSA's
regulation may have an adverse impact on the business of Aspen U.K.

Supervision. The FSA carries out the prudential supervision of insurance
companies through a variety of methods, including the collection of information
from statistical returns, review of accountants' reports, visits to insurance
companies and regular formal interviews.

The FSA has adopted a risk-based approach to the supervision of insurance
companies. Under this approach the FSA performs a formal risk assessment of
insurance companies or groups carrying

on business in the U.K. periodically, which varies in length according to the
risk profile of the insurer. The FSA performs the risk assessment by analyzing
information which it receives during the normal course of its supervision, such
as regular prudential returns on the financial position of the insurance
company, or which it acquires through a series of meetings with senior
management of the insurance company. After each risk assessment, the FSA will
inform the insurer of its views on the insurer's risk profile. This will
include details of any remedial action that the FSA requires and the likely
consequences if this action is not taken.

The FSA carried out a risk assessment visit to Aspen U.K. during October
and November of 2002. The results were received in January 2003. The only
obligations arising from the assessment required Aspen U.K. to:

o no later than July 1, 2003, provide the FSA with a summary of its
governance, structure, operation, staffing, succession plans and control
responsibility; and

o at quarterly intervals commencing in March 2003, meet FSA
representatives to provide a review and progress report covering its
underwriting business plan and related issues including business
development, reinsurance, underwriting controls and claims.

The deadline for the first item was met and the quarterly meetings are
being held as required.

Solvency Requirements. The Interim Prudential Sourcebook for Insurers
requires that insurance companies maintain a margin of solvency at all times in
respect of any general insurance undertaken by the insurance company, the
calculation of which in any particular case depends on the type and amount of
insurance business a company writes. The method of calculation of the solvency
margin is set out in the Interim Prudential Sourcebook for Insurers, and for
these purposes, all the insurer's assets and liabilities are subject to
specific valuation rules. Failure to maintain the required solvency margin is
one of the grounds on which wide powers of intervention conferred upon the FSA
may be exercised.

Each insurance company writing property, credit insurance business,
aviation, marine, business interruption or nuclear insurance or reinsurance
business is required by the Interim Prudential Sourcebook for Insurers to
maintain an equalization reserve in respect of business written in the
financial years ending on or after December 23, 1996 calculated in accordance
with the provisions of the Interim Prudential Sourcebook for Insurers where the
amount of premiums for such classes exceed the minimum threshold set forth in
the provisions.

These solvency requirements are likely to be amended when the Interim
Prudential Sourcebook for Insurers is replaced by the proposed Integrated
Prudential Sourcebook.

In addition, an insurer (other than a pure reinsurer) that is part of a
group, is required to perform and submit to the FSA a solvency margin
calculation return in respect of its ultimate parent undertaking, in accordance
with the FSA's rules. This return is not part of an insurer's own solvency
return and hence will not be publicly available. Although there is no
requirement at present for the parent undertaking solvency calculation to show
a positive result, the FSA is required to take action where it considers that
the solvency of the insurance company is or may be jeopardized due to the group
solvency position. At December 31, 2002, Aspen U.K. exceeded such requirements.
Further, an insurer is required to report in its annual returns to the FSA all
material related party transactions (e.g., intra group reinsurance, whose value
is more than 5% of the insurer's general insurance business amount). However,
the FSA has published proposals for the implementation of the European Union's
Financial Groups Directive which includes a requirement for insurance groups to
hold an amount of capital indicated in the calculation of the parent company's
solvency margin at the European Economic Area parent level for the financial
years beginning in 2005. The purpose of these proposals is to prevent
leveraging of capital arising from involvements in other group insurance firms.
The FSA has stated that it will phase in these proposals. Given the current
structure of the Company, this proposed regulatory obligation would not apply
to Aspen U.K.'s parent, because it is incorporated in Bermuda.

Aspen U.K. is required to maintain a minimum margin of solvency equal to
the greater of (1) the sum of 18% of the first (euro)10 million and 16% of the
excess over (euro)10 million of gross premiums for the

previous financial year (but where a financial year does not have 12 months the
gross premium is adjusted to arrive at a figure that is proportionate to a
12-month financial year) less an allowance for anticipated reinsurance
recoveries; and (2) the sum of 26% of the average claims paid for the first
(euro)7 million of claims and 23% of the average claims paid for claims
comprising the excess over (euro)7 million, as measured over a 36-month period
less an allowance for anticipated reinsurance recoveries. The margin of solvency
is subject to an absolute minimum of (euro)400,000.

Restrictions on Dividend Payments. U.K. company law prohibits Aspen U.K.
from declaring a dividend to its shareholders unless it has "profits available
for distribution." The determination of whether a company has profits available
for distribution is based on its accumulated realized profits less its
accumulated realized losses. While the U.K. insurance regulatory laws impose no
statutory restrictions on a general insurer's ability to declare a dividend,
the FSA strictly controls the maintenance of each insurance company's solvency
margin within its jurisdiction.

In connection with the application to the FSA for consent to the change of
control of City Fire, a scheme of operations was submitted to the FSA showing,
among other things, a forecast profit and loss account (including forecast
dividend payments) for the three financial periods 2003 to 2005 inclusive.
Aspen U.K. is required to submit quarterly financial returns for this period
including a summary profit and loss account and must identify and explain
differences between actual results and forecasts submitted in the scheme of
operations. Further, there is an obligation to notify the FSA of any matter
that is likely to happen which represents a significant departure from the
scheme of operations. Aspen U.K. is also under separate obligations to maintain
its margin of solvency and to notify the FSA of any proposed significant
dividend payment. Thus, while Aspen U.K.'s scheme of operations forecasts
dividends being charged in each of 2003, 2004 and 2005, if the fortunes of
Aspen U.K. were to change such that a dividend payment would affect its ability
to maintain its solvency margin, or if a greater dividend is proposed it would
be obliged to notify the FSA. In such circumstances, depending on the financial
condition of Aspen U.K., the FSA could use its own initiative powers to impose
requirements on Aspen U.K., including restrictions on dividend payments.

Reporting Requirements. U.K. insurance companies must prepare their
financial statements under the Companies Act of 1985 (as amended), which
requires the filing with Companies House of audited financial statements and
related reports. In addition, U.K. insurance companies are required to file
with the FSA regulatory returns, which include a revenue account, a profit and
loss account and a balance sheet in prescribed forms. Under the Interim
Prudential Sourcebook for Insurers, audited regulatory returns must be filed
with the FSA within two months and 15 days (or three months where the delivery
of the return is made electronically).

Supervision of Management. The FSA closely supervises the management of
insurance companies through the approved persons regime, by which any
appointment of persons to perform certain specified "controlled functions"
within a regulated entity, must be approved by the FSA.

Change of Control. FSMA regulates the acquisition of "control" of any U.K.
insurance company authorized under FSMA. Any company or individual that
(together with its or his associates) directly or indirectly acquires 10% or
more of the shares in a U.K. authorized insurance company or its parent
company, or is entitled to exercise or control the exercise of 10% or more of
the voting power in such authorized insurance company or its parent company,
would be considered to have acquired "control" for the purposes of the relevant
legislation, as would a person who had significant influence over the
management of such authorized insurance company or its parent company by virtue
of his shareholding or voting power in either. A purchaser of 10% or more of
the ordinary shares would therefore be considered to have acquired "control" of
Aspen U.K.

Under FSMA, any person proposing to acquire "control" over a U.K.
authorized insurance company must give prior notification to the FSA of his
intention to do so. The FSA would then have three months to consider that
person's application to acquire "control." In considering whether to approve
such application, the FSA must be satisfied that both the acquiror is a fit and
proper person to have such "control" and that the interests of consumers would
not be threatened by such

acquisition of "control." Failure to make the relevant prior application could
result in action being taken against Aspen U.K. by the FSA.

Intervention and Enforcement. The FSA has extensive powers to intervene in
the affairs of an authorized person, culminating in the ultimate sanction of
the removal of authorization to carry on a regulated activity. FSMA imposes on
the FSA statutory obligations to monitor compliance with the requirements
imposed by FSMA, and to enforce the provisions of FSMA related rules made by
the FSA. The FSA has power, among other things, to enforce and take
disciplinary measures in respect of breaches of both the Interim Prudential
Sourcebook for Insurers and breaches of the conduct of business rules generally
applicable to authorized persons.

The FSA also has the power to institute proceedings for criminal offenses
arising under FSMA, and to institute proceedings for the offense of insider
dealing under Part V of the Criminal Justice Act of 1993, and breaches of money
laundering regulations. The FSA's stated policy is to pursue criminal
prosecution in all appropriate cases.

Fees and Levies. As an authorized insurer in the United Kingdom, Aspen
U.K. is subject to FSA fees and levies based on Aspen U.K.'s gross written
premiums. The fees and levies charged by the FSA to Aspen U.K. are not material
to the Company. Our fees paid to the FSA were (pounds sterling)0.1 million for
2003. The FSA also requires authorized insurers to participate in an investors'
protection fund, known as the Financial Services Compensation Scheme (the
"FSCS"). The FSCS was established to compensate consumers of financial
services, including the buyers of insurance, against failures in the financial
services industry. Individual policyholders and small businesses may be
compensated by the FSCS when an authorized insurer is unable, or likely to be
unable, to satisfy policyholder claims. Aspen U.K. writes a small amount of
insurance business that is protected by the FSCS. The levy charged to Aspen
U.K. in connection with the FSCS is calculated on the amount of insurance
business written by Aspen U.K. and covered by the FSCS.

Since the formation of the Company, Syndicate 2020 has continued to
operate within the operating and regulatory structure of the Lloyd's market
under the management of WUAL. Aspen U.K. is an insurance company directly
regulated by the FSA and, as such, is not a member of Lloyd's or part of the
Lloyd's market. Aspen U.K. is not therefore subject to the various fees and
levies (which may be several percentage points of premiums) that are incurred
by members of Lloyd's in relation to the operation of the Lloyd's market and
the maintenance of the Lloyd's Central Fund. The Lloyd's Central Fund acts as a
policyholders' protection fund to make payments where other Lloyd's members
have failed to pay valid claims.

U.S. REGULATION

Aspen U.S. is licensed and domiciled in North Dakota and is eligible to
write certain lines of insurance business on a surplus lines basis in the
majority of states in which it intends to write business.

U.S. Insurance Holding Company Regulation of Aspen Holdings. Aspen
Holdings, as the indirect parent of Aspen U.S., Aspen U.S. Holdings, as the
direct parent of Aspen U.S., and Aspen Specialty Management, are subject to the
insurance holding company laws of North Dakota, where Aspen U.S. is organized
and domiciled. These laws generally require the insurance holding company and
each insurance company directly or indirectly owned by the holding company to
register with the North Dakota Department of Insurance and to furnish annually
financial and other information about the operations of companies within the
holding company system. Generally, all material transactions among companies in
the holding company system affecting Aspen U.S., including sales, loans,
reinsurance agreements, service agreements and dividend payments, must be fair
and, if material or of a specified category, require prior notice and approval
or non-disapproval by the North Dakota Commissioner of Insurance.

Acquisition of Control of a North Dakota Domiciled Insurance
Company. North Dakota law requires that before a person can acquire control of
any North Dakota domiciled insurance company,

such as Aspen U.S., the acquisition of control must be approved by the North
Dakota Commissioner of Insurance. Prior to granting approval of an application
to acquire control of a North Dakota domiciled insurer, the North Dakota
Commissioner of Insurance is required by law to consider various factors,
including, but not limited to, the financial strength of the applicant, the
integrity and management experience of the applicant's board of directors and
executive officers, the applicant's plans for the future operations of the
insurer and any possible anti-competitive results in North Dakota that may
arise from the proposed acquisition of control. North Dakota law provides that
control over a North Dakota domiciled insurer is presumed to exist if any
person directly or indirectly owns, controls, holds with the power to vote, or
holds proxies representing 10% or more of the voting securities of a North
Dakota insurer. Our bye-laws limit the voting power of any shareholder to less
than 9.5%; nevertheless, because a person controlling 10% or more of our
ordinary shares would indirectly control the same percentage of the share
capital of Aspen U.S., there can be no assurance that the North Dakota
Commissioner of Insurance would not apply these restrictions on acquisition of
control to any proposed acquisition of 10% or more of our ordinary shares.

These laws may discourage potential acquisition proposals and may delay,
deter or prevent a change of control of Aspen Holdings, including through
transactions, and in particular unsolicited transactions, that some or all of
the shareholders of Aspen Holdings might consider to be desirable.

Legislative Changes. On November 26, 2002, the Terrorism Risk Insurance
Act was enacted to ensure the availability of insurance coverage for terrorist
acts in the United States. This law requires insurers writing certain lines of
property and casualty insurance to offer coverage against certain acts of
terrorism causing damage within the United States or to U.S. flagged vessels or
aircraft. In return, the law requires the federal government to indemnify such
insurers for 90% of insured losses resulting from covered acts of terrorism,
subject to a premium-based deductible. Any existing policy exclusions for such
coverage were immediately nullified by the law, although such exclusions may be
reinstated if either the insured consents to reinstatement or fails to pay any
applicable increase in premium resulting from the additional coverage within 30
days of being notified of such. It should be noted that "act of terrorism" as
defined by the law excludes purely domestic terrorism. For an act of terrorism
to have occurred, the U.S. Treasury Secretary must make several findings,
including that the act was committed on behalf of a foreign person or foreign
interest. The law expires automatically at the end of 2005.

State Insurance Regulation of Aspen U.S. State insurance authorities have
broad regulatory powers with respect to various aspects of the surplus lines
insurance business, including licensing to transact business, admittance of
assets to STATUTORY SURPLUS, regulating unfair trade and claims practices,
establishing reserve requirements and solvency standards and regulating
investments and dividends. State insurance laws and regulations require Aspen
U.S. to file financial statements with insurance departments in every state
where it will be licensed or authorized or accredited or eligible to conduct
insurance business; and the operations of Aspen U.S. are subject to examination
by those departments at any time. Aspen U.S. will prepare statutory financial
statements in accordance with Statutory Accounting Practices and procedures
prescribed or permitted by these departments. State insurance departments also
conduct periodic examinations of the books and records, financial reporting,
policy filings and market conduct of insurance companies domiciled in their
states, generally once every three to five years. Examinations are generally
carried out in cooperation with the insurance departments of other states under
guidelines promulgated by the NAIC. Aspen Specialty Management which transacts
business as a surplus lines brokerage company must also maintain appropriate
licenses to transact such business.

North Dakota State Dividend Limitations. Under North Dakota insurance law,
Aspen U.S. may not pay dividends to shareholders that exceed the greater of 10%
of Aspen U.S.'s statutory surplus as shown on its latest annual financial
statement on file with the North Dakota Commissioner of Insurance, or 100% of
Aspen U.S.'s net income, not including realized capital gains, for the most
recent calendar year, without the prior approval of the North Dakota
Commissioner of Insurance unless 30 days have passed after receipt by the North
Dakota Commissioner of Insurance of notice of Aspen U.S.'s declaration of such
payment without the North Dakota Commissioner of Insurance

having disapproved of such payment. In addition, Aspen U.S. may not pay a
dividend, except out of earned, as distinguished from contributed, surplus, nor
when its surplus is less than the surplus required by law for the kind or kinds
of business the company is authorized to transact, nor when the payment of a
dividend would reduce its surplus to less than such amount. Aspen U.S. is
required by North Dakota law to report to the North Dakota Commissioner of
Insurance all dividends and other distributions to shareholders within five
business days following the declaration thereof and no less than ten business
days prior to payment thereof.

North Dakota State Risk-Based Capital Regulations. North Dakota requires
that North Dakota domiciled insurers report their risk-based capital based on a
formula calculated by applying factors to various asset, premium and reserve
items. The formula takes into account the risk characteristics of the insurer,
including asset risk, insurance risk, interest rate risk and business risk. The
North Dakota Commissioner of Insurance uses the formula as an early warning
regulatory tool to identify possibly inadequately capitalized insurers for the
purposes of initiating regulatory action, and not as a means to rank insurers
generally. North Dakota insurance law imposes broad confidentiality
requirements on those engaged in any manner in the insurance business and on
the North Dakota Commissioner of Insurance as to the use and publication of
risk-based capital data. The North Dakota Commissioner of Insurance has
explicit regulatory authority to require various actions by, or to take various
actions against, insurers whose total adjusted capital does not exceed certain
risk-based capital levels.

Statutory Accounting Principles. Statutory accounting, or "SAP," is a
basis of accounting developed to assist insurance regulators in monitoring and
regulating the solvency of insurance companies. It is primarily concerned with
measuring an insurer's surplus to policyholders. Accordingly, statutory
accounting focuses on valuing assets and liabilities of insurers at financial
reporting dates in accordance with appropriate insurance law and regulatory
provisions applicable in each insurer's domiciliary state.

U.S. GAAP is concerned with a company's solvency, but it is also concerned
with other financial measurements, such as income and cash flows. Accordingly,
U.S. GAAP gives more consideration to appropriate matching of revenue and
expenses and accounting for management's stewardship of assets than does SAP.
As a direct result, different assets and liabilities and different amounts of
assets and liabilities will be reflected in financial statements prepared in
accordance with U.S. GAAP as opposed to SAP.

Statutory accounting practices established by the NAIC and adopted, in
part, by the North Dakota Department, determine, among other things, the amount
of statutory surplus and statutory net income of our U.S. insurance subsidiary
and thus determine, in part, the amount of funds they have available to pay as
dividends to us.

Guaranty Associations and Similar Arrangements. Most of the jurisdictions
in which Aspen U.S. is surplus lines eligible require property and casualty
insurers doing business within the jurisdiction to participate in guaranty
associations, which are organized to pay contractual benefits owed pursuant to
insurance policies issued by impaired, insolvent or failed insurers. These
associations levy assessments, up to prescribed limits, on all member insurers
in a particular state on the basis of the proportionate share of the premiums
written by member insurers in the lines of business in which the impaired,
insolvent or failed insurer is engaged. Some states permit member insurers to
recover assessments paid through full or partial premium tax offsets.

OPERATIONS OF ASPEN U.K. AND ASPEN BERMUDA

Aspen U.K. and Aspen Bermuda are not admitted to do business in the United
States. The insurance laws of each state of the United States and of many other
countries regulate or prohibit the sale of insurance and reinsurance within
their jurisdictions by non-domestic insurers and reinsurers, such as Aspen U.K.
and Aspen Bermuda, which are not admitted to do business within such
jurisdictions. We do not intend that Aspen Bermuda or Aspen U.K. maintain an
office or solicit, advertise, settle claims or conduct other insurance
activities in any jurisdiction other than Bermuda --

or, in the case of Aspen U.K., London -- where the conduct of such activities
would require Aspen U.K. and Aspen Bermuda to be so admitted.

In addition to the regulatory requirements imposed by the jurisdictions in
which they are licensed, reinsurers' business operations are affected by
regulatory requirements in various states of the United States governing
"credit for reinsurance" which are imposed on their ceding companies. In
general, a ceding company which obtains reinsurance from a reinsurer that is
licensed, accredited or approved by the jurisdiction or state in which the
reinsurer files statutory financial statements is permitted to reflect in its
statutory financial statements a credit in an aggregate amount equal to the
liability for unearned premiums (which are that portion of premiums written
which applies to the unexpired portion of the policy period) and loss reserves
and loss adjustment expense reserves ceded to the reinsurer. Aspen U.K. and
Aspen Bermuda are not licensed, accredited or approved in any state in the
United States. The great majority of states, however, permit a credit to
statutory surplus resulting from reinsurance obtained from a non-licensed or
non-accredited reinsurer to the extent that the reinsurer provides a letter of
credit or other acceptable security arrangement. A few states do not allow
credit for reinsurance ceded to non-licensed reinsurers except in certain
limited circumstances and others impose additional requirements that make it
difficult to become accredited. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

For its U.S. reinsurance activities, Aspen U.K. has established and must
retain a multi-beneficiary U.S. trust fund for the benefit of its U.S. cedents
so that they are able to take financial statement credit without the need to
post cedent-specific security. The minimum trust fund amount is $20 million
plus an amount equal to 100% of Aspen U.K.'s U.S. reinsurance liabilities,
which was $25.5 million at September 30, 2003. Aspen U.K. must apply for
"trusteed reinsurer" approvals in states where U.S. cedents are domiciled.

Aspen U.K. is also writing surplus lines business in the United States. In
certain U.S. jurisdictions, in order to obtain surplus lines approvals and
eligibilities, a company must first be included on the Quarterly Listing of
Alien Insurers ("Quarterly Listing") that is maintained by the International
Insurers Department ("IID") of the NAIC.

Aspen U.K. has established a U.S. surplus lines trust fund with a U.S.
bank to secure U.S. surplus lines policies. The initial minimum trust fund
amount is $5.4 million. In subsequent years, Aspen U.K. must add an amount
equal to 30% of its U.S. surplus lines liabilities, as at year end and
certified by an actuary, subject to the current maximum of $60 million. The
NAIC's IID Plan of Operation Working Group is currently in the early stages of
considering proposals to increase both the trust fund maximum amount and the
variable percentage amount.

Applications for state surplus lines approvals and eligibilities may be
required in certain jurisdictions. As with the IID, certain jurisdictions
require annual requalification filings. Such filings customarily include
financial and related information, updated national and state-specific business
plans, descriptions of reinsurance programs, updated officers and directors
biographical affidavits and similar information.

Apart from the financial and related filings required to maintain Aspen
U.K.'s place on the Quarterly Listing and its jurisdiction-specific approvals
and eligibilities, Aspen U.K. generally will not be subject to regulation by
U.S. jurisdictions. Specifically, rate and form regulations otherwise
applicable to authorized insurers will generally not apply to Aspen U.K.'s
surplus lines transactions. Similarly, U.S. solvency regulation tools --
including risk-based capital standards, investment limitations, credit for
reinsurance and holding company filing requirements -- otherwise applicable to
authorized insurers do not generally apply to alien surplus lines insurers such
as Aspen U.K.

We do not believe that Aspen U.K. or Aspen Bermuda are in violation of
insurance laws of any jurisdiction in the United States. We cannot assure you,
however, that inquiries or challenges to Aspen U.K.'s or Aspen Bermuda's
insurance or reinsurance activities will not be raised in the future.

MANAGEMENT

DIRECTORS

Pursuant to provisions that were formerly in our bye-laws and a
shareholders' agreement by and among us and certain shareholders, certain of
our shareholders had the right to appoint or nominate and remove directors to
serve on our board of directors. Messrs. Pearlman and Melwani were appointed,
and Mr. Rosenthal was nominated, as directors by Blackstone. Mr. Taylor was
appointed director by Montpelier Re. Mr. Cormack was appointed director by
Candover. Mr. Avery was appointed director by Wellington. Mr. Salame was
nominated director by CSFB Private Equity. After this offering, no specific
shareholder will have the right to appoint or nominate or remove one or more
directors pursuant to an explicit provision in our bye-laws or otherwise. The
table below sets forth certain information concerning our directors immediately
following the completion of this offering:

NAME AGE POSITIONS
- --------------------------------- ----- ---------------------------------------------------------------

Paul Myners(2) .................. 55 Chairman of Aspen Holdings and Aspen U.K.
Christopher O'Kane(1) ........... 48 Chief Executive Officer of Aspen Holdings and Aspen U.K. and
Chairman of Aspen Bermuda
Julian Cusack(2) ................ 53 Chief Financial Officer of Aspen Holdings, Finance Director of
Aspen U.K. and Chief Executive Officer of Aspen Bermuda
Julian Avery(3) ................. 58 Director
Ian Cormack(3) .................. 56 Director
Heidi Hutter(1) ................. 46 Director
Prakash Melwani(3) .............. 45 Director
Bret Pearlman(3) ................ 36 Director
Norman L. Rosenthal(2) .......... 52 Director
Kamil M. Salame(3) .............. 34 Director
Anthony Taylor(1) ............... 57 Director

- ----------
(1) Denotes director with term expiring in 2005.

(2) Denotes director with term expiring in 2006.

(3) Denotes director with term expiring in 2007.

Paul Myners. Mr. Myners has been our Chairman and a director since June
21, 2002. He is also currently the Chairman of Aspen U.K., a position he has
held since June 2002, and of the Guardian Media Group, a position held since
March 2000. Mr. Myners is a non-executive director of The Bank of New York,
mmO2 plc and Marks and Spencer. He completed a review of Institutional
Investment for Her Majesty's Treasury in 2001 and is a member of the Financial
Reporting Council, the body responsible for overseeing the process for setting
U.K. accounting standards. From August 1, 1987 until November 2001, he held the
position of Chairman of Gartmore Investment Management and previously served as
an executive director of National Westminster Bank, Coutts & Co., and as an
independent director of the Investment Management Regulatory Organisation, the
Lloyd's Market Board, Celltech Group, the Scottish National Trust, PowerGen plc
and Orange plc.

Christopher O'Kane. Mr. O'Kane has been our Chief Executive Officer and a
director since June 21, 2002. He is also currently the Chief Executive Officer
of Aspen U.K. and Chairman of Aspen Bermuda. Prior to the creation of Aspen
Holdings, from November 2000 until June 2002, Mr. O'Kane served as a director
of Wellington and Chief Underwriting Officer of Lloyd's Syndicate 2020 where he
built his specialist knowledge in the fields of property insurance and
reinsurance, together with active underwriting experience in a range of other
insurance disciplines. From September 1998 until November 2000, Mr. O'Kane
served as one of the underwriting partners for Syndicate 2020. Prior to joining
Syndicate 2020, Mr. O'Kane served as deputy underwriter for Syndicate 51 from
January 1993

to September 1998. Mr. O'Kane has over 16 years of specialty insurance and
reinsurance underwriting experience, beginning his career as a Lloyd's broker.

Julian Cusack, Ph.D. Mr. Cusack has been our Chief Financial Officer and a
director since June 21, 2002. He is also currently the Chief Executive Officer
of Aspen Bermuda since 2002, and Finance Director of Aspen U.K. Mr. Cusack
previously worked with Wellington where he was Managing Director of WUAL from
1992 to 1996, and in 1994 joined the board of directors of Wellington
Underwriting Holdings Limited. He was Group Finance Director of Wellington from
1996 to 2002.

Julian Avery. Mr. Avery has been a director since April 9, 2003. He has
served as Chief Executive Officer of Wellington since 2000. Prior to becoming
Chief Executive Officer, Mr. Avery had been Managing Director of Wellington
since 1996. He has also been a director of WUAL since 1996 and its Chairman
since 2001. Mr. Avery is also a solicitor and was elected to the Council of
Lloyd's in December 2000. He is Deputy Chairman of the Lloyd's Market
Association Services Limited, a director of Premium Underwriting Limited and a
non-executive director of East Surrey Holdings plc.

Ian Cormack. Mr. Cormack has been a director since September 22, 2003 and
has served as a non-executive director of Aspen U.K. since June 2002. Mr.
Cormack is a Senior Partner in Cormack Tansey Partners, a strategic consulting
firm that he established in 2002. From 2000 to 2002, he was Chief Executive
Officer of AIG Inc.'s insurance financial services and asset management in
Europe. From 1997 to 2000, he was Chairman of Citibank International plc and
Co-head of the Global Financial Institutions Client Group at Citigroup. He was
also Country Head of Citicorp in the United Kingdom from 1992 to 1996. Mr.
Cormack also serves as a member of Millennium Associates AG's Global Advisory
Board and Chairman of Hologram Insurance Services Ltd., U.K. and previously
served as Chairman of CHAPS, the high value clearing system in the United
Kingdom, and a Member of the Board of Clearstream (Luxembourg). He was a member
of the U.K. Chancellor's City Advisory Panel from 1993 to 1998.

Heidi Hutter. Ms. Hutter has been a director since June 21, 2002 and has
served as a non-executive director of Aspen U.K. since June 2002. She has
served as Chief Executive Officer of Black Diamond Group, LLC since 2001 and
has over twenty years of experience in property/casualty reinsurance. Ms.
Hutter began her career in 1979 with Swiss Reinsurance Company in New York,
where she specialized in the then new field of finite reinsurance. From 1993 to
1995, she was Project Director for the Equitas Project at Lloyd's of London,
which became the largest run-off reinsurer in the world. From 1996 to 1999, she
served as Chief Executive Officer of Swiss Re America and was a member of the
Executive Board of Swiss Re in Zurich. Ms. Hutter also serves as a director of
Aquila, Inc. and Talbot Underwriting Ltd. and its corporate affiliates.

Prakash Melwani. Mr. Melwani has been a director since July 21, 2003. In
May 2003, Mr. Melwani joined Blackstone as a Senior Managing Director in its
Private Equity Group. He is also a member of the firm's Private Equity
Investment Committee. Prior to joining Blackstone, Mr. Melwani was a founder,
in 1988, of Vestar Capital Partners and served as its Chief Investment Officer.
Prior to that, Mr. Melwani was with the management buyout group at The First
Boston Corporation and with N.M. Rothschild & Sons in Hong Kong and London.

Bret Pearlman. Mr. Pearlman has been a director since June 21, 2002. He is
also currently a Senior Managing Director in the Private Equity Group of
Blackstone. Mr. Pearlman joined Blackstone in 1989. He currently serves as a
director of American Axle and Manufacturing, C3i, Inc., Utilicom, Knology and
Columbia House.

Norman L. Rosenthal, Ph.D. Dr. Rosenthal has been a director since June
21, 2002. He is also currently President of Norman L. Rosenthal & Associates,
Inc., a management consulting firm which specializes in the property casualty
insurance industry. Previously, Dr. Rosenthal was a managing director and
senior equity research analyst at Morgan Stanley & Co. following the property
casualty insurance industry. He joined Morgan Stanley's equity research
department covering the insurance

sector in 1981 and remained there until 1996. Dr. Rosenthal also currently
serves on the board of directors of The Plymouth Rock Company and Palisades
Safety and Insurance Management Corporation.

Kamil M. Salame. Mr. Salame has been a director since June 21, 2002. Since
1997, he has been a Principal of DLJ Merchant Banking Partners, the primary
private equity funds of Credit Suisse First Boston Private Equity. Mr. Salame
joined Donaldson, Lufkin & Jenrette's Merchant Banking Group, a predecessor to
Credit Suisse First Boston Private Equity, in 1997. Previously he was a member
of Donaldson, Lufkin & Jenrette's Leveraged Finance Group. Mr. Salame is a
director of Montpelier Re.

Anthony Taylor. Mr. Taylor has been a director since June 21, 2002. Since
January 1, 2002, he has served as the President and Chief Executive Officer of
Montpelier Re and President and Chief Underwriting Officer of Montpelier
Reinsurance Ltd. From 1999 to 2001, Mr. Taylor was Underwriting Director of
WUAL and Deputy Chairman of Wellington. Mr. Taylor was also Chairman of WUAL
during part of the period from 1999 to 2001. From 1983 until 1998, Mr. Taylor
was associated with Lloyd's Syndicate number 51 "A Taylor & Others," which was
initially managed by Willis Faber Agencies and, after a management buy out, by
WUAL, of which he was a founding director. Mr. Taylor is a Fellow of the
Chartered Insurance Institute and has held various committee and board
positions for the Lloyd's market.

BOARD OF DIRECTORS

The bye-laws provide for a classified board composed of three classes of
directors, with each class elected to serve a term of three years, except for
the initial terms of the directors of the Company at the time this offering is
completed, which terms expire as set forth in the table above under "--
Directors."

COMMITTEES OF THE BOARD OF DIRECTORS

The following describes the composition of our board of directors as of
the completion of the offering:

Audit Committee: Messrs. Cormack and Rosenthal and Ms. Hutter. The Audit
Committee has general responsibility for the oversight and surveillance of our
accounting, reporting and financial control practices. The Audit Committee
annually reviews the qualifications of the independent auditors, makes
recommendations to the board of directors, as to their selection and reviews
the plan, fees and results of their audit. Mr. Cormack is Chairman of the Audit
Committee.

The members of the audit committee have substantial experience in
assessing the performance of companies, gained as members of our board of
directors and audit committee, as well as by serving on the boards of directors
of other companies. Our audit committee is comprised of seasoned business
professionals, whereby one member has over 30 years of experience in the
financial services industry, another member has over 20 years of experience in
the property and casualty reinsurance business, and another member has over 15
years of experience as an equity research analyst following the insurance
industry. As a result, they each have an understanding of U.S. GAAP financial
statements. However, none of them has acquired the attributes of a financial
expert through the specific means permitted under the Sarbanes-Oxley Act.
Accordingly, the board of directors does not consider any of them to be a
"financial expert" as defined in the applicable regulations. Nevertheless, our
board of directors believes that they competently perform the functions
required of them as members of the audit committee and, given their background
and understanding of the Company, it would not be in the best interest of the
Company at this time to replace any of them with another person to qualify a
member of the audit committee as a financial expert.

Compensation Committee: Messrs. Myners, Pearlman and Salame and Ms.
Hutter. The Compensation Committee, oversees our compensation and benefit
policies and programs, including administration of our annual bonus awards and
long-term incentive plans. Mr. Myners is Chairman of the Compensation
Committee.

Investment Committee: Messrs. Myners, Cusack, Pearlman and Salame and Ms.
Hutter. The Investment Committee is an advisory committee to the board of
directors which formulates our investment policy and oversees all of our
significant investing activities. Mr. Myners is the Chairman of the Investment
Committee.

Corporate Governance and Nominating Committee: Messrs. Myners, Melwani and
Rosenthal. The Corporate Governance and Nominating Committee, among other
things, establishes the board of directors' criteria for selecting new
directors and oversees the evaluation of the board of directors and management.
Mr. Myners is the Chairman of the Corporate Governance and Nominating
Committee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

John Barton, non-executive chairman of Wellington, was previously on our
board of directors and our compensation committee from November 2002 through
April 2003. Wellington is one of our shareholders with which the Company has
entered into various agreements. See "Certain Relationships and Related
Transactions." We have also granted to Wellington options to purchase up to
378,112 non-voting shares. Such options are exercisable or lapse upon the
earlier occurrence of several events as further described in "Description of
Share Capital -- Investor Options" and the non-voting shares so acquired will
automatically convert into ordinary shares at a one-to-one ratio once exercised
after the completion of this offering. Our executive officers Messrs. O'Kane
and Cusack served as directors of Wellington until June 21, 2002, and Ms.
Davies and Mr. May served as directors of WUAL until June 21, 2002. None of
Messrs. O'Kane, Cusack or May or Ms. Davies served as members of the
compensation committee of Wellington or WUAL at any time.

Mr. Salame is a Principal of DLJ Merchant Banking Partners, the primary
private equity funds of CSFB Private Equity, one of our shareholders. Credit
Suisse First Boston LLC, one of the underwriters in this offering and a lender
participating in the syndicate of our credit facilities, is an affiliate of DLJ
Merchant Banking Partners.

Heidi Hutter, one of our directors, is also a shareholder and director of
Talbot Holdings Ltd, Talbot Underwriting Holding Ltd and Talbot Underwriting
Ltd. Ms. Hutter is not an executive officer of either Aspen Holdings or Talbot.
We have entered into reinsurance agreements with Talbot through which we
reinsure some of their risks and have received approximately $800,000 of
premium income for 2003. Talbot also reinsures some of our risks for which they
have received approximately $251,000 of premium income for 2003. We believe
that the amount of premium income we have received from Talbot and our level of
exposure with respect to the risks we have reinsured is not material to our
business.

DIRECTOR COMPENSATION

For service in 2002, each director other than Messrs. O'Kane and Cusack
(who are also our executive officers) received cash in the amount of (pounds
sterling)20,000 (or $32,000 based on the exchange rate of $1.60 to (pounds
sterling)1) plus VAT (where applicable), pro-rated for the time served on our
board of directors during 2002. Our directors and officers who serve on the
board of directors of our subsidiaries may also receive separate fees for their
services. As Chairman of our board of directors, Mr. Myners received an annual
salary of (pounds sterling)120,000, pro-rated for the time served as Chairman
during 2002, and was entitled to receive a bonus. The same director
compensation arrangements were in effect for 2003.

Effective in 2004, the annual compensation for the members of our board of
directors who are not otherwise affiliated with the Company as employees or
officers will be $45,000. The chairman of each committee of our board of
directors other than the audit committee will receive an additional $5,000 per
annum. Mr. Cormack, the chairman of the audit committee of our board of
directors, will receive an additional $25,000 per annum. Members of our board
of directors who are also members of the board of directors of Aspen U.K., such
as Ms. Hutter and Mr. Cormack, will receive an additional $10,000 per annum.
Mr. Cormack, the chairman of the audit committee of the board of directors of
Aspen U.K., will receive an additional $10,000 per annum.

100

EXECUTIVE OFFICERS

The table below sets forth certain information concerning our executive
officers as of September 30, 2003:

NAME AGE POSITIONS
- -------------------------------- ----- --------------------------------------------------------------

Christopher O'Kane(1) .......... 48 Chief Executive Officer of the Company and Aspen U.K.
Julian Cusack(1) ............... 52 Chief Financial Officer of the Company, Financial Director of
Aspen U.K. and Chief Executive Officer of Aspen Bermuda
Sarah Davies ................... 39 Chief Operating Officer
David May ...................... 57 Chief Casualty Underwriter
Peter Coghlan .................. 53 President and Chief Executive Officer of Aspen U.S.
David Curtin ................... 45 General Counsel

- ----------
(1) Biography available above under "-- Directors."

Sarah Davies. Since June 21, 2002, Ms. Davies has served as our Chief
Operating Officer. Ms. Davies initially joined Wellington in 1993 from Munich
Re U.K. as a property reinsurance underwriter. Starting in 1995, she served as
Market Research Manager of WUAL. From 1999 to 2002, she served as WUAL's
Operations Director.

David May. Since June 21, 2002, Mr. May has served as our Chief Casualty
Underwriter. In 1995, he joined Wellington and served as manager in the
casualty reinsurance division for Lloyd's Syndicate 51. From 1986 to 1995, he
was a senior manager at Munich Re U.K. in charge of casualty underwriting.

Peter Coghlan. Since June 21, 2003, Mr. Coghlan has served as the
President and Chief Executive Officer of Aspen U.S. Prior to joining Aspen
U.S., he was the President of First State Management Group from 2000. Mr.
Coghlan joined First State Management Group in 1984 as its Chief Property
Underwriter and became Chief Underwriting Officer in 1992. His insurance career
began in 1975 with George F. Brown in Boston as a Property Supervisor. He later
joined Mission Re Management in 1977 as an underwriter, becoming Branch Manager
in 1979.

David Curtin. Since September 2, 2003, Mr. Curtin has served as our
General Counsel. Prior to joining the Company, Mr. Curtin served as the Senior
Vice President and General Counsel of ICO Global Communications Limited from
January 2001 until October 2002. He joined ICO as Chief Banking and Financial
Counsel in November 1998 and became Deputy General Counsel in March 2000. From
1988 to 1998 he was with Jones, Day, Reavis and Pogue in New York and London
and from 1985 to 1988 he was with Bingham, Dana & Gould in Boston.

MANAGEMENT COMPENSATION AND INCENTIVE PLANS

The Compensation Committee oversees our compensation and benefit policies,
including administration of annual bonus awards and long-term incentive plans.
Our compensation policies are designed with the goal of maximizing shareholder
value over the long term. We believe that this goal is best realized by
utilizing a compensation program which serves to attract and retain superior
executive talent by providing management with performance-based incentives and
closely aligning the financial interests of management with those of our
shareholders.

The Company's compensation program combines three components: base salary,
annual bonuses and long-term compensation in the form of options and share
ownership. The level of compensation is based on numerous factors, including
achievement of underwriting results and financial objectives established by our
Compensation Committee and our board of directors. Salary, target bonuses and
incentive compensation award opportunities are reviewed regularly for
competitiveness and are determined in large part by reference to compensation
levels for comparable positions at comparable companies based in Bermuda, the
United Kingdom and the United States. The company intends to

101

reward individuals appropriately taking into account the relevant local or
global talent pool comparables, as well as both company and individual
performance against prescribed goals.

Our current executive officers are compensated according to the terms of
their respective service agreements, which are described under the heading "--
Employment-Related Agreements."

SUMMARY COMPENSATION TABLE

The following table sets forth the salaries, bonuses and other
compensation arrangements earned by our Chief Executive Officer and each of the
next three most highly compensated executive officers during the year ended
December 31, 2002. These individuals are referred to as the "named executive
officers." The Company's other current executive officers, Messrs. Coghlan and
Curtin, were not serving as such at the end of the last fiscal year.

LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
--------------------------------------- --------------------------- ---------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND COMPENSATION STOCK UNDERLYING LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(2) AWARDS OPTIONS/SARS PAYOUTS ($)(3)
- -------------------- ------ ------------ ----------- -------------- ------------ -------------- --------- -------------

Christopher O'Kane 2002 $232,634 $170,126 $4,392 -- -- -- $37,222
Julian Cusack 2002 183,659 108,262 5,337 -- -- -- 33,059
Sarah Davies 2002 132,965 108,262 465 -- -- -- 15,956
David May 2002 146,927 61,864 3,887 -- -- -- 29,385

- ----------
(1) The compensation reported for the named executive officers for 2002
reflects the period beginning upon their commencement of employment with
us and ending on December 31, 2002. All compensation payments were made
in British Pounds and have been translated into U.S. Dollars at the
average exchange rate for the period from May 23, 2002 through December
31, 2002, which was $1.5466 to (pounds sterling)1.

(2) Other annual compensation includes benefits-in-kind.

(3) The amounts listed under "All other compensation" reflect the Company's
contributions to the pension plan (a defined contribution plan).

EMPLOYMENT-RELATED AGREEMENTS

The following information summarizes the employment-related agreements for
our named executive officers. The employment agreements of each of the named
executive officers commenced on June 21, 2002. Each of the agreements may be
terminated by the employee or the employer on not less than 12 months notice.
In addition, employment terminates automatically:

o when the employee reaches 65 years of age;

o if the employee ceases to be a director of the Company;

o if the employee becomes bankrupt, is convicted of a serious criminal
offence or serious misconduct; or

o if the employee is disqualified from being a director or ceases to be
registered by any regulatory body.

The employees have for the benefit of their respective beneficiaries life
cover of four times their basic salary which is fully insured by the Company.
There are no key man insurance policies in place.

The Compensation Committee is currently considering amendments to these
agreements which would, among other things, extend the term of the agreements
to three years and provide for increased severance benefits under certain
circumstances.

Christopher O'Kane. Aspen U.K. Services has entered into a management
services contract with Mr. O'Kane under which he has agreed to serve as our
Chief Executive Officer, terminable upon 12

102

months' notice by either party. The agreement provides that Mr. O'Kane shall be
paid an initial annual salary of (pounds sterling)330,000 per annum which is
subject to review by Aspen U.K. Services from time to time. Mr. O'Kane's
management services contract also entitles him to participate in any pension
scheme which is established by our board, and to private medical insurance,
permanent health insurance, personal accident insurance and life assurance. The
management services contract also provides for a discretionary bonus to be
awarded at such times and at such level as the Compensation Committee of our
board may determine.

Julian Cusack. Aspen Holdings entered into a service agreement with Mr.
Cusack under which he has agreed to serve as our Chief Financial Officer
terminable upon 12 months' notice by either party. The agreement provides that
Mr. Cusack will be paid an initial annual salary of $312,000 which is subject
to review by our board from time to time. Mr. Cusack's management services
contract also entitles him to participate in any pension scheme which is
established by our board, an annual housing allowance in an amount up to
$180,000, and to private medical insurance, permanent health insurance,
personal accident insurance and life assurance. The management services
contract also provides for a discretionary bonus to be awarded at such times
and at such level as the Compensation Committee of our board may determine. In
addition, Mr. Cusack is also entitled to receive annual fees in the amount of
(pounds sterling)30,000 for his executive officer service as the Finance
Director of Aspen U.K.

Sarah Davies. Aspen U.K. Services has entered into a management services
contract with Ms. Davies under which she has agreed to serve as our Chief
Operating Officer terminable upon 12 months' notice by either party. The
agreement provides that Ms. Davies will be paid an initial annual salary of
(pounds sterling)165,000 subject to review by our board from time to time. Ms.
Davies' management services contract also entitles her to participate in any
pension scheme which is established by our board, and to private medical
insurance, permanent health insurance, personal accident insurance and life
assurance. The management services contract also provides for a discretionary
bonus to be awarded at such times and at such level as the Compensation
Committee of our board may determine.

David May. Aspen U.K. Services has entered into a management services
contract with Mr. May under which he has agreed to serve as our Chief Casualty
Underwriter terminable upon 12 months' notice by either party. The agreement
provides that Mr. May will be paid an initial annual salary of (pounds
sterling)190,000 subject to review by our board from time to time. Mr. May's
management services contract also entitles him to participate in any pension
scheme which is established by our board, and to private medical insurance,
permanent health insurance, personal accident insurance and life assurance. The
management services contract also provides for a discretionary bonus to be
awarded at such times and at such level as the Compensation Committee of our
board may determine.

ANNUAL BONUS PLAN

As at June 30, 2003, bonus payments were made to our officers based on the
final terms of the bonus scheme and the performance of the Company for fiscal
year ending 2002. Each year, officers that participate in the annual bonus plan
will be eligible to receive a bonus based upon the officer's achievement of
annual performance targets that have been established by the Compensation
Committee of our board of directors. The Compensation Committee will establish
a bonus pool at the end of each year, with the amount of such pool determined
based upon our year-end results. The pool will then be allocated to officers
based upon their individual performance with respect to their performance
targets.

SHARE INCENTIVE PLAN

We have adopted the Aspen Insurance Holdings Limited 2003 Share Incentive
Plan ("2003 Share Incentive Plan") to aid us in recruiting and retaining key
employees and directors and to motivate such employees and directors.

The plan provides for the grant to selected employees and non-employee
directors of share options, share appreciation rights, restricted shares and
other share-based awards. The shares subject to initial grant of options (the
"initial grant options") will represent an aggregate of 5.75% of our

103

ordinary shares on a fully diluted basis (3,884,020 shares), assuming the
exercise of all outstanding options issued to Wellington and the Names'
Trustee. In addition, an aggregate of 2.5% of our ordinary shares on a fully
diluted basis (1,840,550 shares), assuming the exercise of all outstanding
options issued to Wellington and the Names' Trustee, are reserved for
additional grant or issuance of share options, share appreciation rights,
restricted shares and/or other share-based awards following the completion of
this offering as and when determined in the sole discretion of our board of
directors or the Compensation Committee. No award may be granted under the plan
after the tenth anniversary of its effective date. The plan provides for
equitable adjustment of affected terms of the plan and outstanding awards in
the event of any change in the outstanding ordinary shares by reason of any
share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination, combination or transaction or exchange of
shares or other corporate exchange, or any distribution to shareholders of
shares other than regular cash dividends or any similar transaction. In the
event of a change in control (as defined in the plan), our board of directors
or the Compensation Committee may accelerate, vest or cause the restrictions to
lapse with respect to, all or any portion of an award (except that shares
subject to the initial grant options shall vest); or cancel awards for fair
value; or provide for the issuance of substitute awards that substantially
preserve the terms of any affected awards; or provide that for a period of at
least 15 days prior to the change in control share options will be exercisable
and that upon the occurrence of the change in control, such options shall
terminate and be of no further force and effect.

The initial grant options have a term of ten years and an exercise price
of (pounds sterling)10.70 per share, which price was calculated based on 109%
of the calculated fair market value of our ordinary shares as of May 29, 2003
and was determined by an independent consultant. Sixty-five percent of the
initial grant options are subject to time-based vesting with 20% vesting upon
grant and 20% vesting on each December 31 of calendar years 2003, 2004, 2005
and 2006. The remaining 35% of the initial grant options are subject to
performance-based vesting determined by achievement of return on equity
targets, and subject to achieving a threshold combined ratio target, in each
case, over the applicable one or two-year performance period. Initial grant
options that do not vest based on the applicable performance targets may vest
in later years to the extent performance in such years exceeds 100% of the
applicable targets, and in any event, any unvested and outstanding
performance-based initial grant options will become vested on December 31,
2009. Upon termination of a participant's employment, any unvested options
shall be forfeited, except that if the termination is due to death or
disability (as defined in the option agreement), the time-based portion of the
initial grant options shall vest to the extent such option would have otherwise
become vested within 12 months immediately succeeding such termination due to
death or disability. Upon termination of employment, vested initial grant
options will be exercisable, subject to expiration of the options, until (i)
the first anniversary of termination due to death or disability or, for nine
members of senior management, without cause or for good reason (as those terms
are defined in the option agreement), (ii) six months following termination
without cause or for good reason for all other participants, (iii) three months
following termination by the participant for any reason other than those stated
in (i) or (ii) above or (iv) the date of termination for cause. As provided in
the plan, in the event of a change in control unvested and outstanding initial
grant options shall immediately become fully vested.

104

SHARE OPTIONS GRANTED

The following table summarizes our named executive officers' options to
purchase ordinary shares granted as of September 30, 2003:

PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE PRESENT
NAME GRANTED IN 2003 PRICE EXPIRATION DATE VALUE(1)
- ---------------------------- ------------ ------------ --------------------------- ----------------- --------------

Christopher O'Kane ......... 991,830 25.5% (pounds sterling)10.70 August 19, 2013 $5.27 million
Julian Cusack .............. 338,180 8.7% 10.70 August 19, 2013 $1.80 million
Sarah Davies ............... 316,940 8.2% 10.70 August 19, 2013 $1.69 million
David May .................. 155,000 4.0% 10.70 August 19, 2013 $0.82 million

- ----------
(1) There was no public market for our ordinary shares as of September 30,
2003. The fair value of each option has been estimated on the date of
grant using the Black-Scholes option pricing model. The model is based on
the following assumptions: risk free interest rate of 4.7%; expected life
of 7 years; a dividend yield of 0.6%; share price volatility of zero (as
the minimum value method was utilized); and foreign currency volatility
of 9.4% (as the exercise price is in British Pounds and the share price
of the Company is in U.S. Dollars). Although the exercise price is
denominated in British Pounds, the grant date present value is shown in
U.S. Dollars based on the exchange rate on August 20, 2003, the date of
grant, at (pounds sterling)1 to $1.5924.

105

PRINCIPAL SHAREHOLDERS

As at September 30, 2003, we had 88 registered holders of ordinary shares.
Two of those registered holders have an address in Bermuda.

The following table sets forth information as of September 30, 2003
regarding beneficial ownership of ordinary shares and the applicable voting
rights attached to such share ownership in accordance with our bye-laws by:

o each person known by us to beneficially own 5% or more of our
outstanding ordinary shares;

o each of our directors;

o each of our named executive officers; and

o all of our executive officers and directors as a group.

BENEFICIAL OWNERSHIP OF
PRINCIPAL SHAREHOLDERS BENEFICIAL OWNERSHIP OF
PRIOR PRINCIPAL SHAREHOLDERS
TO THE OFFERING(1) AFTER THE OFFERING
------------------------- ------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(2) NUMBER PERCENTAGE NUMBER PERCENTAGE
- ---------------------------------------------------- ------------ ------------ ------------ -----------

The Blackstone Group(3) ............................ 18,000,000 31.62% 18,000,000 27.09%
345 Park Avenue, 31st Floor
New York, NY 10154
Wellington Underwriting plc(4) ..................... 15,043,580 24.78% 15,043,580 21.42%
88 Leadenhall Street
London EC3A 3BA
United Kingdom
Candover Investments plc, its subsidiaries and funds
under management(5) ............................... 6,980,700 12.26% 6,980,700 10.51%
20 Old Bailey
London EC4M 7LN
United Kingdom
Credit Suisse First Boston Private Equity(6) ....... 7,000,000 12.30% 7,000,000 10.53%
11 Madison Avenue, 16th Floor
New York, NY 10010
Montpelier Re Holdings Ltd.(7) ..................... 4,000,000 7.03% 4,000,000 6.02%
Mintflower Place
8 Par-La-Ville Road
Hamilton HM08
Bermuda
Harrington Trust Limited(8) ........................ 3,799,530 6.34% 3,799,530 5.47%
4th Floor, Windsor Place
22 Queen Street
Hamilton HM 11
Bermuda
3i Group plc ....................................... 3,000,000 5.27% 3,000,000 4.51%
91 Waterloo Road
London SE1 8XP
United Kingdom

106

BENEFICIAL OWNERSHIP OF
PRINCIPAL SHAREHOLDERS BENEFICIAL OWNERSHIP OF
PRIOR PRINCIPAL SHAREHOLDERS
TO THE OFFERING(1) AFTER THE OFFERING
------------------------ -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(2) NUMBER PERCENTAGE NUMBER PERCENTAGE
- ----------------------------------------------- ----------- ------------ ----------- -----------

Phoenix Equity Partners(9) .................... 3,000,000 5.27% 3,000,000 4.51%
33 Glasshouse Street
London W1B 5DG
United Kingdom
Paul Myners(10) ............................... 151,830 * 151,830 *
Christopher O'Kane(11) ........................ 194,080 * 194,080 *
Julian Cusack(12) ............................. 68,840 * 68,840 *
Sarah Davies(13) .............................. 65,340 * 65,340 *
David May(14) ................................. 32,100 * 32,100 *
Julian Avery(15) .............................. __ __ __ --
Ian Cormack(16) ............................... 8,890 __ 8,890 *
Heidi Hutter(17) .............................. 17,790 * 17,790 *
Prakash Melwani(18) ........................... __ __ __ --
Bret Pearlman(19) ............................. __ __ __ --
Norman Rosenthal(20) .......................... 13,570 * 13,570 *
Kamil M. Salame(21) ........................... __ __ __ --
Anthony Taylor(22) ............................ __ __ __ --
All directors and executive officers as a group
(13 persons) ................................. 552,440 0.96% 552,440 0.83%

- ----------
* Less than 1%

(1) Includes the outstanding ordinary shares and assumes the exercise of all
options to purchase non-voting shares, which options may be exercised or
lapse upon the earlier occurrence of several events as further described
in "Description of Share Capital -- Investor Options" and the non-voting
shares so acquired will automatically convert into ordinary shares upon
completion of this offering or upon issuance, if the options are
exercised after the completion of this offering.

Our bye-laws generally provide for voting adjustments in certain
circumstances. See "Description of Share Capital -- Voting Adjustments."

(2) Unless otherwise stated, the address for each director and officer is c/o
Aspen Insurance UK Limited, 100 Leadenhall Street, London EC3A 3DD,
United Kingdom. The address for Mr. Cusack is c/o Aspen Insurance
Holdings Limited, Victoria Hall, 11 Victoria Street, Hamilton HM 11,
Bermuda.

(3) Includes 13,730,800 ordinary shares held by BCP Excalibur Holdco (Cayman)
Limited, 1,042,220 ordinary shares held by BFIP Excalibur Holdco (Cayman)
Limited, 629,720 ordinary shares held by BGE Excalibur Holdco (Cayman)
Limited and 2,597,260 ordinary shares held by BOCP Excalibur Holdco
(Cayman) Limited. Blackstone FI2 Capital Partners (Cayman) L.P., a Cayman
Islands exempted limited partnership ("BCP III"), Blackstone FI Offshore
Capital Partners (Cayman) L.P., a Cayman Islands exempted limited
partnership ("BOCP III") and Blackstone

107

Family Investment Partnership (Cayman) III L.P., a Cayman Islands exempted
limited partnership ("BFIP III"), are the sole members of BCP Excalibur
Holdco (Cayman) Limited, BOCP Excalibur Holdco (Cayman) Limited, and BFIP
Excalibur Holdco (Cayman) Limited, respectively. As the sole general
partner of each of BCP III and BFIP III, and the sole investment general
partner of BOCP III, Blackstone Management Associates III L.L.C., a
Delaware limited liability company ("BMA III"), may be deemed to be the
beneficial owner of 17,370,280 ordinary shares. As the sole member of BGE
Excalibur II Limited, a Cayman Islands exempted limited company, which
itself is the sole director and sole voting member of BGE Excalibur Holdco
(Cayman) Limited, a Cayman Islands exempted limited company ("BGE"),
Blackstone LR Associates (Cayman) III LDC, a Cayman Islands limited
duration company ("BLR III") may be deemed to be the beneficial owner of
629,720 ordinary shares. Messrs. Peter G. Peterson and Stephen A.
Schwarzman are the founding members of each of BMA III and BLR III (the
"Blackstone Founding Members") and have the shared power to vote or to
direct the vote of, and to dispose or to direct the disposition of, the
shares of the identified class of securities that may be deemed to be
beneficially owned by BMA III or BLR III. As a result, the Blackstone
Founding Members may be deemed to beneficially own the ordinary shares
that BMA III or BLR III may be deemed to beneficially own, but they
disclaim any such beneficial ownership except to the extent of their
individual pecuniary interest in such ordinary shares.

(4) Includes 11,262,460 ordinary shares and options to purchase 3,781,120
non-voting shares, which options will become exercisable or lapse upon
the earlier occurrence of several events including this offering as
further described in "Description of Share Capital -- Investor Options",
and which non-voting shares will automatically convert into ordinary
shares at a one-to-one ratio upon completion of this offering or upon
issuance, if the options are exercised after completion of this offering.
We have been notified by Wellington that it is in the process of entering
into a loan agreement with Barclays Bank plc and a syndicate of banks.
The parties have a non-binding agreement that Wellington will pledge its
ordinary shares in Aspen Holdings to Barclays Bank plc and the syndicate
as a condition to entering into the loan agreement. If Wellington
defaults under the loan agreement, it is possible that Barclays and the
syndicate would become shareholders in Aspen Holdings.

(5) Includes 783,050 ordinary shares held by Candover Investments plc, 35,620
ordinary shares held by Candover (Trustees) Limited, 153,790 ordinary
shares held by Candover 2001 GmbH & Co. KG, 466,630 ordinary shares held
by Candover Partners Limited as general partner of Candover 2001 Fund US
No. 5 Limited Partnership, 124,830 ordinary shares held by Candover
Partners Limited as general partner of Candover 2001 Fund US No. 4
Limited Partnership, 262,800 ordinary shares held by Candover Partners
Limited as general partner of Candover 2001 Fund US No. 3 Limited
Partnership, 765,010 ordinary shares held by Candover Partners Limited as
general partner of Candover 2001 Fund US No. 2 Limited Partnership,
1,109,410 ordinary shares held by Candover Partners Limited as general
partner of Candover 2001 Fund US No. 1 Limited Partnership, 634,880
ordinary shares held by Candover Partners Limited as general partner of
Candover 2001 Fund UK No. 6 Limited Partnership, 81,490 ordinary shares
held by Candover Partners Limited as general partner of Candover 2001
Fund UK No. 5 Limited Partnership, 115,670 ordinary shares held by
Candover Partners Limited as general partner of Candover 2001 Fund UK No.
4 Limited Partnership, 1,117,820 ordinary shares held by Candover
Partners Limited as general partner of Candover 2001 Fund UK No. 3
Limited Partnership, 365,420 ordinary shares held by Candover Partners
Limited as general partner of Candover 2001 Fund UK No. 2 Limited
Partnership and 964,280 ordinary shares held by Candover Partners Limited
as general partner of Candover 2001 Fund UK No. 1 Limited Partnership,
but excludes 19,300 ordinary shares held by Mourant & Co. Trustees
Limited ("Mourant") as trustee of The Candover 2001 Employee Benefit
Trust.

(6) Includes 968,080 ordinary shares held by MBP III Plan Investors, L.P.,
9,330 ordinary shares held by Millennium Partners II, L.P., 46,300
ordinary shares held by DLJ MB Partners III GmbH & Co. KG, 69,780
ordinary shares held by DLJ Offshore Partners III-2, C.V., 97,970
ordinary

108

shares held by DLJ Offshore Partners III-1, C.V., 379,060 ordinary shares
held by DLJ Offshore Partners III, C.V., and 5,429,480 ordinary shares
held by DLJMB Overseas Partners III, C.V., which, along with all of the
shareholders named in this footnote are referred to collectively as the
"DLJ Related Entities." Credit Suisse First Boston, a Swiss bank, owns all
the voting stock of Credit Suisse First Boston (USA), Inc. (formerly
Donaldson, Lufkin & Jenrette, Inc.) ("CSFB-USA"). The DLJ Related Entities
are direct and indirect subsidiaries of CSFB-USA and merchant banking
funds advised by subsidiaries of CSFB USA. Credit Suisse First Boston LLC,
one of the underwriters in this offering, is a direct subsidiary of
CSFB-USA and itself does not hold any ownership interest in either CSFB
Private Equity or any of the DLJ Related Entities. Affiliates of DLJ
Related Entities own approximately 9.1% interest in Montpelier Re, which
is also a beneficial owner of the ordinary shares of the Company. See
footnote (7) below.

(7) 4,000,000 ordinary shares are held by Montpelier Reinsurance Ltd., a
direct subsidiary of Montpelier Re.

(8) Includes 792,770 ordinary shares and options to purchase 3,006,760
non-voting shares, which options will become exercisable or lapse upon
the earlier occurrence of several events including this offering as
further described in "Description of Share Capital -- Investor Options,"
held by the Names' Trustee for the benefit of the Unaligned Members and
which non-voting shares will automatically convert into ordinary shares
at a one-to-one ratio upon completion of this offering or upon issuance,
if the options are exercised after completion of this offering, upon
issuance.

(9) Includes 8,440 ordinary shares held by Phoenix Equity Partners IV
Co-Investment Plan, 9,240 ordinary shares held by Phoenix Equity Partners
III & IV Executive Investment Plan L.P., 197,850 ordinary shares held by
Phoenix Equity Nominees Limited as attorney for Donaldson, Lufkin &
Jenrette Securities Corporation, 408,050 ordinary shares held by Phoenix
Equity Partners IV "C" L.P., 1,061,420 ordinary shares held by Phoenix
Equity Partners IV "B" L.P. and 1,315,000 ordinary shares held by Phoenix
Equity Partners IV "A" L.P. (collectively, the "Phoenix Equity
Partners"). Phoenix Equity Nominees Limited holds these shares on behalf
of the Phoenix Equity Partners as their nominee or attorney-in-fact. As
the sole general partner of each of Phoenix Equity Partners III & IV
Executive Investment Plan, Phoenix Equity Partners IV "C," Phoenix Equity
Partners IV "B" and Phoenix Equity Partners IV "A," Phoenix General
Partner Limited Partnership IV, a U.K. Limited Partnership ("PGPLP IV";
which in turn is managed by Phoenix Thistle General Partner Limited and
Phoenix Equity Partners Limited), may be deemed to be the beneficial
owner of 2,793,710 ordinary shares. Messrs. David Gregson, Hugh Lenon,
James Thomas, Alastair Muirhead and David Burns are the directors of
Phoenix Equity Partners Limited and have the shared power to vote or to
direct the vote of, and to dispose or to direct the disposition of, the
shares of the identified class of securities that may be deemed to be
beneficially owned by Phoenix Equity Partners III & IV Executive
Investment Plan, Phoenix Equity Partners IV "C," Phoenix Equity Partners
IV "B" and Phoenix Equity Partners IV "A." As a result, the directors of
Phoenix Equity Partners Limited may be deemed to beneficially own the
ordinary shares that Phoenix Equity Partners III & IV Executive
Investment Plan, Phoenix Equity Partners IV "C," Phoenix Equity Partners
IV "B" and Phoenix Equity Partners IV "A" may be deemed to beneficially
own, but they disclaim any such beneficial ownership except to the extent
of their individual pecuniary interest in such ordinary shares. In
addition, CSFB Private Equity, which through its affiliates invested in
Aspen Holdings, is an investor in Phoenix Equity Partners. CSFB Private
Equity is entitled to 13% of the management fees relating to the
management of Phoenix Equity Partners.

(10) Includes 100,000 ordinary shares and 51,830 ordinary shares issuable upon
exercise of vested options held by Mr. Myners.

(11) Includes 30,430 ordinary shares and 163,650 ordinary shares issuable upon
exercise of vested options held by Mr. O'Kane.

(12) Includes and 13,040 ordinary shares and 55,800 ordinary shares issuable
upon exercise of vested options held by Mr. Cusack.

109

(13) Includes 13,040 ordinary shares and 52,300 ordinary shares issuable upon
exercise of vested options held by Ms. Davies.

(14) The 6,520 ordinary shares held by Mr. May include 300 ordinary shares
held by Mr. May's son Aaron Nicholas May, 300 ordinary shares held by his
son Jacob Marcus May, 300 ordinary shares held by his daughter Kendra
Bethany May and 300 ordinary shares held by his son Toby Sebastian May.
Also includes 25,580 ordinary shares issuable upon exercise of vested
options held by Mr. May.

(15) Mr. Avery, one of our directors, is Chief Executive Officer of
Wellington. As Chief Executive Officer and a director of Wellington, Mr.
Avery has the ability to influence voting and investment decisions over
the securities beneficially owned by Wellington. The business address of
Mr. Avery is c/o Wellington Underwriting plc, 88 Leadenhall Street,
London EC3A 3BA, United Kingdom.

(16) Includes 2,170 ordinary shares and 6,720 ordinary shares issuable upon
exercise of vested options held by Mr. Cormack.

(17) Ms. Hutter, one of our directors, is the beneficial owner of 870 ordinary
shares. As Chief Executive Officer of The Black Diamond Group, LLC, Ms.
Hutter has shared voting and investment power over the 3,470 ordinary
shares beneficially owned by The Black Diamond Group, LLC. The business
address of Ms. Hutter is c/o Black Diamond Group, 780 Third Avenue, 32nd
Floor, New York, NY 10017. Ms. Hutter also holds vested options
exercisable for 13,450 ordinary shares.

(18) Mr. Melwani, one of our directors, is a Senior Managing Director in the
Private Equity Group of Blackstone. Mr. Melwani disclaims beneficial
ownership of any of the ordinary shares or options held by Blackstone.
The business address of Mr. Melwani is c/o The Blackstone Group L.P., 345
Park Avenue, 31st Floor, New York, NY 10154.

(19) Mr. Pearlman, one of our directors, is a Senior Managing Director in the
Private Equity Group of Blackstone. Mr. Pearlman disclaims beneficial
ownership of any of the ordinary shares held by Blackstone. The business
address of Mr. Pearlman is c/o The Blackstone Group L.P., 345 Park
Avenue, 31st Floor, New York, NY 10154.

(20) Includes 6,850 ordinary shares and 6,720 ordinary shares issuable upon
exercise of vested options held by Mr. Rosenthal. Mr. Rosenthal, one of
our directors, was nominated by Blackstone and appointed by the board of
directors. Mr. Rosenthal disclaims beneficial ownership of any of the
ordinary shares held by Blackstone. The business address of Mr. Rosenthal
is c/o Norman L. Rosenthal & Associates, Inc., 415 Spruce Street,
Philadelphia, PA 19106.

(21) Mr. Salame, one of our directors, is a Director in the Private Equity
Group of Credit Suisse First Boston LLC, of which the DLJ Related
Entities are a part. Mr. Salame disclaims beneficial ownership of any of
the ordinary shares owned by the DLJ Related Entities. The business
address of Mr. Salame is c/o DLJ Merchant Banking Partners, Credit Suisse
First Boston Private Equity, Eleven Madison Avenue, 16th Floor, New York,
NY 10010.

(22) Mr. Taylor, one of our directors, is President and Chief Executive
Officer of Montpelier Re. Mr. Taylor, as a member of the board of
directors of Montpelier Re, has the ability to influence voting and
investment decisions over the securities beneficially owned by Montpelier
Re. Mr. Taylor disclaims beneficial ownership of any of the ordinary
shares owned by Montpelier Re. The business address of Mr. Taylor is c/o
Montpelier Re Holdings Ltd., Mintflower, 8 Par-la-Ville Road, Hamilton
HM08 Bermuda.

110

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We describe below some of the transactions we have entered into with
parties that are related to our Company.

TRANSACTIONS AND RELATIONSHIPS WITH INITIAL INVESTORS

Certain of our founding shareholders, including Blackstone, CSFB Private
Equity, Olympus, Candover, Mourant, 3i, Phoenix, Montpelier Re and The Lexicon
Partnership LLP ("Lexicon"), received $10.0 million (applying the British
Pound/U.S. Dollar exchange rate at $1.5000 to (pounds sterling)6.7 million) in
the aggregate for assistance with Aspen Holdings' initial funding completed on
June 21, 2002 and second funding completed on November 29, 2002.

Aspen Holdings and Aspen U.K. have entered into a number of arrangements
with Wellington and some of its affiliates. Wellington is a holder of 19.79% of
our ordinary shares as of September 30, 2003. These arrangements are as
follows:

o Quota Share Agreements. Syndicate 2020, managed by WUAL, has placed a
QUALIFYING QUOTA SHARE contract with National Indemnity Company
("NICO"), a member of the Berkshire Hathaway group of companies under
which it ceded 35.7% of all Syndicate 2020's business, excluding U.S.
surplus lines business, effective between January 1, 2002 and May 31,
2002, plus all surplus lines business written between June 1, 2002 and
June 30, 2002. WUAL established a consortium Syndicate 3030, with the
backing of the Berkshire Hathaway group companies, with which it
placed a 35.7% share of all business effective between June 1, 2002
and December 31, 2002, excluding U.S. surplus lines business written
between June 1, 2002 and June 30, 2002. Aspen U.K. has obtained some
of its business through reinsuring NICO and Syndicate 3030. With
respect to the qualifying quota share contract with NICO, Aspen U.K.
has entered into a quota share contract under which it has reinsured
34% of NICO's liabilities under the qualifying quota share agreement
with Syndicate 2020. Aspen U.K. has entered into a quota share
agreement with Syndicate 3030 in respect of 70% of its portfolio,
whose single corporate member is a member of the Berkshire Hathaway
group. Of Aspen U.K.'s gross written premiums of $374.3 million for
the period from May 23, 2002 to December 31, 2002, $98.2 million was
written as retrocession of the Syndicate 2020 qualifying quota share
and $118.0 million as a quota share of Syndicate 3030. In the nine
months ended September 30, 2003, gross premiums written under the 2003
quota share agreement with Syndicate 2020 were $58.9 million.

o Option to Purchase Retrocession Agreement. Under this agreement
entered into on May 28, 2002, Wellington and Aspen Holdings agreed to
pay NICO $2.5 million and $2.0 million, respectively, to procure (i)
the retrocession to a subsidiary of Aspen Holdings of the NICO
qualifying quota share of Syndicate 2020 and (ii) the reinsurance of
Syndicate 3030. On June 21, 2002, the amount of $2.5 million was
repaid to Wellington by Aspen Holdings (reimbursed by Aspen U.K. on
the same day) together with a fee of $275,000 for bearing the risk
from May 28, 2002.

o Framework Agreement. Under the framework agreement entered into by
and among Aspen Holdings, Aspen U.K. Services, Wellington, WUAL,
Wellington Underwriting Services Limited ("WUSL") and WU Inc. on May
28, 2002, Aspen Holdings agreed to cause Aspen U.K. to offer Syndicate
2020, for 2003 and each subsequent year of account, a 20% quota share
of Aspen U.K.'s business (comprising the lines of business previously
underwritten by Syndicate 2020) during such year. WUAL agreed, on
behalf of Syndicate 2020, to offer to Aspen U.K. for 2003 and each
subsequent year of account, a 20% quota share of all business (other
than Aspen U.K. lines) allocated to that year of account of Syndicate
2020's business. For 2003, Aspen U.K. has elected to take up a 7.5%
quota share of Syndicate 2020 lines, and WUAL, on behalf of Syndicate
2020, has elected not to accept any quota share reinsurance of Aspen
U.K. Neither Aspen U.K. nor WUAL on

111

behalf of Syndicate 2020 will be obligated to offer a quota share to
the other after the 2005 year of account should an initial public
offering (such as this offering) be completed prior to December 21,
2005. Under the framework agreement, Wellington, WUAL, WUSL and WU
Inc. also agree, until March 31, 2004, not to, subject to exceptions,
compete with Aspen U.K. or engage in activities that will directly or
indirectly foster competition with Aspen U.K. in the property
reinsurance, U.S. and non-U.S. casualty reinsurance and U.K.
commercial insurance lines of business that were previously written by
Syndicate 2020 and currently written by Aspen U.K.

o Shareholder's Agreement. Aspen Holdings and Wellington have agreed in
principle to enter into a shareholder's agreement effective with this
offering, which contains provisions similar to the framework
agreement, whereby Wellington and its subsidiaries are restricted from
competing with Aspen U.K. in certain lines of business written by
Aspen U.K. until March 31, 2004.

o Binding Authority Letters. Aspen U.K. has entered into three binding
authority letters with WU Inc. to underwrite and market our U.S.
facultative property and casualty products effective January 1, 2003.
With respect to our U.S. facultative property and casualty reinsurance
lines of business, WU Inc. writes reinsurance under explicit authority
limits in accordance with the binding authority agreements. See
"Business -- Underwriting and Risk Management."

o Administrative Services Agreement. Aspen Holdings and its
subsidiaries have entered into an administrative services agreement as
of June 21, 2002, for the provision of services that include
accounting, actuarial, operations, risk management and technical
support by a subsidiary of WUAL. The agreement is for an indefinite
period but may be terminated by either party upon the occurrence of
certain specified circumstances, such as the inability to pay debts,
and after an initial period of 3 years may be terminated by either
party on 18 months' prior notice. We may also terminate the agreement
on six months' notice following the completion of this offering. The
provision of these services is priced on an actual cost basis. For the
period from May 23, 2002 to December 31, 2002, we paid $2.6 million to
Wellington and its affiliates under the administrative services
agreement. During 2003 we have progressively reduced our reliance on
the services provided under this agreement by developing our own
in-house resources. We have chosen to continue to outsource support
for our information technology systems to Wellington, but we
anticipate that we will not continue to receive any other significant
services from WUAL beyond the end of 2003.

o Run-Off Services Agreement. Aspen U.K. Services has entered into a
run-off services agreement with WUAL as of May 20, 2003 to handle the
run-off of the claims for Syndicate 2020, Syndicate 3030 and their
predecessors for the lines of business that were assumed by the
Company. Under the agreement, Aspen Holdings acts as guarantor of the
services to be performed by Aspen U.K. Services. The commencement
period was as of June 21, 2002, and the agreement may be terminated by
either party on 3 months' notice. Under certain circumstances,
including regulatory requirements and change of control, the agreement
may be terminated immediately by either party. Services are charged on
an at-cost basis.

o Indemnification Agreement. In connection with the preparation of the
Syndicate 2020 and 3030 Financial Information included in this
prospectus, we have agreed with WUAL and Wellington, in its capacity
as the provider of such information, to jointly represent to KPMG as
to certain facts and circumstances surrounding the preparation of the
financial information of the Syndicates. In addition, we have agreed
to indemnify Wellington, WUAL and their respective directors for any
liability or loss incurred as a result of investigating, disputing or
settling any claim arising out of provision of the representation to
KPMG, the content of the financial information of the Syndicates as
presented in the

112

filings with the SEC or the public filings of such information with
the SEC, other than the liabilities or losses found in a final
judgment by a court of competent jurisdiction to have resulted from
the bad faith, gross negligence, fraud or willful misconduct of
Wellington, WUAL or their respective directors.

o Subscription and Shareholders' Agreement. In connection with our
formation and initial funding, we granted Wellington several rights to
purchase our ordinary shares under this agreement. They exercised
these rights in 2002 and, as a result, they own 11,262,460 ordinary
shares for which we received an aggregate of (pounds sterling)114.9
million. Other operative provisions of this agreement were amended and
restated as described under "Description of Share Capital --
Shareholders' Agreement."

o Option Instrument. In connection with our formation and initial
funding, Wellington and the Names' Trustee received options to
purchase, respectively, 3,781,120 and 3,006,760 non-voting shares
exercisable or lapsing upon the earlier occurrence of several events
(including this offering) as further described in "Description of
Share Capital -- Investor Options," which non-voting shares will
automatically convert into ordinary shares at a one-to-one ratio upon
the completion of this offering or upon issuance, if the options are
exercised after the completion of this offering.

We have agreed with the Names' Trustee, a holder of 1.34% of our ordinary
shares as of September 30, 2003 and the options to purchase up to 3,006,760
non-voting shares, the following:

o Taxation Funding Facility Agreement. On June 21, 2002, we entered
into the taxation funding facility agreement with the Names' Trustee,
as trustee of the Names' Trust. Under that agreement, we agreed to
make available cash advances to the Names' Trust to enable the Names'
Trustee to make sub-advances to the Unaligned Members to fund payment
of taxation payable on the value of rights granted to the Unaligned
Members in respect of options granted to them and taxation payable in
respect of contingent payments received under the profit commission
agreement. The value of the rights is the amount agreed in principle
by Aspen Holdings with the U.K. Inland Revenue prior to December 31,
2003, or, if no such agreement has been reached by then, the amount
estimated by us in good faith, with provisions for upward adjustment
in the event that the amount subsequently agreed with the U.K. Inland
Revenue is higher. Any taxation payable by the Unaligned Members on
these rights, which we may have to advance, will be based on such
determination of value. If no value is realized by the Unaligned
Members, or to the extent that the value realized (after tax) is less
than the advance, we have agreed to waive repayment. We expect that it
is most likely that we will not incur any liability under the Taxation
Funding Facility Agreement prior to 2006.

o Deed of Retirement, Appointment and Amendment. In connection with the
appointment of the Names' Trustee as successor trustee to the Names'
Trust, Aspen Holdings has entered into a deed of retirement,
appointment and amendment with the Names' Trustee as successor
trustee, the Names' Trustees Limited (the "Predecessor Trustee"), as
initial trustee, and WUSL, whereby the Names' Trustee's liability is
limited under the various agreements which it administers for the
benefit of the Unaligned Members under the Names' Trust. We have
agreed to indemnify the Predecessor Trustee and its directors and
officers with respect to any present or future liabilities arising out
of or as a result of its trusteeship, except for any liabilities that
may arise out of any breach of trust, fraud or willful misconduct. We
have also agreed to indemnify the Names' Trustee and its officers,
directors and employees for any liabilities arising out of any act or
omission with respect to the formation and enforcement of the
agreements which it administers for the benefit of the Unaligned
Members under the Names' Trust, except for any liabilities arising out
of the Names' Trustee's breach of trust, fraud, willful misconduct or
negligence. We have further agreed to indemnify the Names' Trustee for
any liabilities, subject to limitations, that may arise under
agreements with underwriters in connection with a sale of ordinary

113

shares by the Names' Trustee in a secondary underwritten offering in
the United States, except where the Names' Trustee does not hold good
title to the ordinary shares or if it created any encumbrances on the
ordinary shares to be sold in such offering.

Aspen U.K. has entered into four quota share reinsurance arrangements with
Montpelier Reinsurance Ltd., an affiliate of Montpelier Re and one of our
founding shareholders, in connection with our automotive liability facultative
reinsurance line, property risk excess of loss reinsurance line and property
facultative reinsurance line. One of our directors, Anthony Taylor, is Chief
Executive Officer and Director of Montpelier Re. Three of the contracts run for
three years commencing January 1, 2003 and each has a capping mechanism
designed to limit the amount ceded in the aggregate to $60 million in the first
year, $120 million in the first two years and $180 million over three years.
The cap applies to gross written premiums ceded before deductions and brokerage
and profit commissions. The contracts will have the benefit of the reinsurance
protections placed by Aspen U.K. Aspen U.K. will receive an over-riding
commission of 7.5% of net premiums and profit commission of 15% of the
reinsurer's net profit from the contracts. In addition, Aspen U.K. has entered
into a 10% quota share treaty effective from January 1, 2003 with Montpelier
Reinsurance Ltd. and continuing annually unless cancelled with respect to its
U.K. and Irish employers' liability and public liability business. Aspen U.K.
will receive an over-riding commission of 5% of premiums (after deductions
except reinsurance premiums) and a profit commission of 20% of the reinsurer's
net profit from the treaty. For the nine months ended September 30, 2003, the
reinsurance premiums ceded under such quota share arrangements with Montpelier
Re were $59.9 million.

Under letter agreements dated June 21, 2002, January 22, 2003 and June 2,
2003, respectively, Aspen Holdings agreed with Montpelier Re that:

o until December 20, 2003, Aspen Holdings would not take any steps to
establish a Class IV Reinsurance Company in Bermuda, other than a
captive (the "Captive") wholly-owned by Aspen Holdings whose sole
business shall be the reinsurance of risks underwritten by Aspen U.K.
and except that Aspen Bermuda may provide property and casualty
reinsurance risks to third parties in an amount not greater than $25
million of gross written premium.

o after December 20, 2003, Aspen Holdings shall not take any steps to
establish a Class IV Reinsurance Company in Bermuda without first
advising Montpelier Re in writing of such intention; and

o in the event Aspen Holdings does establish a Captive, it shall enter
into negotiations with Montpelier Re in good faith with a view to
appointing Montpelier Reinsurance Ltd. as manager in preference to any
other party.

TRANSACTIONS AND RELATIONSHIP WITH UNDERWRITERS

Affiliates of Credit Suisse First Boston LLC, one of the underwriters in
this offering, DLJMB Overseas Partners III, C.V., DLJ Offshore Partners III,
C.V., DLJ Offshore Partners III-1, C.V., DLJ Offshore Partners III-2, C.V., DLJ
MB Partners III GmbH & Co., KG, Millennium Partners II, L.P. and MBP III Plan
Investors, L.P. purchased a total of 7,000,000 of our ordinary shares in two
private placements during 2002 for a total aggregate purchase price of (pounds
sterling)70,000,000 ($105,000,000 based on the relevant British Pound/U.S.
Dollar exchange rate applied to both placements at $1.5000 to (pounds
sterling)1). As of September 30, 2003, such 7,000,000 shares owned by the
affiliates of Credit Suisse First Boston LLC represented approximately a 12.3%
interest in our company.

Affiliates of Credit Suisse First Boston LLC, Deutsche Bank Securities
Inc. and UBS Securities LLC, three of the underwriters of this offering,
participate as lenders in the syndicate of our credit facilities as described
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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MATERIAL TAX CONSIDERATIONS

The following summary of our taxation, and the taxation of our
shareholders is based upon current law and does not purport to be a
comprehensive discussion of all the tax consideration that may be relevant to a
decision to purchase ordinary shares. Legislative, judicial or administrative
changes may be forthcoming that could affect this summary.

The following legal discussion (including and subject to the matters and
qualifications set forth in such summary) of the material tax considerations
under (i) "Taxation of Aspen Holdings and Subsidiaries -- Bermuda" and
"Taxation of Shareholders -- Bermuda Taxation" is based upon the advice of
Appleby, Spurling & Kempe, (ii) "Taxation of Aspen Holdings and Subsidiaries --
United Kingdom" is based upon the advice of LeBoeuf, Lamb, Greene & MacRae
London, England and (iii) "Taxation of Aspen Holdings and Subsidiaries --
United States" and "Taxation of Shareholders -- United States Taxation" is
based upon the advice of LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York, New
York. Each of these firms has reviewed the relevant portion of this discussion
(as set forth above) and believes that such portion of the discussion
constitutes, in all material respects, a fair and accurate summary of the
relevant income tax considerations relating to Aspen Holdings and its
subsidiaries and the ownership of Aspen Holdings' ordinary shares by investors
that are U.S. Persons (as defined below) who acquire such shares in the
offering. The advice of such firms does not include any factual or accounting
matters, determinations or conclusions such as insurance accounting
determinations or RPII, amounts and computations and amounts or components
thereof (for example, amounts or computations of income or expense items or
reserves entering into RPII computations) or facts relating to the business,
income, reserves or activities of Aspen Holdings and its subsidiaries. The
advice of these firms relies upon and is premised on the accuracy of factual
statements and representations made by Aspen Holdings concerning the business
and properties, ownership, organization, source of income and manner of
operation of Aspen Holdings and its subsidiaries. The discussion is based upon
current law. Legislative, judicial or administrative changes or interpretations
may be forthcoming that could be retroactive and could affect the tax
consequence to holders of ordinary shares. The tax treatment of a holder of
ordinary shares, or of a person treated as a holder of ordinary shares for U.S.
federal income, state, local or non-U.S. tax purposes, may vary depending on
the holder's particular tax situation. Statements contained herein as to the
beliefs, expectations and conditions of Aspen Holdings and its subsidiaries as
to the application of such tax laws or facts represent the view of management
as to the application of such laws and do not represent the opinions of
counsel. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING
THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF OWNING ORDINARY
SHARES UNDER THE LAWS OF THEIR COUNTRIES OF CITIZENSHIP, RESIDENCE, ORDINARY
RESIDENCE OR DOMICILE.

TAXATION OF ASPEN HOLDINGS AND SUBSIDIARIES

Bermuda. The following is a summary of certain Bermuda tax considerations
under current law and is based upon the advice of Appleby Spurling & Kempe, our
Bermuda counsel. Under current Bermuda law, there is no income, corporate or
profits tax or withholding tax, capital gains tax or capital transfer tax,
estate or inheritance tax payable by us or our shareholders, other than
shareholders ordinarily resident in Bermuda, if any. Aspen Holdings and Aspen
Bermuda have each obtained from the Minister of Finance under The Exempted
Undertaking Tax Protection Act 1966, as amended, an assurance that, in the
event that Bermuda enacts legislation imposing tax computed on profits, income,
any capital asset, gain or appreciation, or any tax in the nature of estate
duty or inheritance, then the imposition of any such tax shall not be
applicable to Aspen Holdings and Aspen Bermuda or to any of their operations or
their shares, debentures or other obligations, until March 28, 2016. Aspen
Holdings and Aspen Bermuda could be subject to taxes in Bermuda after that
date. This assurance is subject to the proviso that it is not to be construed
so as to prevent the application of any tax or duty to such persons as are
ordinarily resident in Bermuda or to prevent the application of any tax payable
in accordance with the provisions of the Land Tax Act 1967 or otherwise payable
in relation to any property leased to Aspen Holdings and Aspen Bermuda. Aspen
Holdings and Aspen

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Bermuda each pay annual Bermuda government fees, and Aspen Bermuda pays annual
insurance license fees. In addition, all entities employing individuals in
Bermuda are required to pay a payroll tax and there are other sundry taxes
payable, directly or indirectly, to the Bermuda government.

United Kingdom. Aspen U.K. Holdings, Aspen U.K. and Aspen U.K. Services
are companies incorporated and managed in the United Kingdom and are,
therefore, resident in the United Kingdom for United Kingdom corporation tax
purposes and will be subject to the United Kingdom corporation tax on their
worldwide profits (including revenue profits and capital gains), whether or not
such profits are remitted to the United Kingdom. The maximum rate of United
Kingdom corporation tax is currently 30% on profits of whatever description.
Currently, no United Kingdom withholding tax applies to dividends paid by Aspen
U.K. Holdings, Aspen U.K. and Aspen U.K. Services.

None of us except for Aspen U.K. Holdings, Aspen U.K. and Aspen U.K.
Services are incorporated in the United Kingdom. Accordingly, except for Aspen
U.K. Holdings, Aspen U.K. and Aspen U.K. Services, we should not be treated as
being resident in the United Kingdom unless our central management and control
is exercised in the United Kingdom. The concept of central management and
control is indicative of the highest level of control of a company, which is
wholly a question of fact. The directors of each of us, other than Aspen U.K.
Holdings, Aspen U.K. and Aspen U.K. Services, intend to manage our affairs so
that none of us, other than Aspen U.K. Holdings, Aspen U.K. and Aspen U.K.
Services, are resident in the United Kingdom for tax purposes.

The directors of each of us, other than Aspen U.K. Holdings, Aspen U.K.
and Aspen U.K. Services (which should be treated as resident in the United
Kingdom by virtue of being incorporated and managed there), intend that we will
operate in such a manner so that none of us, other than Aspen U.K. Holdings,
Aspen U.K. and Aspen U.K. Services, carry on a trade through a permanent
establishment in the United Kingdom. Nevertheless, because neither case law nor
U.K. statute definitively defines the activities that constitute trading in the
United Kingdom through a permanent establishment, the U.K. Inland Revenue might
contend that any of us, other than Aspen U.K. Holdings, Aspen U.K. and Aspen
U.K. Services, are/is trading in the United Kingdom through a permanent
establishment in the United Kingdom.

The United Kingdom has no income tax treaty with Bermuda. There are
circumstances in which companies that are neither resident in the United
Kingdom nor entitled to the protection afforded by a double tax treaty between
the United Kingdom and the jurisdiction in which they are resident may be
exposed to income tax in the United Kingdom (other than by deduction or
withholding) on the profits of a trade carried on there even if that trade is
not carried on through a permanent establishment but the directors of each of
us intend that we will operate in such a manner that none of us will fall
within the charge to income tax in the United Kingdom (other than by deduction
or withholding) in this respect.

United States. The following discussion is a summary of all material U.S.
federal income tax considerations relating to our operations. A foreign
corporation that is engaged in the conduct of a U.S. trade or business will be
subject to U.S. tax as described below, unless entitled to the benefits of an
applicable tax treaty. Whether business is being conducted in the United States
is an inherently factual determination. Because the Code, regulations and court
decisions fail to identify definitively activities that constitute being
engaged in a trade or business in the United States, we cannot be certain that
the IRS will not contend successfully that Aspen Holdings and/or its foreign
subsidiaries

116

are or will be engaged in a trade or business in the United States. A foreign
corporation deemed to be so engaged would be subject to U.S. income tax at
regular corporate rates, as well as the branch profits tax, on its income which
is treated as effectively connected with the conduct of that trade or business
unless the corporation is entitled to relief under the permanent establishment
provision of an applicable tax treaty, as discussed below. Such income tax, if
imposed, would be based on effectively connected income computed in a manner
generally analogous to that applied to the income of a U.S. corporation, except
that a foreign corporation is generally entitled to deductions and credits only
if it timely files a U.S. federal income tax return. Aspen U.K. and Aspen
Bermuda intend to file protective U.S. federal income tax returns on a timely
basis in order to preserve the right to claim income tax deductions and credits
if it is ever determined that they are subject to U.S. federal income tax. The
highest marginal federal income tax rates currently are 35% for a corporation's
effectively connected income and 30% for the additional "branch profits" tax.

If Aspen Bermuda is entitled to the benefits under the income tax treaty
between Bermuda and the United States (the "Bermuda Treaty"), Aspen Bermuda
would not be subject to U.S. income tax on any income found to be effectively
connected with a U.S. trade or business unless that trade or business is
conducted through a permanent establishment in the United States. No
regulations interpreting the Bermuda Treaty have been issued. Aspen Bermuda
currently intends to conduct its activities so that it does not have a
permanent establishment in the United States, although we cannot be certain
that we will achieve this result.

An insurance enterprise resident in Bermuda generally will be entitled to
the benefits of the Bermuda Treaty if (i) more than 50% of its shares are owned
beneficially, directly or indirectly, by individual residents of the United
States or Bermuda or U.S. citizens and (ii) its income is not used in
substantial part, directly or indirectly, to make disproportionate
distributions to, or to meet certain liabilities of, persons who are neither
residents of either the United States or Bermuda nor U.S. citizens. We cannot
be certain that Aspen Bermuda will be eligible for Bermuda Treaty benefits
immediately following the offering or in the future because of factual and
legal uncertainties regarding the residency and citizenship of Aspen Holdings'
shareholders. Aspen Holdings would not be eligible for treaty benefits because
it is not an insurance company. Accordingly, Aspen Holdings and Aspen Bermuda
have conducted and intend to conduct substantially all of their foreign
operations outside the United States and to limit their U.S. contacts so that
neither Aspen Holdings nor Aspen Bermuda should be treated as engaged in the
conduct of a trade or business in the United States.

Foreign insurance companies carrying on an insurance business within the
United States have a certain minimum amount of effectively connected net
investment income, determined in accordance with a formula that depends, in
part, on the amount of U.S. risk insured or reinsured by such companies. If
Aspen Bermuda is considered to be engaged in the conduct of an insurance
business in the United States and it is not entitled to the benefits of the
Bermuda Treaty in general (because it fails to satisfy one of the limitations
on treaty benefits discussed above), the Code could subject a significant
portion of Aspen Bermuda's investment income to U.S. income tax. In addition,
while the Bermuda Treaty clearly applies to premium income, it is uncertain
whether the Bermuda Treaty applies to other income such as investment income.
If Aspen Bermuda is considered engaged in the conduct of an insurance business
in the United States and is entitled to the benefits of the Bermuda Treaty in
general, but the Bermuda Treaty is interpreted to not apply to investment
income, a significant portion of Aspen Bermuda's investment income could be
subject to U.S. income tax.

Under the income tax treaty between the United Kingdom and the United
States that is generally in effect in the United States through December 31,
2003 (the "U.K. Treaty"), a U.K. company is entitled to the benefits of the
U.K. Treaty if it is managed and controlled in the United Kingdom. We believe
that Aspen U.K. Holdings, Aspen U.K. and Aspen U.K. Services should be
characterized as managed and controlled in the United Kingdom, and thus should
be entitled to the benefits of the U.K. Treaty. As a result, Aspen U.K.
Holdings, Aspen U.K. and Aspen U.K. Services should be subject to U.S. federal
income tax on their income found to be effectively connected with a U.S. trade
or business only if such income is attributable to the conduct of a trade or
business carried on through a permanent establishment in the United States and
the branch profits tax will not apply. Aspen U.K.

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Holdings and Aspen U.K. Services have conducted and intend to conduct each of
their activities in a manner so that each of them should not have a permanent
establishment in the United States, although we cannot be certain that we will
achieve this result. Because of the binding authorities granted by Aspen U.K.
to WU Inc., the IRS may be able to successfully assert that Aspen U.K. has a
permanent establishment in the United States. However, we believe that even if
the IRS were to successfully assert such a position, our results of operations
and your investment would not be materially adversely affected.

The United States and the United Kingdom have entered into a new income
tax treaty which is not yet fully in force (the "New U.K. Treaty"). The New
U.K. Treaty (i) will apply with respect to U.S. federal income taxes for
taxable periods beginning on or after January 1, 2004 and (ii) applies with
respect to U.S. withholding taxes for certain dividends on or after May 1,
2003. Aspen U.K. Holdings, Aspen U.K. and Aspen U.K. Services will generally be
entitled to the benefits of the New U.K. Treaty if, among other things, (i)
during at least half of the days during the relevant taxable period, at least
50% of Aspen U.K. Holdings', Aspen U.K.'s and Aspen U.K. Services' stock is
beneficially owned, directly or indirectly, by citizens or residents of the
United States and the United Kingdom, and less than 50% of each of Aspen U.K.
Holdings' Aspen U.K.'s and Aspen U.K. Services' gross income for the relevant
taxable period is paid or accrued, directly or indirectly, to persons who are
not U.S. or U.K. residents in the form of payments that are deductible for
purposes of U.K. taxation, (ii) with respect to specific items of income,
profit or gain derived from the United States, if such income, profit or gain
is considered to be derived in connection with, or incidental to each of Aspen
U.K. Holdings', Aspen U.K.'s and Aspen U.K. Services' business conducted in the
United Kingdom or (iii) at least 50% of the aggregate vote and value of their
shares is owned directly or indirectly by five or fewer companies the principal
class of shares of which is listed and regularly traded on a recognized stock
exchange. Although we cannot be certain that Aspen U.K. Holdings, Aspen U.K.
and Aspen U.K. Services will be eligible for treaty benefits under the New U.K.
Treaty because of factual and legal uncertainties regarding (i) the residency
and citizenship of Aspen Holdings' shareholders, (ii) the percentage of Aspen
Holdings ordinary shares traded on the NYSE, and (iii) the interpretation of
what constitutes income incidental to or connected with a trade or business in
the United Kingdom, we will endeavor to so qualify. As with the current U.K.
Treaty, under the provisions of the New U.K. Treaty, Aspen U.K. Holdings, Aspen
U.K. and Aspen U.K. Services, if entitled to the benefits of the New U.K.
Treaty, will not be subject to U.S. federal income tax on any income found to
be effectively connected with a U.S. trade or business unless that trade or
business is conducted through a permanent establishment in the United States.
Under the New U.K. Treaty, if the IRS were to successfully assert that Aspen
U.K. Holdings, Aspen U.K. or Aspen U.K. Services has a permanent establishment,
the additional U.S. branch profits tax may be imposed at a rate of up to 5%
absent an applicable exception.

Foreign corporations not engaged in a trade or business in the United
States are nonetheless subject to U.S. income tax imposed by withholding on
certain "fixed or determinable annual or periodic gains, profits and income"
derived from sources within the United States (such as dividends and certain
interest on investments), subject to exemption under the Code or reduction by
applicable treaties. Generally under the current U.K. Treaty or the New U.K.
Treaty the withholding rate on dividends from less than 10% owned corporations
is reduced to 15% and on interest is reduced to 0%. The Bermuda Treaty does not
reduce the U.S. withholding rate on U.S.-sourced investment income.

The United States also imposes an excise tax on insurance and reinsurance
premiums paid to foreign insurers or reinsurers with respect to risks located
in the United States. The rates of tax applicable to premiums paid to Aspen
Bermuda are 4% for casualty insurance premiums and 1% for reinsurance premiums.
The excise tax does not currently apply to premiums paid to Aspen U.K. provided
that it is entitled to the benefits of the U.K. Treaty. Under the New U.K.
Treaty effective as of January 1, 2004, the excise tax would not apply to
premiums paid to Aspen U.K. if (i) it is entitled to the benefits of the New
U.K. Treaty and (ii) the policies are not entered into as part of a conduit
arrangement.

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Aspen U.S. Holdings and Aspen U.S. Services are Delaware corporations,
Aspen U.S. is a North Dakota corporation and Aspen Specialty Management is a
Massachusetts corporation and as such each is subject to taxation in the United
States at regular corporate rates. Additionally dividends paid by Aspen U.S.
Holdings will be subject to a 30% U.S. withholding tax subject to reduction
under the income tax treaty between the United States and the United Kingdom to
5%.

Personal Holding Companies. Aspen Holdings and/or any of its subsidiaries
could be subject to U.S. tax on a portion of its income if any of them are
considered to be a personal holding company ("PHC") for U.S. federal income tax
purposes. A corporation generally will be classified as a PHC for U.S. federal
income tax purposes in a given taxable year if (i) at any time during the last
half of such taxable year, five or fewer individuals (without regard to their
citizenship or residency) own or are deemed to own (pursuant to certain
constructive ownership rules) more than 50% of the stock of the corporation by
value and (ii) at least 60% of the corporation's gross income, as determined
for U.S. federal income tax purposes, for such taxable year consists of "PHC
income." PHC income includes, among other things, dividends, interest,
royalties, annuities and, under certain circumstances, rents. Under the
constructive ownership rules, among other things, a partner will be treated as
owning a proportionate amount of the stock owned by the partnership and a
partner who is an individual will be treated as owning the stock owned by his
partners. For example, all of the ordinary shares owned by a partnership will
be attributed to each of its partners, if any, who are individuals. Also, stock
treated as owned by such partner proportionately through such partnership will
be treated as owned by the partner for purposes of reapplying the constructive
ownership rules. Additionally, certain entities (such as tax-exempt
organizations and pension funds) will be treated as individuals. The PHC rules
contain an exception for foreign corporations that are classified as foreign
personal holding companies (as discussed below).

If Aspen Holdings or any subsidiary were a PHC in a given taxable year,
such corporation would be subject to a 15% PHC tax on its "undistributed PHC
income" (which, in the case of foreign entities, would exclude PHC income that
is from non-U.S. sources, except to the extent that such income is effectively
connected with a trade or business in the United States). For taxable years
beginning after December 31, 2008, the PHC tax rate would be the highest
marginal rate on ordinary income applicable to individuals. Thus, the PHC
income of Aspen Holdings and its foreign subsidiaries would not include
underwriting income or investment income derived from non-U.S. sources and
should not include dividends received by Aspen Holdings from its foreign
subsidiaries (as long as such foreign subsidiaries are not engaged in the trade
or business in the United States).

We believe based upon the information made available to us regarding our
existing shareholder base that neither Aspen Holdings nor any of its
subsidiaries should be considered a PHC for U.S. federal income tax purposes
for any prior years of operations or immediately following the offering.
Additionally, we intend to manage our business to minimize the possibility that
we will meet the 60% income threshold so that neither Aspen Holdings nor any of
its subsidiaries should be considered a PHC for U.S. federal income tax
purposes.

We cannot be certain, however, that Aspen Holdings and its subsidiaries
will not become PHCs following the offering or in the future because of factors
including legal and factual uncertainties regarding the application of the
constructive ownership rules, the makeup of Aspen Holdings' shareholder base,
the gross income of Aspen Holdings or any of its subsidiaries and other
circumstances that could change the application of the PHC rules to Aspen
Holdings and its subsidiaries. In addition, if Aspen Holdings or any of its
subsidiaries were to become PHCs we cannot be certain that the amount of PHC
income will be immaterial.

TAXATION OF SHAREHOLDERS

Bermuda Taxation. Currently, there is no Bermuda withholding or other tax
payable on principal, interests or dividends paid to the holders of the
ordinary shares.

United States Taxation. The following summary sets forth the material
United States federal income tax considerations related to the purchase,
ownership and disposition of ordinary shares.

119

Unless otherwise stated, this summary deals only with shareholders that are
U.S. Persons (as defined below) who purchase their ordinary shares in this
offering and who hold their ordinary shares as capital assets within the
meaning of section 1221 of the Code. The following discussion is only a
discussion of the material U.S. federal income tax matters as described herein
and does not purport to address all of the U.S. federal income tax consequences
that may be relevant to a particular shareholder in light of such shareholder's
specific circumstances. For example, if a partnership holds our ordinary
shares, the tax treatment of a partner will generally depend on the status of
the partner and the activities of the partnership. If you are a partner of a
partnership holding the ordinary shares, you should consult your tax advisors.
In addition, the following summary does not address the U.S. federal income tax
consequences that may be relevant to special classes of shareholders, such as
financial institutions, insurance companies, regulated investment companies,
real estate investment trusts, financial asset securitization investment
trusts, dealers or traders in securities, tax exempt organizations,
expatriates, persons who are considered with respect to any of us as "United
States shareholders" for purposes of the CFC rules of the Code (generally, a
U.S. Person, as defined below, who owns or is deemed to own 10% or more of the
total combined voting power of all classes of Aspen Holdings or the stock of
any of our foreign subsidiaries entitled to vote (i.e., 10% U.S.
Shareholders)), or persons who hold the ordinary shares as part of a hedging or
conversion transaction or as part of a short-sale or straddle, who may be
subject to special rules or treatment under the Code. This discussion is based
upon the Code, the regulations promulgated thereunder and any relevant
administrative rulings or pronouncements or judicial decisions, all as in
effect on the date hereof and as currently interpreted, and does not take into
account possible changes in such tax laws or interpretations thereof, which may
apply retroactively. This discussion does not include any description of the
tax laws of any state or local governments within the United States.

For purposes of this discussion, the term "U.S. Person" means: (i) a
citizen or resident of the United States, (ii) a partnership or corporation, or
entity treated as a corporation, created or organized in or under the laws of
the United States, or any political subdivision thereof, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, (iv) a trust if either (x) a court within the United States is able to
exercise primary supervision over the administration of such trust and one or
more U.S. Persons have the authority to control all substantial decisions of
such trust or (y) the trust has a valid election in effect to be treated as a
U.S. Person for U.S. federal income tax purposes or (v) any other person or
entity that is treated for U.S. federal income tax purposes as if it were one
of the foregoing.

Taxation of Dividends. Subject to the discussions below relating to the
potential application of the controlled foreign corporation ("CFC"), related
person insurance income ("RPII"), foreign personal holding company ("FPHC") and
passive foreign investment company ("PFIC") rules, cash distributions, if any,
made with respect to the ordinary shares will constitute dividends for U.S.
federal income tax purposes to the extent paid out of current or accumulated
earnings and profits of Aspen Holdings (as computed using U.S. tax principles).
Under recently enacted legislation, we believe dividends paid by us before 2009
should be eligible for reduced rates of tax because we believe our ordinary
shares should be treated as readily tradeable on an established securities
market in the United States. Such dividends will not be eligible for the
dividends received deduction. To the extent such distributions exceed Aspen
Holdings' earnings and profits, they will be treated first as a return of the
shareholder's basis in the ordinary shares to the extent thereof, and then as
gain from the sale of a capital asset.

Classification of Aspen Holdings or Its Foreign Subsidiaries as Controlled
Foreign Corporations. Each 10% U.S. Shareholder (as defined below) of a foreign
corporation that is a CFC for an uninterrupted period of 30 days or more during
a taxable year, and who owns shares in the CFC, directly or indirectly through
foreign entities, on the last day of the CFC's taxable year, must include in
its gross income for U.S. federal income tax purposes its pro rata share of the
CFC's "subpart F income," even if the subpart F income is not distributed. A
foreign corporation is considered a CFC if 10% U.S. Shareholders own (directly,
indirectly through foreign entities or by attribution by application of the
constructive ownership rules of section 958(b) of the Code (i.e.,
"constructively"))

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more than 50% of the total combined voting power of all classes of voting stock
of such foreign corporation, or more than 50% of the total value of all stock
of such corporation. For purposes of taking into account insurance income, a
CFC also includes a foreign insurance company in which more than 25% of the
total combined voting power of all classes of stock or more than 25% of the
total value of all stock is owned by 10% U.S. Shareholders on any day of the
taxable year of such corporation, if the gross amount of premiums or other
consideration for the reinsurance or the issuing of insurance or annuity
contracts exceeds 75% of the gross amount of all premiums or other
consideration in respect of all risks. A "10% U.S. Shareholder" is a U.S.
Person who owns (directly, indirectly through foreign entities or
constructively) at least 10% of the total combined voting power of all classes
of stock entitled to vote of the foreign corporation. We believe that because
of the anticipated dispersion of our share ownership, provisions in our
organizational documents that limit voting power (these provisions are
described in "Description of Share Capital") and other factors, no U.S. Person
who owns shares of Aspen Holdings directly or indirectly through one or more
foreign entities should be treated as owning (directly, indirectly through
foreign entities, or constructively) 10% or more of the total voting power of
all classes of shares of Aspen Holdings or any of its foreign subsidiaries. It
is possible, however, that the IRS could challenge the effectiveness of these
provisions and that a court could sustain such a challenge.

The RPII CFC Provisions. The following discussion generally is applicable
only if the RPII of a foreign Insurance Subsidiary, determined on a gross
basis, is 20% or more of such company's gross insurance income for the taxable
year and the 20% Ownership Exception (as defined below) is not met. The
following discussion generally would not apply for any fiscal year in which
such company's RPII falls below the 20% threshold or the 20% Ownership
Exception is met. Although we cannot be certain, Aspen Holdings believes that
each of the foreign Insurance Subsidiaries met the 20% Ownership Exception in
prior years of operation and that the gross RPII of each of our foreign
Insurance Subsidiaries as a percentage of its gross insurance income will be
below the 20% threshold for each tax year for the foreseeable future.
Additionally, as Aspen Holdings is not licensed as an insurance company we do
not anticipate that Aspen Holdings will have insurance income, including RPII.

RPII is any "insurance income" (as defined below) attributable to policies
of insurance or reinsurance with respect to which the person (directly or
indirectly) insured is a "RPII shareholder" (as defined below) or a "related
person" (as defined below) to such RPII shareholder. In general, and subject to
certain limitations, "insurance income" is income (including premium and
investment income) attributable to the issuing of any insurance or reinsurance
contract which would be taxed under the portions of the Code relating to
insurance companies if the income were the income of a domestic insurance
company. For purposes of inclusion of the RPII of a foreign Insurance
Subsidiary in the income of RPII shareholders, unless an exception applies, the
term "RPII shareholder" means any U.S. Person who owns (directly or indirectly
through foreign entities) any amount of Aspen Holdings' ordinary shares.
Generally, the term "related person" for this purpose means someone who
controls or is controlled by the RPII shareholder or someone who is controlled
by the same person or persons which control the RPII shareholder. Control is
measured by either more than 50% in value or more than 50% in voting power of
stock applying certain constructive ownership principles. A corporation's
pension plan is ordinarily not a "related person" with respect to the
corporation unless the pension plan owns, directly or indirectly through the
application of certain constructive ownership rules, more than 50% measured by
vote or value, of the stock of the corporation. Each foreign Insurance
Subsidiary will be treated as a CFC under the RPII provisions if RPII
shareholders are treated as owning (directly, indirectly through foreign
entities or constructively) 25% or more of the shares of Aspen Holdings by vote
or value.

RPII Exceptions. The special RPII rules do not apply to a foreign
Insurance Subsidiary if (i) direct and indirect insureds and persons related to
such insureds, whether or not U.S. Persons, are treated as owning (directly or
indirectly through entities) less than 20% of the voting power and less than
20% of the value of the shares of Aspen Holdings (the "20% Ownership
Exception"), (ii) RPII, determined on a gross basis, is less than 20% of the
gross insurance income of the foreign Insurance

121

Subsidiary for the taxable year (the "20% Gross Income Exception), (iii) the
foreign Insurance Subsidiary elects to be taxed on its RPII as if the RPII were
effectively connected with the conduct of a U.S. trade or business, and to
waive all treaty benefits with respect to RPII and meet certain other
requirements or (iv) the foreign Insurance Subsidiary elects to be treated as a
U.S. corporation and waives all treaty benefits and meets certain other
requirements. Where none of these exceptions applies to a foreign Insurance
Subsidiary, each U.S. Person owning or treated as owning any shares in Aspen
Holdings (and therefore, indirectly, in each foreign Insurance Subsidiary) on
the last day of Aspen Holdings' taxable year will be required to include in its
gross income for U.S. federal income tax purposes its share of the RPII of the
company or companies, as the case may be, that failed to qualify for the
exception for the portion of the taxable year during which the foreign
Insurance Subsidiary was a CFC under the RPII provisions, determined as if all
such RPII were distributed proportionately only to such U.S. Persons at that
date, but limited by each such U.S. Person's share of such company's
current-year earnings and profits as reduced by the U.S. Person's share, if
any, of certain prior-year deficits in earnings and profits. Our foreign
Insurance Subsidiaries intend to operate in a manner that is intended to ensure
that each qualifies for the 20% Gross Income Exception. Although we do not
expect that the gross RPII of either foreign Insurance Subsidiary will equal or
exceed 20% of such company's gross insurance income in the foreseeable future,
it is possible that we will not be successful in qualifying under this
exception.

Computation of RPII. In order to determine how much RPII a foreign
Insurance Subsidiary has earned in each taxable year, our foreign Insurance
Subsidiaries may obtain and rely upon information from their insureds and
reinsureds to determine whether any of the insureds, reinsureds or persons
related thereto own (directly or indirectly through foreign entities) shares of
Aspen Holdings and are U.S. Persons. Aspen Holdings may not be able to
determine whether any of the underlying direct or indirect insureds to which
our foreign Insurance Subsidiaries provide insurance or reinsurance are
shareholders or related persons to such shareholders. Consequently, Aspen
Holdings may not be able to determine accurately the gross amount of RPII
earned by each of our foreign Insurance Subsidiaries in a given taxable year.
For any year in which gross RPII of a foreign Insurance Subsidiary is 20% or
more of its gross insurance income for the year and the 20% Ownership Exception
does not apply, Aspen Holdings may also seek information from its shareholders
as to whether beneficial owners of ordinary shares at the end of the year are
U.S. Persons so that the RPII may be determined and apportioned among such
persons; to the extent Aspen Holdings is unable to determine whether a
beneficial owner of ordinary shares is a U.S. Person, Aspen Holdings may assume
that such owner is not a U.S. Person, thereby increasing the per share RPII
amount for all known RPII shareholders.

If, as expected, the RPII of each foreign Insurance Subsidiary is less
than 20% of its gross insurance income, RPII shareholders will not be required
to include RPII in their taxable income. The amount of RPII includable in the
income of a RPII shareholder is based upon the net RPII income for the year
after deducting related expenses such as losses, loss reserves and operating
expenses.

Apportionment of RPII to U.S. Holders. Every RPII shareholder who owns
ordinary shares on the last day of any fiscal year of Aspen Holdings in which
the 20% Ownership Exception does not apply to a foreign Insurance Subsidiary
and the gross insurance income constituting RPII for that year equals or
exceeds 20% of such company's gross insurance income should expect that for
such year it will be required to include in gross income its share of such
company's RPII for the portion of the taxable year during which such company
was a CFC under the RPII provisions, whether or not distributed, even though it
may not have owned the shares throughout such period. A RPII shareholder who
owns ordinary shares during such taxable year but not on the last day of the
taxable year is not required to include in gross income any part of company's
RPII.

Basis Adjustments. A RPII shareholder's tax basis in its ordinary shares
will be increased by the amount of any RPII that the shareholder includes in
income. The RPII shareholder may exclude from income the amount of any
distributions by Aspen Holdings out of previously taxed RPII income. The RPII
shareholder's tax basis in its ordinary shares will be reduced by the amount of
such distributions that are excluded from income.

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Uncertainty as to Application of RPII. The RPII provisions have never been
interpreted by the courts or the Treasury Department in final regulations, and
regulations interpreting the RPII provisions of the Code exist only in proposed
form. It is not certain whether these regulations will be adopted in their
proposed form or what changes or clarifications might ultimately be made
thereto or whether any such changes, as well as any interpretation or
application of RPII by the IRS, the courts or otherwise, might have retroactive
effect. These provisions include the grant of authority to the Treasury
Department to prescribe "such regulations as may be necessary to carry out the
purpose of this subsection including . . . regulations preventing the avoidance
of this subsection through cross insurance arrangements or otherwise."
Accordingly, the meaning of the RPII provisions and the application thereof to
our foreign Insurance Subsidiaries is uncertain. In addition, we cannot be
certain that the amount of RPII or the amounts of the RPII inclusions for any
particular RPII shareholder, if any, will not be subject to adjustment based
upon subsequent IRS examination. Any prospective investors considering an
investment in ordinary shares should consult his tax advisor as to the effects
of these uncertainties.

Information Reporting. Under certain circumstances, U.S. Persons owning
stock in a foreign corporation are required to file IRS Form 5471 with their
U.S. federal income tax returns. Generally, information reporting on IRS Form
5471 is required by (i) a person who is treated as a RPII shareholder, (ii) a
10% U.S. Shareholder of a foreign corporation that is a CFC for an
uninterrupted period of 30 days or more during any tax year of the foreign
corporation, and who owned the stock on the last day of that year and (iii)
under certain circumstances, a U.S. Person who acquires stock in a foreign
corporation and as a result thereof owns 10% or more of the voting power or
value of such foreign corporation, whether or not such foreign corporation is a
CFC. For any taxable year in which Aspen Holdings determines that gross RPII
constitutes 20% or more of the gross insurance income of a foreign Insurance
Subsidiary and the 20% Ownership Exception does not apply, Aspen Holdings will
provide to all U.S. Persons registered as shareholders of its ordinary shares a
completed IRS Form 5471 or the relevant information necessary to complete the
form. Failure to file IRS Form 5471 may result in penalties.

Tax-Exempt Shareholders. Tax-exempt entities will be required to treat
certain subpart F insurance income, including RPII, that is includible in
income by the tax-exempt entity as unrelated business taxable income.
Prospective investors that are tax exempt entities are urged to consult their
tax advisors as to the potential impact of the unrelated business taxable
income provisions of the Code. A tax-exempt organization that is treated as a
10% U.S. Shareholder or a RPII Shareholder also must file IRS Form 5471 in the
circumstances described above.

Dispositions of Ordinary Shares. Subject to the discussions below relating
to the potential application of the Code section 1248, PFIC and FPHC rules,
U.S. holders of ordinary shares generally should recognize capital gain or loss
for U.S. federal income tax purposes on the sale, exchange or other disposition
of ordinary shares in the same manner as on the sale, exchange or other
disposition of any other shares held as capital assets. If the holding period
for these ordinary shares exceeds one year, any gain will be subject to tax at
a current maximum marginal tax rate of 15% for individuals and 35% for
corporations. Moreover, gain, if any, generally will be a U.S. source gain and
generally will constitute "passive income" for foreign tax credit limitation
purposes.

Code section 1248 provides that if a U.S. Person sells or exchanges stock
in a foreign corporation and such person owned, directly, indirectly through
certain foreign entities or constructively, 10% or more of the voting power of
the corporation at any time during the five-year period ending on the date of
disposition when the corporation was a CFC, any gain from the sale or exchange
of the shares will be treated as a dividend to the extent of the CFC's earnings
and profits (determined under U.S. federal income tax principles) during the
period that the shareholder held the shares and while the corporation was a CFC
(with certain adjustments). We believe that because of the anticipated
dispersion of our share ownership, provisions in our organizational documents
that limit voting power and other factors, that no U.S. shareholder of Aspen
Holdings should be treated as owning (directly, indirectly through foreign
entities or constructively) 10% or more of the total voting power of Aspen
Holdings; to the extent this is the case, the application of Code Section 1248
under the regular CFC

123

rules should not apply to dispositions of our ordinary shares. It is possible,
however, that the IRS could challenge the effectiveness of these provisions and
that a court could sustain such a challenge. A 10% U.S. Shareholder may in
certain circumstances be required to report a disposition of shares of a CFC by
attaching IRS Form 5471 to the U.S. federal income tax or information return
that it would normally file for the taxable year in which the disposition
occurs. In the event this is determined necessary, Aspen Holdings will provide
a completed IRS Form 5471 or the relevant information necessary to complete the
Form.

Code section 1248 also applies to the sale or exchange of shares in a
foreign corporation if the foreign corporation would be treated as a CFC for
RPII purposes regardless of whether the shareholder is a 10% U.S. Shareholder
or whether RPII constitutes 20% or more of the corporation's gross insurance
income or the 20% Ownership Exception applies. Existing proposed regulations do
not address whether Code section 1248 would apply if a foreign corporation is
not a CFC but the foreign corporation has a subsidiary that is a CFC and that
would be taxed as an insurance company if it were a domestic corporation. We
believe, however, that this application of Code section 1248 under the RPII
rules should not apply to dispositions of ordinary shares because Aspen
Holdings will not be directly engaged in the insurance business. We cannot be
certain, however, that the IRS will not interpret the proposed regulations in a
contrary manner or that the Treasury Department will not amend the proposed
regulations to provide that these rules will apply to dispositions of ordinary
shares. Prospective investors should consult their tax advisors regarding the
effects of these rules on a disposition of ordinary shares.

Passive Foreign Investment Companies. In general, a foreign corporation
will be a PFIC during a given year if (i) 75% or more of its gross income
constitutes "passive income" (the "75% test") or (ii) 50% or more of its assets
produce passive income (the "50% test").

If Aspen Holdings were characterized as a PFIC during a given year, U.S.
Persons holding ordinary shares would be subject to a penalty tax at the time
of the sale at a gain of, or receipt of an "excess distribution" with respect
to, their shares, unless such persons made a "qualified electing fund election"
or "mark-to-market" election. It is uncertain that Aspen Holdings would be able
to provide its shareholders with the information necessary for a U.S. Person to
make these elections. In general, a shareholder receives an "excess
distribution" if the amount of the distribution is more than 125% of the
average distribution with respect to the shares during the three preceding
taxable years (or shorter period during which the taxpayer held the shares). In
general, the penalty tax is equivalent to an interest charge on taxes that are
deemed due during the period the shareholder owned the shares, computed by
assuming that the excess distribution or gain (in the case of a sale) with
respect to the shares was taken in equal portion at the highest applicable tax
rate on ordinary income throughout the shareholder's period of ownership. The
interest charge is equal to the applicable rate imposed on underpayments of
U.S. federal income tax for such period. In addition, a distribution paid by
Aspen Holdings to U.S. shareholders that is characterized as a dividend and is
not characterized as an excess distribution would not be eligible for a reduced
rate of tax under recently enacted legislation with respect to dividends paid
before 2009.

For the above purposes, passive income generally includes interest,
dividends, annuities and other investment income. The PFIC rules provide that
income "derived in the active conduct of an insurance business by a corporation
which is predominantly engaged in an insurance business . . . is not treated as
passive income." The PFIC provisions also contain a look-through rule under
which a foreign corporation shall be treated as if it "received directly its
proportionate share of the income . . ." and as if it "held its proportionate
share of the assets . . ." of any other corporation in which it owns at least
25% of the value of the stock.

This exception is intended to ensure that income derived by a bona fide
insurance company is not treated as passive income, except to the extent such
income is attributable to financial reserves in excess of the reasonable needs
of the insurance business. We expect, for purposes of the PFIC rules, that each
of our Insurance Subsidiaries will be predominantly engaged in an insurance
business and is unlikely to have financial reserves in excess of the reasonable
needs of its insurance business in each

124

year of operations. Accordingly, none of the income or assets of our Insurance
Subsidiaries should be treated as passive. Additionally, we expect that in each
year of operations the passive income and assets of Aspen U.K. Holdings, Aspen
U.K. Services will not meet the 75% test or the 50% test because they should
have sufficient non-passive income and assets. Finally, we expect that the
passive income and assets of Aspen U.S. Holdings, Aspen U.S. Services and Aspen
Specialty Insurance Management will be de minimis in each year of operations
with respect to the overall income and assets of Aspen Holdings and its
subsidiaries. Under the look-through rule Aspen Holdings should be deemed to
own its proportionate share of the assets and to have received its
proportionate share of the income of its direct and indirect subsidiaries for
purposes of the 75% test and the 50% test. As a result, we believe that Aspen
Holdings was not and should not be treated as a PFIC. We cannot be certain,
however, as there are currently no regulations regarding the application of the
PFIC provisions to an insurance company and new regulations or pronouncements
interpreting or clarifying these rules may be forthcoming, that the IRS will
not challenge this position and that a court will not sustain such challenge.
Prospective investors should consult their tax advisor as to the effects of the
PFIC rules.

Foreign Personal Holding Companies. A foreign corporation will be
classified as an FPHC for U.S. federal income tax purposes if (i) at any time
during the taxable year at issue, five or fewer individuals who are U.S.
citizens or residents own or are deemed to own (pursuant to certain
constructive ownership rules) more than 50% of all classes of the corporation's
stock measured by voting power or value and (ii) at least 60% of its gross
income for the year is "FPHC income." Under these constructive ownership rules,
among other things, a partner will be treated as owning a proportionate amount
of the stock owned by the partnership and a partner who is an individual will
be treated as owning the stock owned by his partners. For example, all of the
ordinary shares owned by a partnership will be attributed to each of its
partners, if any, who are individuals. Also, stock treated as owned by such
partner proportionately through such partnership will be treated as owned by
the partner for purposes of reapplying the constructive ownership rules. If
Aspen Holdings or any of its foreign subsidiaries were to become FPHCs, a
portion of the "undistributed foreign personal holding company income" (as
defined for U.S. federal income tax purposes) of each such FPHC would be
imputed to all of Aspen Holdings' shareholders who are U.S. Persons. Such
income would be taxable as a dividend and should not be eligible for a reduced
rate of tax under recently enacted legislation, even if no cash dividend were
actually paid. In such event, subsequent cash distributions will first be
treated as a tax-free return of any previously taxed and undistributed amounts.
In addition, a distribution paid by Aspen Holdings to a U.S. shareholder that
is not treated as a tax-free return of any previously taxed and undistributed
amount and is characterized as a dividend would not be eligible for a reduced
rate of tax under recently enacted legislation with respect to dividends paid
before 2009. Further, in such case, upon the death of any U.S. individual
owning ordinary shares, such individual's heirs or estate would not be entitled
to a "step-up" in the basis of the ordinary shares which might otherwise be
available under U.S. federal income tax laws. Moreover, each shareholder who
owns, directly or indirectly, 10% or more of the value of an FPHC is required
to file IRS Form 5471.

We believe based upon information made available to us regarding our
existing shareholder base that neither Aspen Holdings nor any of its foreign
subsidiaries should be considered an FPHC for any prior year of operations or
immediately following the offering. Additionally, we intend to manage our
business to minimize the possibility that we will meet the 60% income threshold
so that neither Aspen Holdings nor any of its foreign subsidiaries should be
considered an FPHC. We cannot be certain, however, that Aspen Holdings and/or
any of its foreign subsidiaries will not be considered an FPHC, because of
factors including legal and factual uncertainties regarding the application of
the constructive ownership rules, the makeup of Aspen Holdings' shareholder
base, the gross income of Aspen Holdings and/or any of its foreign subsidiaries
and other circumstances that could change the application of the FPHC rules to
Aspen Holdings and its foreign subsidiaries. In addition, if Aspen Holdings or
any of its foreign subsidiaries were to become an FPHC, we cannot be certain
that the amount of FPHC income will be immaterial.

125

Foreign tax credit. Because it is anticipated that U.S. Persons will own a
majority of our shares, only a portion of the current income inclusions, if
any, under the CFC, RPII and PFIC rules and of dividends paid by us (including
any gain from the sale of ordinary shares that is treated as a dividend under
section 1248 of the Code) will be treated as foreign source income for purposes
of computing a shareholder's U.S. foreign tax credit limitations. We will
consider providing shareholders with information regarding the portion of such
amounts constituting foreign source income to the extent such information is
reasonably available. It is also likely that substantially all of the "subpart
F income," RPII and dividends that are foreign source income will constitute
either "passive" or "financial services" income for foreign tax credit
limitation purposes. Thus, it may not be possible for most shareholders to
utilize excess foreign tax credits to reduce U.S. tax on such income.

Information Reporting and Backup Withholding on Distributions and
Disposition Proceeds. Information returns may be filed with the IRS in
connection with distributions on the ordinary shares and the proceeds from a
sale or other disposition of the ordinary shares unless the holder of the
ordinary shares establishes an exemption from the information reporting rules.
A holder of ordinary shares that does not establish such an exemption may be
subject to U.S. backup withholding tax on these payments if the holder is not a
corporation or non-U.S. Person or fails to provide its taxpayer identification
number or otherwise comply with the backup withholding rules. The amount of any
backup withholding from a payment to a U.S. Person will be allowed as a credit
against the U.S. Person's U.S. federal income tax liability and may entitle the
U.S. Person to a refund, provided that the required information is furnished to
the IRS.

Proposed U.S. Tax Legislation. Legislation has been introduced in the U.S.
Congress intended to eliminate certain perceived tax advantages of companies
(including insurance companies) that have legal domiciles outside the United
States but have certain U.S. connections. In this regard, legislation has been
introduced that includes a provision which permits the IRS to reallocate or
recharacterize items of income, deduction or certain other items related to a
reinsurance agreement between related parties to reflect the proper source,
character and amount for each item (in contrast to current law, which only
refers to source and character). While there are no currently pending
legislative proposals which, if enacted, would have a material adverse effect
on us or our shareholders, it is possible that broader-based legislative
proposals could emerge in the future that could have an adverse impact on us or
our shareholders.

Additionally, the U.S. federal income tax laws and interpretations
regarding whether a company is engaged in a trade or business within the United
States or is a PFIC, or whether U.S. Persons would be required to include in
their gross income the "subpart F income" or the RPII of a CFC, are subject to
change, possibly on a retroactive basis. There are currently no regulations
regarding the application of the PFIC rules to insurance companies and the
regulations regarding RPII are still in proposed form. New regulations or
pronouncements interpreting or clarifying such rules may be forthcoming. We
cannot be certain if, when or in what form such regulations or pronouncements
may be provided and whether such guidance will have a retroactive effect.

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DESCRIPTION OF SHARE CAPITAL

Our amended and restated bye-laws will become effective upon the
consummation of this offering. The following summary of our bye-laws is
qualified in its entirety by the provisions of such bye-laws, a copy of which
will be filed as an exhibit to the registration statement of which this
prospectus is a part. All references to "bye-laws" are intended to refer to the
amended and restated bye-laws of Aspen Holdings that will be in effect upon the
consummation of this offering. As of September 30, 2003, there were 56,924,120
ordinary shares issued, 6,787,880 options granted that will be exercisable for
shares or lapse upon the earlier occurrence of several events as further
described in "-- Investor Options" below and 3,884,020 options to purchase
shares granted to employees as described under "Management -- Share Incentive
Plan."

Aspen Holdings has authorized share capital of $1,630,185.83 divided into
1,076,416,910 shares of par value 0.15144558(cents) per share, of which
969,629,030 are ordinary shares, 6,787,880 are non-voting shares and 100,000,000
are preference shares. Immediately after completion of this offering, 66,448,120
ordinary shares (67,876,720 ordinary shares if the underwriters exercise their
over-allotment option in full) will be outstanding. The following summary of our
share capital is qualified in its entirety by reference to our memorandum of
association and by our bye-laws, the shareholders agreement, the registration
rights agreement and the option instrument, copies of which will be filed as an
exhibit to this registration statement.

ORDINARY SHARES

In general, subject to the adjustments regarding voting set forth in "--
Voting Adjustments" below, holders of our ordinary shares have one vote for
each ordinary share held by them and are entitled to vote, on a non-cumulative
basis, at all meetings of shareholders. Holders of our ordinary shares are
entitled to receive dividends as may be lawfully declared from time to time by
our board of directors. Holders of our ordinary shares have no redemption,
conversion or sinking fund rights. In the event of our liquidation, dissolution
or winding-up, the holders of our ordinary shares are entitled to share equally
and ratably in our assets, if any remain after the payment of all our debts and
liabilities and the liquidation preference of any outstanding preferred shares.

NON-VOTING SHARES

As of September 30, 2003, there were no non-voting shares in issue.
Holders of our non-voting shares have the same rights as the holders of
ordinary shares, except that (unless otherwise granted a vote pursuant to the
provisions of the Companies Act) they have no right to vote on any matters put
before the shareholders of Aspen Holdings. Upon the occurrence of this
offering, each non-voting share shall automatically convert, immediately upon
issue, into one ordinary share carrying rights to vote. See "-- Options" for a
description of the rights of certain optionholders to purchase non-voting
shares.

PREFERENCE SHARES

As of the date of this prospectus, there were no preference shares in
issue. Subject to certain limitations contained in our bye-laws and any
limitations prescribed by applicable law, our board of directors is authorized
to issue preference shares in one or more series and to fix the rights,
privileges, principles and restrictions of such shares, including but not
limited to dividend rates, conversion rights, voting rights, terms of
redemption (including sinking fund provisions), redemption prices and
liquidation preferences, and the number of shares constituting and the
designation of any such series, without further vote or action by our
shareholders.

127

INVESTOR OPTIONS

The following table shows the number of investor options outstanding to
purchase shares at September 30, 2003:

OPTIONS TO ACQUIRE PERCENTAGE OF EXERCISE PRICE
OPTION HOLDER SHARES ORDINARY SHARES(1) AT JUNE 21, 2002(2) EXPIRATION(3)
- ---------------------------- -------------------- -------------------- ---------------------- -------------

Wellington ................. 3,781,120 5.9% (pounds sterling)10 June 21, 2012
Names' Trustee (4) ......... 3,006,760 4.7% (pounds sterling)10 June 21, 2012
--------- ----
Total ..................... 6,787,880 10.6%
========= ====

- ----------------
(1) Percentages are based upon 56,924,120 ordinary shares outstanding as of
September 30, 2003 plus 6,787,880 non-voting shares issuable upon
exercise of outstanding investor options.

(2) To be increased by 5% per annum from June 21, 2002 to date of exercise,
less the amount of any prior dividend or distribution per share. Assuming
an exercise date of December 19, 2003, the exercise price would be
(pounds sterling)10.75.

(3) The investor options originally have a five-year term, which will be
extended to ten years if a LISTING such as this offering takes place
prior to June 21, 2007.

(4) The Names' Trustee holds the options solely as trustee of the Names'
Trust, the beneficiaries of which are the Unaligned Members.

On June 21, 2002, Aspen Holdings issued to Wellington options to purchase
3,781,120 non-voting shares (the "Wellington Options") and issued to the Names'
Trustee, as trustee of Names' Trust for the benefit of the Unaligned Members,
options to purchase 3,006,760 non-voting shares (the "Names' Options;" together
with the Wellington Options, the "Investor Options"). The rights of the holders
of the Investor Options are governed by an option instrument dated June 21,
2002 issued by the Company, which is in the process of being amended and
restated prior to the completion of this offering to effect certain of the
provisions described below (the "Option Instrument"). Upon completion of this
offering, the non-voting shares issued upon the exercise of the Investor
Options will automatically convert into ordinary shares at a one-to-one ratio
upon issuance.

The term of the Investor Options expires on June 21, 2007, except that if
a Listing such as this offering occurs prior to June 21, 2007, the term will be
extended to June 21, 2012. During the term of the Investor Options, the
Investor Options will become exercisable upon the earlier occurrence of a
Listing, such as this offering, and a SALE. In addition, if a Listing or a Sale
has not occurred by June 21, 2007, the Investor Options will be exercisable for
five business days commencing on June 21, 2007. The Investor Options may be
exercised in whole or in part at the time of this offering or at subsequent
times.

The Company currently expects that Wellington will not immediately
exercise any of its 3,781,120 options upon completion of this offering,
although it has the right to do so on the terms set forth in the Option
Instrument. The Names' Trustee is in the process of polling the beneficiaries
of the Names' Trust to determine the extent to which it will exercise its
options upon completion of this offering. The Names' Trustee will notify the
Company prior to the completion of this offering of the number of Names'
Options that will be exercised on a cash and/or cashless basis. A portion of
such Names' Options is held by WUSL (as sub-trustee) for certain Unaligned
Members and may be exercised on a cashless basis only.

Aspen Holdings and the optionholders have agreed in principle to amend the
Option Instrument whereby the Wellington Options would be exercisable at any
time in whole or in part subject to a minimum number of options to be
exercised. The Names' Options would be exercisable in whole or in part without
regard to a minimum number of options to be exercised. However, after
completion of

128

this offering, the Names' Options would be exercisable, in whole or in part, at
the end of an annual 45-day window period (expiring June 21, 2012) during which
the Unaligned Members notify the Names' Trustee of their elections to exercise
the Names' Options. The annual 45-day window period begins on the day following
the day on which Aspen Holdings' annual report is published. In addition to the
annual 45-day window period, the Names' Options also would be exercisable at
the time of the first underwritten secondary offering, as further described in
"-- Registration Rights Agreement" below.

The Investor Options will lapse on the earlier occurrence of (i) the end
of the term of the Investor Options, (ii) the liquidation of the Company (other
than a liquidation in connection with a reconstruction or amalgamation) and
(iii) the completion of a Sale (if such options are not exercised in connection
with such Sale).

The exercise price payable for each option share is (pounds sterling)10,
together with interest accruing at 5% per annum (less any dividends or other
distributions) from the date of issue of the Investor Options (June 21, 2002)
until the date of exercise of the Investor Options. Each optionholder may
exercise its options on a cashless basis, subject to relevant requirements of
the Companies Act. A cashless exercise allows the optionholders to realize,
through the receipt of ordinary shares, the economic benefit of the difference
between the subscription price under the Investor Options and the
then-prevailing market prices without having to pay the subscription price for
any such ordinary shares. Thus, the optionholder receives fewer shares upon
exercise.

In connection with the proposed amendment to the Option Instrument, the
Investor Options would be exercisable on a cashless basis at the time of this
offering, whereby the number of ordinary shares to be issued would be based on
the difference between the exercise price and the initial offering price to the
public. For any subsequent exercise of the Investor Options on a cashless
basis, the number of ordinary shares to be issued would be based on the
difference between the exercise price on the date of exercise and the
then-prevailing market price of the ordinary shares, calculated using the
average closing bid price for five preceding trading days. The Names' Options
would also be exercisable on a cashless basis at the time of the first
underwritten secondary offering and the number of ordinary shares to be issued
would be based on the difference between the exercise price on the date of
exercise and the offer price of the first underwritten secondary offering.

Following the issuance of the Investor Options, there are a range of
anti-dilution protections for the optionholders if any issuance or
reclassification of our shares or similar matters are effected below fair
market value, subject to certain exceptions. Under these circumstances, an
adjustment to the subscription rights of the optionholders or the subscription
price of the Investor Options shall be made by our board of directors. If
optionholders holding 75% or more of the rights to subscribe for non-voting
shares under the Investor Options so request, any adjustment proposed by our
board of directors may be referred to independent financial advisors for their
determination.

MANAGEMENT OPTIONS

As of September 30, 2003, an aggregate of 3,884,020 options to purchase
our ordinary shares have been granted to our key employees and non-employee
directors under our 2003 Share Incentive Plan. See "Management -- Share
Incentive Plan" and "-- Share Options Granted."

VOTING ADJUSTMENTS

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the voting power of all 9.5% U.S. Shareholders has been reduced to less than
9.5%. In addition, our board of directors may limit a shareholder's voting
rights when it deems it appropriate to do so to (i) avoid the existence of any
9.5% U.S. Shareholder; and (ii) avoid certain material adverse tax, legal or
regulatory consequences to the Company or any of its subsidiaries or any
shareholder or its affiliates. "Controlled shares" includes, among other
things, all shares of the Company that such U.S. Person is deemed to own
directly, indirectly or constructively (within the meaning of section 958 of
the Code).

Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could
have the effect of reducing the votes of certain shareholders who would not
otherwise be subject to the 9.5% limitation by virtue of their direct share
ownership. Our bye-laws provide that shareholders will be notified of their
voting interests prior to any vote to be taken by them.

ACQUISITION OF ORDINARY SHARES BY THE COMPANY

Under our bye-laws and subject to Bermuda law, we have the option, but not
the obligation, to require a shareholder to sell to us or a third party at fair
market value, as determined in the good faith discretion of our board of
directors, the minimum number of ordinary shares which is necessary to avoid or
cure any material adverse tax consequences to us, our subsidiaries or our
shareholders or affiliates if our board of directors unanimously determines
that failure to exercise our option would result in such material adverse tax
consequences.

ISSUANCE OF SHARES

In accordance with our bye-laws, our board of directors has the power to
issue any unissued shares of the Company, except that our board of directors
may not issue preference shares having voting rights or powers (other than any
mandatory voting rights or powers required under the Companies Act) unless a
resolution authorizing such issuance is approved by a majority of voting power
of votes cast at a meeting of the Company's shareholders.

SHAREHOLDERS' AGREEMENT

Upon the completion of this offering, the amended and restated
shareholders' agreement dated as of September 30, 2003 by and among the
Company, Blackstone, Wellington, Candover, Mourant, CSFB Private Equity,
Montpelier Re, the Names' Trustee, 3i, Phoenix, Olympus and Lexicon and, for
limited purposes, Mr. Myners, Mr. O'Kane, Mr. Cusack, Ms. Davies and Mr. May
will become fully effective. All references to "shareholders' agreement" are
intended to refer to the shareholders' agreement that will become effective
upon the completion of this offering.

The shareholders' agreement defines certain rights and obligations of the
shareholders parties to the shareholders' agreement with respect to the
transfer of shares and other matters. Pursuant to the terms of the
shareholders' agreement, generally if any existing shareholder party thereto
(or group of existing shareholder parties thereto) proposes to transfer 20% or
more of our outstanding shares, then the other shareholders party to the
shareholders' agreement have a right to participate proportionally in the
transfer.

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If a change of control (as defined in the shareholders' agreement) is
approved by the board of directors and by investors (as defined in the
shareholders' agreement) holding not less than 60% of the voting power of
shares held by the investors (in each case, after taking into account voting
power adjustments under the bye-laws), Wellington, certain entities affiliated
with Wellington and the Names' Trustee undertake to:

o exercise their respective voting rights as shareholders to approve
the change of control; and

o tender their respective shares for sale in relation to the change of
control on terms no less favorable than those on which the investors
sell their shares.

Each shareholder party to the shareholders' agreement consents to the
bonus issue of shares pursuant to a cashless exercise (as defined and described
in the Option Instrument). Each shareholder party to the shareholders'
agreement agrees to vote its shares and otherwise take all reasonable action
within its power to give effect to the foregoing and the cashless exercise
provision of the Investor Options.

Each shareholder party has agreed to require any transferee within
thirty-six months after this offering to sign a deed of adherence to the
shareholders' agreement, except if such transfer is pursuant to a registered
public offering, sale pursuant to Rule 144 of the Securities Act or certain
other circumstances. In addition, until twelve months after this offering, a
shareholder party may not make transfers to its shareholders, members, partners
or beneficiaries by way of a dividend or distribution of our shares without
consideration.

Generally, the shareholders' agreement may only be amended if the
amendment is in writing and signed by or on behalf of the Company (acting with
the approval of the board of directors) and the shareholder parties holding 75%
of the voting power of the shares held by the shareholder parties, provided
that any amendment or variation of the shareholders' agreement that would
adversely affect a shareholder party thereto in a disproportionate manner
relative to the other shareholder parties thereto may not be effected without
the consent of such disproportionately affected shareholder.

Directors, officers and employees of the Company who currently hold
ordinary shares are deemed third party beneficiaries of some of the provisions
of the shareholders' agreement. However, these directors, officers and
employees are not entitled to vote in connection with any amendment or
variation of the shareholders' agreement, unless such amendment or variation
adversely affects only them or adversely affects them in a disproportionate
manner relative to the other shareholder parties thereto, in which case the
consent of a majority of voting power of ordinary shares held by these
directors, officers and employees is required.

We have agreed to pay the reasonable legal fees and expenses incurred by
the shareholders parties to the shareholders' agreement in connection with the
negotiation, preparation and execution of the shareholders' agreement, the
registration rights agreement, the management shareholders' agreements (and all
other documents relating to the 2003 Share Incentive Plan) and all other
matters in connection with this offering prior to the date that this offering
is consummated.

In addition, we have agreed to pay the reasonable legal fees and expenses
incurred by all of our management shareholders, taken together, in connection
with the negotiation, preparation and execution of the shareholders' agreement,
the registration rights agreement, the management shareholders' agreements (and
all other documents relating to the 2003 Share Incentive Plan) and all other
matters in connection with this offering prior to the date that this offering
is consummated and the management service contracts; provided that, we shall
only reimburse our management shareholders for any such legal fees and expenses
incurred for the services of one firm of legal counsel.

We have agreed to pay each year the reasonable costs of administration of
the Names' Trust incurred by the Names' Trustee and will bear the reasonable or
pre-approved costs of Names' Trustee incurred in connection with the
transmission of notices received by the Names' Trustee (in its capacity

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as trustee for Names' Trust) to the Unaligned Members and any other
communications with the Unaligned Members which are made to or by the Names'
Trustee on behalf of the Unaligned Members.

REGISTRATION RIGHTS AGREEMENT

Under a registration rights agreement, dated June 21, 2002, as amended and
restated on July 23, 2002, as further amended and restated as of September 30,
2003, by and among the Company and Blackstone, Wellington, Candover, Mourant,
CSFB Private Equity, Montpelier Re, the Names' Trustee, 3i, Phoenix, Olympus
and Lexicon, we may be required to register our ordinary shares held by such
parties under the Securities Act following the effective date of this offering.
At any time following the earlier of 180 days after the effective date of this
registration statement and the expiration of the period during which the
managing underwriters for this initial public offering prohibit us from
otherwise distributing our shares, any such shareholder party or group of
shareholders (other than directors, officers or employees of the Company) that
holds in the aggregate $50 million of our shares has the right to request
registration for a public offering of all or a portion of its shares.

We have agreed in principle to a further amendment which is being sought
by the Names' Trustee to allow the ordinary shares issued in connection with
the exercise of the Names' Options to have priority over the sale of ordinary
shares held by the other shareholders party to the registration rights
agreement in the first underwritten secondary offering of ordinary shares after
this initial public offering. In addition, under the proposed amendment, if one
or more of our shareholders does not request from the Company the registration
of its ordinary shares in connection with the first underwritten secondary
offering within 240 days of this initial public offering, the Names' Trustee
has the right to demand the registration of ordinary shares it holds on behalf
of the Unaligned Members, subject to a registration of a minimum number of
ordinary shares, for a non-underwritten direct resale of such ordinary shares
between 240 and 285 days from the date of this initial public offering. In the
event that one or more of our shareholders requests the registration of its
ordinary shares after the 240th day after this initial public offering, and the
Names' Trustee either had not requested to register its ordinary shares or any
such registration statement had not yet become effective, the requesting
shareholder may cause the Names' Trustee to participate in such underwritten
secondary offering. In such event, the sale of ordinary shares issued in
connection with the exercise of the Names' Options would have priority over the
sale of ordinary shares to be sold by the other shareholders in the first
underwritten secondary offering.

In addition, under certain circumstances after the completion of this
offering, if we propose to register the sale of any of our securities under the
Securities Act (other than a registration on Form S-8 or F-4), such parties
holding our ordinary shares or other securities convertible into, exercisable
for or exchangeable for our ordinary shares, will have the right to participate
proportionately in such sale.

Parties to the registration rights agreement who wish to register their
ordinary shares must notify us within 10 days of receipt of our notice that a
registration statement will be filed. It has been agreed that a 20 business day
period will apply for the Names' Trustee to allow it additional time to
coordinate with the Names' Trust beneficiaries. If the registration requested
would not be delayed by the extended period provided to the Names' Trustee,
then the Names' Trustee will participate in the underwritten offering. If a
delay would occur as a result of the extended period to the Names' Trustee,
then the Names' Trustee would be entitled to request the registration of
ordinary shares it holds on behalf of the Unaligned Members, for a
non-underwritten direct resale of such shares under a separate registration
statement to be filed by us.

The registration rights agreement provides that neither we, nor any holder
of our ordinary shares or other securities convertible into, exercisable for or
exchangeable for our ordinary shares will offer, sell, or otherwise dispose of
any such shares or other securities for a specified period of time, not to
exceed 180 days after the date of the initial sale of ordinary shares under
this prospectus.

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Generally, the registration rights agreement may only be amended if the
amendment is in writing and signed by or on behalf of shareholders party to the
registration rights agreement holding 75% of the number of ordinary shares (or
securities exchangeable or exercisable for or convertible into ordinary shares)
that are considered registrable under the registration rights agreement
("Registrable Securities"), provided that any amendment or variation of the
registration rights agreement that would adversely affect a shareholder party
thereto in a disproportionate manner relative to the other shareholders parties
thereto may not be effected without the consent of such disproportionately
affected shareholder.

Directors, officers and employees of the Company who currently hold
ordinary shares and options are deemed third party beneficiaries of some of the
provisions of the registration rights agreement. However, these directors,
officers and employees are not entitled to vote in connection with any
amendment or variation of the registration rights agreement, unless such
amendment or variation adversely affects only them or adversely affects them in
a disproportionate manner relative to the other shareholders parties thereto,
in which case the consent of a majority of the number of Registrable Securities
held by these directors, officers and employees is required.

BYE-LAWS

In addition to the provisions of our bye-laws described elsewhere in this
prospectus, the following provisions are a summary of some of the other
important provisions of our bye-laws.

Our Board and Corporate Action. Our bye-laws provide that the board shall
consist of not less than six and not more than 15 directors. Subject to our
bye-laws and Bermuda law, the directors shall be elected or appointed by
holders of ordinary shares. Our board of directors is divided into three
classes, designated Class I, Class II and Class III and is elected by the
shareholders as follows. Each director shall serve for a term ending on the
date of the third annual general meeting of shareholders next following the
annual general meeting at which such director was elected, provided that (i)
Directors initially designated as Class I Directors shall serve for an initial
term ending on the date of the third annual general meeting of Shareholders
following June 21, 2002, (ii) directors initially designated as Class II
Directors shall serve for an initial term ending on the fourth annual general
meeting following June 21, 2002, and (iii) directors initially designated as
Class III Directors shall serve for an initial term ending on the fifth annual
general meeting following June 21, 2002. Notwithstanding the foregoing, each
director shall hold office until such director's successor shall have been duly
elected or until such director is removed from office or such office is
otherwise vacated. In the event of any change in the number of directors, the
board of directors shall apportion any newly created directorships among, or
reduce the number of directorships in, such class or classes as shall equalize,
as nearly as possible, the number of directors in each class. In no event will
a decrease in the number of directors shorten the term of any incumbent
director.

Generally, the affirmative vote of a majority of the directors present at
any meeting at which a quorum is present shall be required to authorize
corporate action. Corporate action may also be taken by a unanimous written
resolution of the board without a meeting and with no need to give notice,
except in the case of removal of auditors or directors. The quorum necessary
for the transaction of business of the board of directors may be fixed by the
board of directors and, unless so fixed at any other number, shall be a
majority of directors in office from time to time and in no event less than two
directors, provided, that the majority of the directors present does not
consist of persons residing in the United Kingdom for U.K. tax purposes.

Shareholder Action. Except as otherwise required by the Companies Act and
our bye-laws, any question proposed for the consideration of the shareholders
at any general meeting shall be decided by the affirmative vote of a majority
of the voting power of votes cast at such meeting (in each case, after taking
into account voting power adjustments under the bye-laws).

The following actions shall be approved by the affirmative vote of at
least seventy-five percent (75%) of the voting power of shares entitled to vote
at a meeting of shareholders (in each case, after taking into account voting
power adjustments under the bye-laws): any amendment to Bye-Laws 13

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(first sentence - Modification of Rights); 24 (Transfer of Shares); 49
(Voting); 63, 64, 65 and 66 (Adjustment of Voting Power); 67 (Other Adjustments
of Voting Power), 76 (Purchase of Shares), 84 or 85 (Certain Subsidiaries);
provided, however, that in the case of any amendments to Bye-Laws 24, 63, 64,
65, 66, 67 or 76, such amendment shall only be subject to this voting
requirement if the board determines in its sole discretion that such amendment
could adversely affect any shareholder in any non-de minimis respect. The
following actions shall be approved by the affirmative vote of at least
sixty-six percent (66%) of the voting power of shares entitled to vote at a
meeting of shareholders (in each case, after taking into account voting power
adjustments under the bye-laws): (i) a merger or amalgamation with, or a sale,
lease or transfer of all or substantially all of the assets of the Company to,
a third party, where any shareholder does not have the same right to receive
the same consideration as all other shareholders in such transaction; or (ii)
discontinuance of the Company out of Bermuda to another jurisdiction.

Amendment. Our bye-laws may be revoked or amended by a majority of the
board of directors, but no revocation or amendment shall be operative unless
and until it is approved at a subsequent general meeting of the Company by the
shareholders by resolution passed by a majority of the voting power of votes
cast at such meeting (in each case, after taking into account voting power
adjustments under the bye-laws) or such greater majority as required by our
bye-laws.

Voting of Non-U.S. Subsidiary Shares. If we are required or entitled to
vote at a general meeting of any of Aspen U.K., Aspen Bermuda, Aspen U.K.
Holdings or Aspen U.K. Services or any other directly held non-U.S. subsidiary
of ours (together, the "Non-U.S. Subsidiaries"), our directors shall refer the
subject matter of the vote to our shareholders and seek direction from such
shareholders as to how they should vote on the resolution proposed by the
Non-U.S. Subsidiary. Substantially similar provisions are or will be contained
in the bye-laws (or equivalent governing documents) of the Non-U.S.
Subsidiaries.

DIFFERENCES IN CORPORATE LAW

You should be aware that the Companies Act, which applies to us, differs
in certain material respects from laws generally applicable to U.S.
corporations and their shareholders. In order to highlight these differences,
set forth below is a summary of certain significant provisions of the Companies
Act (including modifications adopted pursuant to our bye-laws) applicable to us
which differ in certain respects from provisions of the State of Delaware
corporate law. Because the following statements are summaries, they do not
address all aspects of Bermuda law that may be relevant to us and our
shareholders.

Duties of Directors. Under Bermuda law, at common law, members of a board
of directors owe a fiduciary duty to the company to act in good faith in their
dealings with or on behalf of the company and exercise their powers and fulfill
the duties of their office honestly. This duty has the following essential
elements:

o a duty to act in good faith in the best interests of the company;

o a duty not to make a personal profit from opportunities that arise
from the office of director;

o a duty to avoid conflicts of interest; and

o a duty to exercise powers for the purpose for which such powers were
intended.

The Companies Act imposes a duty on directors and officers of a Bermuda
company:

o to act honestly and in good faith with a view to the best interests
of the company; and

o to exercise the care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.

In addition, the Companies Act imposes various duties on officers of a
company with respect to certain matters of management and administration of the
company.

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The Companies Act provides that in any proceedings for negligence,
default, breach of duty or breach of trust against any officer, if it appears
to a court that such officer is or may be liable in respect of negligence,
default, breach of duty or breach of trust, but that he has acted honestly and
reasonably, and that, having regard to all the circumstances of the case,
including those connected with his appointment, he ought fairly to be excused
for the negligence, default, breach of duty or breach of trust, that court may
relieve him, either wholly or partly, from any liability on such terms as the
court may think fit. This provision has been interpreted to apply only to
actions brought by or on behalf of the company against such officers. Our
bye-laws, however, provide that shareholders waive all claims or rights of
action that they might have, individually or in the right of the Company,
against any director or officer of Aspen Holdings for any act or failure to act
in the performance of such director's or officer's duties, except this waiver
does not extend to any claims or rights of action that arise out of fraud on
the part of such director or officer or with respect to the recovery of any
gain, personal profit or advantage to which the officer or director is not
legally entitled.

Under Delaware law, the business and affairs of a corporation are managed
by or under the direction of its board of directors. In exercising their
powers, directors are charged with a fiduciary duty of care to protect the
interests of the corporation and a fiduciary duty of loyalty to act in the best
interests of its stockholders.

The duty of care requires that directors act in an informed and
deliberative manner and inform themselves, prior to making a business decision,
of all material information reasonably available to them. The duty of care also
requires that directors exercise care in overseeing and investigating the
conduct of corporate employees. The duty of loyalty may be summarized as the
duty to act in good faith, not out of self-interest, and in a manner which the
director reasonably believes to be in the best interests of the stockholders.

A party challenging the propriety of a decision of a board of directors
bears the burden of rebutting the applicability of the presumptions afforded to
directors by the "business judgment rule." If the presumption is not rebutted,
the business judgment rule attaches to protect the directors and their
decisions, and their business judgments will not be second guessed. Where,
however, the presumption is rebutted, the directors bear the burden of
demonstrating the entire fairness of the relevant transaction. Notwithstanding
the foregoing, Delaware courts subject directors' conduct to enhanced scrutiny
in respect of defensive actions taken in response to a threat to corporate
control and approval of a transaction resulting in a sale of control of the
corporation.

Interested Directors. Under Bermuda law and our bye-laws, any transaction
entered into by us in which a director has an interest is not voidable by us
nor can such director be accountable to us for any benefit realized under that
transaction provided the nature of the interest is disclosed at the first
opportunity at a meeting of directors, or in writing to the directors. In
addition, our bye-laws allow a director to be taken into account in determining
whether a quorum is present and to vote on a transaction in which he has an
interest unless the majority of the disinterested directors determine
otherwise. Under Delaware law, such transaction would not be voidable if (1)
the material facts as to such interested director's relationship or interests
are disclosed or are known to the board of directors and the board in good
faith authorizes the transaction by the affirmative vote of a majority of the
disinterested directors, (2) such material facts are disclosed or are known to
the stockholders entitled to vote on such transaction and the transaction is
specifically approved in good faith by vote of the majority of shares entitled
to vote thereon or (3) the transaction is fair as to the corporation as of the
time it is authorized, approved or ratified. Under Delaware law, such
interested director could be held liable for a transaction in which such
director derived an improper personal benefit.

Voting Rights and Quorum Requirements. Under Bermuda law, the voting
rights of our shareholders are regulated by our bye-laws and, in certain
circumstances, the Companies Act. Under our bye-laws, at any general meeting,
shareholders holding at least 50% of our shareholders' aggregate voting power
in the ordinary shares shall constitute a quorum for the transaction of
business. In general, except for the removal of the Company's auditors or
directors, any action that we may take by resolution in a general meeting may,
without a meeting, be taken by a resolution in writing signed

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by all of the shareholders entitled to attend such meeting and vote on the
resolution. In general, any question proposed for the consideration of the
shareholders at any general meeting shall be decided by the affirmative votes
of a majority of the votes cast in accordance with the bye-laws.

Any individual who is a shareholder of Aspen Holdings and who is present
at a meeting may vote in person, as may any corporate shareholder which is
present by a duly authorized representative. Our bye-laws also permit votes by
proxy, provided the instrument appointing the proxy, together with evidence of
its due execution, is satisfactory to our board of directors.

In general, and except as provided below, shareholders have one vote for
each ordinary share held by them and are entitled to vote at all meetings of
shareholders. If, and so long as, the ordinary shares of a shareholder in the
Company are treated as "controlled shares" (as determined pursuant to section
958 of the Code) of any U.S. Person and such controlled shares constitute 9.5%
or more of the votes conferred by the issued ordinary shares, the voting rights
with respect to the controlled shares owned by such 9.5% U.S. Shareholder shall
be limited, in the aggregate, to a voting power of less than 9.5%, under a
formula specified in our bye-laws. The formula is applied repeatedly until the
voting power of all 9.5% U.S. Shareholders has been reduced to less than 9.5%.
In addition, our board of directors may limit a shareholder's voting rights
where it deems it appropriate to do so to (1) avoid the existence of any 9.5%
U.S. Shareholder; and (2) avoid material adverse tax, legal or regulatory
consequences to the Company or any of its subsidiaries or any shareholder or
its affiliates. "Controlled shares" includes, among other things, all ordinary
shares of the Company that such U.S. Person is deemed to beneficially own
directly, indirectly or constructively (within the meaning of section 958 of
the Code).

We are authorized to require any shareholder to provide information as to
that shareholder's beneficial share ownership, the names of persons having
beneficial ownership of the shareholder's shares, relationships with other
shareholders or any other facts the directors may deem relevant to a
determination of the number of ordinary shares attributable to any person. If
any holder fails to respond to such a request or submits incomplete or
inaccurate information, we may in our sole discretion, eliminate the
shareholder's voting rights. All information provided by the shareholder shall
be treated by the Company as confidential information and shall be used by the
Company solely for the purpose of establishing whether any 9.5% U.S.
Shareholder exists or assisting the Company in determining whether any U.S.
Person that is a shareholder directly or indirectly through foreign entities
would have "related person insurance" inclusions under Section 953(c) of the
Code (except as otherwise required by applicable law or regulation). The amount
of any reduction of votes that occurs by operation of the above limitations
will generally be reallocated proportionately among all other shareholders of
Aspen Holdings whose shares were not "controlled shares" of the 9.5% U.S.
Shareholder so long as such: (i) reallocation does not cause any person to
become a 9.5% U.S. Shareholder; (ii) no portion of such reallocation shall
apply to the shares held by Wellington or the Names' Trustee, except where the
failure to apply such increase would result in any person becoming a 9.5%
shareholder, and (iii) reallocation shall be limited in the case of existing
shareholders 3i, Phoenix and Montpelier Re so that none of their voting rights
exceed 10%.

Under these provisions, certain shareholders may have their voting rights
limited to less than one vote per share, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could
have the effect of reducing the votes of certain shareholders who would not
otherwise be subject to the 9.5% limitation by virtue of their direct share
ownership. The bye-laws of Aspen Holdings also provide that shareholders will
be notified of their voting interests prior to any vote to be taken by the
shareholders. See "-- Voting Adjustments."

Dividends. Bermuda law does not permit payment of dividends or
distributions of contributed surplus by a company if there are reasonable
grounds for believing that the company, after the payment is made, would be
unable to pay its liabilities as they become due, or the realizable value of
the company's assets would be less, as a result of the payment, than the
aggregate of its liabilities and its issued share capital and share premium
accounts. The excess of the consideration paid on issue of shares over the
aggregate par value of such shares must (except in certain limited
circumstances) be

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credited to a share premium account. Share premium may be distributed in
certain limited circumstances, for example to pay up for unissued shares which
may be distributed to shareholders in proportion to their holdings, but is
otherwise subject to limitation. In addition, Aspen Bermuda's ability to pay
dividends is subject to Bermuda insurance laws and regulatory constraints. See
"Regulatory Matters -- Bermuda Regulation -- Minimum Solvency Margin and
Restrictions on Dividends and Distributions."

Under Delaware law, subject to any restrictions contained in the company's
certificate of incorporation, a company may pay dividends out of surplus or, if
there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and for the preceding fiscal year. Delaware law also
provides that dividends may not be paid out of net profits if, after the
payment of the dividend, capital is less than the capital represented by the
outstanding stock of all classes having a preference upon the distribution of
assets.

Amalgamations, Mergers and Similar Arrangements. We may acquire the
business of another Bermuda exempted company or a company incorporated outside
Bermuda when conducting such business would benefit the Company and would be
conducive to attaining our objectives contained within our memorandum of
association. Under our bye-laws, we may, except in certain circumstances, with
the approval of at least a majority of the voting power of votes cast (after
taking account of any voting power adjustments under the bye-laws) at a general
meeting of our shareholders at which a quorum is present, amalgamate with
another Bermuda company or with a body incorporated outside Bermuda. In the
case of an amalgamation, a shareholder may apply to a Bermuda court for a
proper valuation of such shareholder's shares if such shareholder is not
satisfied that fair market value has been paid for such shares. The court
ordinarily would not disapprove the transaction on that ground absent evidence
of fraud or bad faith.

Under Delaware law, with certain exceptions, a merger, consolidation or
sale of all or substantially all the assets of a corporation must be approved
by the board of directors and a majority of the outstanding shares entitled to
vote thereon. Under Delaware law, a shareholder of a corporation participating
in certain major corporate transactions may, under certain circumstances, be
entitled to appraisal rights pursuant to which such shareholder may receive
payment in the amount of the fair market value of the shares held by such
shareholder (as determined by a court) in lieu of the consideration such
shareholder would otherwise receive in the transaction.

Takeovers. Bermuda law provides that where an offer is made for shares of
a company and, within four months of the offer, the holders of not less than
90% of the shares which are the subject of the offer accept, the offeror may by
notice require the non-tendering shareholders to transfer their shares on the
terms of the offer. Dissenting shareholders may apply to the court within one
month of the notice objecting to the transfer. The burden is on the dissenting
shareholders to show that the court should exercise its discretion to enjoin
the required transfer, which the court will be unlikely to do unless there is
evidence of fraud or bad faith or collusion between the offeror and the holders
of the shares who have accepted the offer as a means of unfairly forcing out
minority shareholders. Delaware law provides that a parent corporation, by
resolution of its board of directors and without any stockholder vote, may
merge with any subsidiary of which it owns at least 90% of each class of
capital stock. Upon any merger, dissenting stockholders of the subsidiary would
have appraisal rights.

Certain Transactions with Significant Shareholders. As a Bermuda company,
we may enter into certain business transactions with our significant
shareholders, including asset sales, in which a significant shareholder
receives, or could receive, a financial benefit that is greater than that
received, or to be received, by other shareholders with prior approval from our
board of directors but without obtaining prior approval from our shareholders.
Amalgamations require the approval of the board of directors and, except for
certain amalgamations, a resolution of shareholders approved by a majority of
at least a majority of the votes cast (after taking account of any voting power
adjustments under the bye-laws). If we were a Delaware corporation, we would
need, subject to certain exceptions, prior approval from shareholders holding
at least two-thirds of our outstanding ordinary shares not owned by such
interested shareholder to enter into a business combination (which, for this
purpose, includes

137

asset sales of greater than 10% of our assets that would otherwise be
considered transactions in the ordinary course of business) with an interested
shareholder for a period of three years from the time the person became an
interested shareholder, unless we opted out of the relevant Delaware statute.

Shareholders' Suits. The rights of shareholders under Bermuda law are not
as extensive as the rights of shareholders under legislation or judicial
precedent in many U.S. jurisdictions. Class actions and derivative actions are
generally not available to shareholders under the laws of Bermuda. However, the
Bermuda courts ordinarily would be expected to follow English case law
precedent, which would permit a shareholder to commence an action in our name
to remedy a wrong done to us where the act complained of is alleged to be
beyond our corporate power or is illegal or would result in the violation of
our memorandum of association or bye-laws. Furthermore, consideration would be
given by the court to acts that are alleged to constitute a fraud against the
minority shareholders or where an act requires the approval of a greater
percentage of our shareholders than actually approved it. The winning party in
such an action generally would be able to recover a portion of attorneys' fees
incurred in connection with such action. Our bye-laws provide that shareholders
waive all claims or rights of action that they might have, individually or in
the right of the Company, against any director or officer for any action or
failure to act in the performance of such director's or officer's duties,
except such waiver shall not extend to claims or rights of action that arise
out of any fraud of such director or officer or with respect to the recovery of
any gain, personal profit or advantage to which the officer or director is not
legally entitled. Class actions and derivative actions generally are available
to shareholders under Delaware law for, among other things, breach of fiduciary
duty, corporate waste and actions not taken in accordance with applicable law.
In such actions, the court generally has discretion to permit the winning party
to recover attorneys' fees incurred in connection with such action.

Indemnification of Directors and Officers. Under Bermuda law and our
bye-laws, we may indemnify our directors, officers or any other person
appointed to a committee of the board of directors and any resident
representative (and their respective heirs, executors or administrators)
against all liabilities, loss, damage or expense to the full extent permitted
by law, incurred or suffered by this person by reason of any act done,
conceived in or omitted in the conduct of our business or in the discharge of
his/her duties; provided that such indemnification shall not extend to any
matter which would render it void under the Companies Act. Under Delaware law,
a corporation may indemnify a director or officer of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in defense of an action, suit or
proceeding by reason of such position if (1) that director or officer acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and (2) with respect to any criminal
action or proceeding, such director or officer had no reasonable cause to
believe his conduct was unlawful.

Inspection of Corporate Records. Members of the general public have the
right to inspect our public documents available at the office of the Registrar
of Companies in Bermuda and our registered office in Bermuda, which will
include our memorandum of association (including its objects and powers) and
any alteration to our memorandum of association and documents relating to any
increase or reduction of authorized capital. Our shareholders have the
additional right to inspect our bye-laws, minutes of general meetings and
financial statements, which must be presented to the annual general meeting of
shareholders. The register of our shareholders is also open to inspection by
shareholders without charge, and to members of the public for a fee. We are
required to maintain our share register in Bermuda but may establish a branch
register outside of Bermuda. We are required to keep at our registered office a
register of our directors and officers which is open for inspection by members
of the public without charge. Bermuda law does not, however, provide a general
right for shareholders to inspect or obtain copies of any other corporate
records. Delaware law permits any shareholder to inspect or obtain copies of a
corporation's shareholder list and its other books and records for any purpose
reasonably related to such person's interest as a shareholder.

Shareholder Proposals. Under Bermuda law, the Companies Act provides that
shareholders may, as set forth below and at their own expense (unless a company
otherwise resolves), require a company

138

to give notice of any resolution that the shareholders can properly propose at
the next annual general meeting and/or to circulate a statement prepared by the
requesting shareholders in respect of any matter referred to in a proposed
resolution or any business to be conducted at a general meeting. The number of
shareholders necessary for such a requisition is either that number of
shareholders representing at least 5% of the total voting rights of all
shareholders having a right to vote at the meeting to which the requisition
relates or not less than 100 shareholders. Delaware law does not include a
provision restricting the manner in which nominations for directors may be made
by shareholders or the manner in which business may be brought before a
meeting.

Calling of Special Shareholders Meetings. Under Bermuda law a special
meeting may also be called by the shareholders when requisitioned by the
holders of at least 10% of the paid up voting share capital of Aspen Holdings
as provided by the Companies Act. Delaware law permits the board of directors
or any person who is authorized under a corporation's certificate of
incorporation or bye-laws to call a special meeting of shareholders.

Staggered Board of Directors. Bermuda law does not contain statutory
provisions specifically requiring staggered board of directors arrangements for
a Bermuda exempted company. These provisions, however, may validly be provided
for in the bye-laws governing the affairs of a company and our bye-laws do so
provide. Similarly, Delaware law permits corporations to have a staggered board
of directors.

Approval of Corporate Matters by Written Consent. Under Bermuda law, the
Companies Act provides that shareholders may take action by written consent
with 100% shareholders consent required. Delaware law permits shareholders to
take action by the consent in writing by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting of stockholders at which all shares
entitled to vote thereon were present and voted.

Amendment of Memorandum of Association. Bermuda law provides that the
memorandum of association of a company may be amended by a resolution passed at
a general meeting of shareholders of which due notice has been given. An
amendment to the memorandum of association that alters the company's business
objects may require approval of the Bermuda Minister of Finance, who may grant
or withhold approval at his or her discretion.

Under Bermuda law, the holders of an aggregate of not less than 20% in par
value of a company's issued share capital have the right to apply to the
Bermuda courts for an annulment of any amendment of the memorandum of
association adopted by shareholders at any general meeting, other than an
amendment which alters or reduces a company's share capital as provided in the
Companies Act. Where such an application is made, the amendment becomes
effective only to the extent that it is confirmed by the Bermuda court. An
application for an annulment of an amendment of the memorandum of association
must be made within 21 days after the date on which the resolution altering the
company's memorandum of association is passed and may be made on behalf of
persons entitled to make the application by one or more of their designees as
such holders may appoint in writing for such purpose. No application may be
made by the shareholders voting in favor of the amendment.

Under Delaware law, amendment of the certificate of incorporation, which
is the equivalent of a memorandum of association, of a company must be made by
a resolution of the board of directors setting forth the amendment, declaring
its advisability, and either calling a special meeting of the shareholders
entitled to vote or directing that the amendment proposed be considered at the
next annual meeting of the shareholders. Delaware law requires that, unless a
different percentage is provided for in the certificate of incorporation, a
majority of the outstanding shares entitled to vote thereon is required to
approve the amendment of the certificate of incorporation at the shareholders
meeting. If the amendment would alter the number of authorized shares or par
value or otherwise adversely affect the rights or preference of any class of a
company's stock, the holders of the outstanding shares of such affected class,
regardless of whether such holders are entitled to vote by the certificate of
incorporation, should be entitled to vote as a class upon the proposed
amendment.

139

However, the number of authorized shares of any class may be increased or
decreased, to the extent not falling below the number of shares then
outstanding, by the affirmative vote of the holders of a majority of the stock
entitled to vote, if so provided in the company's certificate of incorporation
or any amendment that created such class or was adopted prior to the issuance
of such class or that was authorized by the affirmative vote of the holders of
a majority of such class or classes of stock.

Amendment of Bye-laws. Our bye-laws may be revoked or amended by the board
of directors, which may from time to time revoke or amend them in any way by a
resolution of the board of directors passed by a majority of the directors then
in office and eligible to vote on the resolution, but no revocation or
amendment shall be operative unless and until it is approved at a subsequent
general meeting of the Company by the shareholders by resolution passed by a
majority of the voting power of votes cast at such meeting (in each case, after
taking into account voting power adjustments under the bye-laws) or such
greater majority as required by bye-laws.

Under Delaware law, holders of a majority of the voting power of a
corporation and, if so provided in the certificate of incorporation, the
directors of the corporation, have the power to adopt, amend and repeal the
bylaws of a corporation.

LISTING

We have applied to list our ordinary shares on the NYSE under the trading
symbol "AHL."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the ordinary shares will be Mellon
Investor Services LLC.

140

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, we will have a total of 66,448,120
ordinary shares outstanding (67,876,720 shares if the underwriters exercise the
over-allotment option in full). All of the ordinary shares sold in the
offering will be freely tradable without restriction or further registration
under the Securities Act by persons other than our "affiliates." Under the
Securities Act, an "affiliate" of a company is a person that directly or
indirectly controls, is controlled by or is under common control with that
company. The remaining 56,924,120 ordinary shares outstanding will be
"restricted securities" within the meaning of Rule 144 under the Securities Act
and may not be sold in the absence of registration under the Securities Act
unless an exemption from registration is available, including the exemptions
contained in Rule 144.

We may, however, issue shares upon the exercise of the Investor Options as
long as the holder of such shares agrees in writing to be bound by the
obligations and restrictions of the lock-up agreement. As of September 30,
2003, pursuant to the Investor Options we had issued options to purchase a
total of 6,787,880 non-voting shares to Wellington and the Names' Trustee,
which non-voting shares will automatically convert into ordinary shares upon a
Listing, such as this offering, or, if issued after completion of such Listing,
upon issuance.

Following the completion of this offering, we intend to file one or more
registration statements on Form S-8 under the Securities Act to register
ordinary shares issued or reserved for issuance under our share incentive plan.
Any such Form S-8 registration statement will automatically become effective
upon filing. Accordingly, shares registered under such registration statement
will be available for sale in the open market, unless such shares are subject
to vesting restrictions or the lock-up restrictions described above.

In general, under Rule 144, a person (or persons whose shares are
aggregated), including any person who may be deemed our affiliate, is entitled
to sell within any three-month period, a number of restricted securities that
does not exceed the greater of 1% of the then outstanding ordinary shares and
the average weekly trading volume in the over-the-counter market during the
four calendar weeks preceding each such sale, provided that at least one year
has elapsed since these shares were acquired from us or any affiliate of ours
and certain manner of sale, notice requirements and requirements as to
availability of current public information about us are satisfied. Any person
who is deemed to be our affiliate must comply with the provisions of Rule 144
(other than the one-year holding period requirement) in order to sell ordinary
shares which are not restricted securities (such as shares acquired by
affiliates either in the offering or through purchases in the open market
following the offering). In addition, under Rule 144(k), a person who is not
our affiliate, and who has not been our affiliate at any time during the 90
days preceding any sale, is entitled to sell the shares without regard to the
foregoing limitations, provided that at least two years have elapsed since the
shares were acquired from us or any affiliate of ours.

Under the registration rights agreement, each of Blackstone, Candover,
Candover (including Mourant), CSFB Private Equity and Wellington, individually,
and 3i, Phoenix, Olympus, Montpelier Re, The Lexicon Partnership LLP and the
Names' Trustee, collectively, have demand registration rights which will
continue to apply to all of their shares after this offering. At any time
beginning 180 days after the effective date of the registration statement
relating to this offering, subject to exceptions, any of these shareholders may
request that we file a registration statement under the Securities Act covering
their shares, subject to certain minimum offering size requirements. Upon
receipt of each request, we generally will be required to use reasonable best
efforts to effect the

141

registration. Each such shareholder may only demand a specific number of
registrations. In addition, we are not required to effect any registration
requested by any such shareholders if we have effected any registration (other
than on Form F-3 or any successor form relating to secondary offerings) within
six months prior to the request. We are generally obligated to bear the
expenses, excluding underwriting fees, discounts and sales commissions, of all
registrations.

Under the registration rights agreement, holders of our ordinary shares or
other securities convertible into, exercisable for or exchangeable for our
ordinary shares also have certain "piggyback" registration rights with respect
to our ordinary shares. Accordingly, if we propose to register any of our
securities, either for our own account or for the account of other
shareholders, with certain exceptions, we are required to notify these
shareholders and to include in the registration all the ordinary shares
requested to be included by them, subject to rejection of such shares under
certain circumstances by an underwriter. In addition, if shareholders do not
request to register ordinary shares within 240 days of this initial public
offering, the Names' Trustee has the right to demand the registration of
ordinary shares it holds on behalf of the Unaligned Members subject to a
registration of a minimum number of ordinary shares for a non-underwritten
direct resale of such ordinary shares between 240 and 285 days from the date of
this initial public offering. See "Description of Share Capital -- Registration
Rights Agreement."

No prediction can be made as to the effect, if any, that future sales of
ordinary shares, or the availability of ordinary shares for future sales, will
have on the market price of our ordinary shares prevailing from time to time.
The sale of substantial amounts of our ordinary shares in the public market, or
the perception that these sales could occur, could harm the prevailing market
price of our ordinary shares.

142

UNDERWRITING

We and the underwriters named below have entered into an underwriting
agreement with respect to the ordinary shares being offered. Subject to certain
conditions, each underwriter has severally agreed to purchase the number of
ordinary shares indicated in the following table. Credit Suisse First Boston
LLC and Goldman, Sachs & Co. are the representatives of the underwriters.

Number of Ordinary
Underwriters Shares
- --------------------------------------------- -------------------

Credit Suisse First Boston LLC ..............
Goldman, Sachs & Co. ........................
Deutsche Bank Securities Inc. ...............
UBS Securities LLC ..........................
Dowling & Partners Securities, LLC ..........
Fox-Pitt, Kelton Inc. .......................
Keefe, Bruyette & Woods, Inc. ...............
---------
Total .................................... 9,524,000
=========

The underwriters are committed to take and pay for all of the ordinary
shares being offered, if any are taken, other than the ordinary shares covered
by the over-allotment option described below unless and until this option is
exercised.

If the underwriters sell more ordinary shares than the total number set
forth in the table above, the underwriters have an option to buy up to an
additional 1,428,600 ordinary shares from us to cover such sales. They may
exercise that over-allotment option for 30 days. If any ordinary shares are
purchased pursuant to this over-allotment option, the underwriters will
severally purchase ordinary shares in approximately the same proportion as set
forth in the table above.

The following table shows the per ordinary share and total underwriting
discounts and commissions to be paid to the underwriters by us. Such amounts
are shown assuming both no exercise and full exercise of the underwriters'
option to purchase additional ordinary shares.

Paid by the Company No Exercise Full Exercise
- ----------------------------- ------------- --------------

Per Ordinary Share .......... $ $
Total .................... $ $

Ordinary shares sold by the underwriters to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus. Any ordinary shares sold by the underwriters to securities dealers
may be sold at a discount of up to $ per ordinary share from the initial
public offering price. Any such securities dealers may resell any ordinary
shares purchased from the underwriters to certain other brokers or dealers at a
discount of up to $ per ordinary share from the initial public offering
price. If all the ordinary shares are not sold at the initial public offering
price, the representatives may change the offering price and the other selling
terms.

We, our directors, officers, employee shareholders and optionholders, and
certain of our existing shareholders have agreed to enter into lock-up
agreements with the underwriters not to dispose of or hedge any of their
ordinary shares or securities convertible into or exchangeable for ordinary
shares during the period from the date of this prospectus continuing through
the date 180 days after the date of this prospectus without the prior written
consent of the representatives, subject to certain exceptions. This agreement
does not apply to any existing employee benefit plans. See "Shares Eligible for
Future Sale" for a discussion of certain transfer restrictions.

Prior to this offering, there has been no public market for the ordinary
shares. The initial public offering price will be negotiated among us and the
representatives. Among the factors to be considered in determining the initial
public offering price of the ordinary shares, in addition to prevailing market
conditions, will be our historical performance, estimates of our business
potential and earnings prospects, an assessment of our management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.

143

We have applied to list our ordinary shares on the NYSE under the symbol
"AHL." In order to meet one of the requirements for listing the ordinary shares
on the NYSE, the underwriters will undertake to sell lots of 100 or more
ordinary shares to a minimum of 2,000 beneficial holders.

In connection with this offering, the underwriters may purchase and sell
ordinary shares in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
ordinary shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the underwriters'
option to purchase additional ordinary shares from us in the offering. The
underwriters may close out any covered short position by either exercising
their option to purchase additional ordinary shares or purchasing ordinary
shares in the open market. In determining the source of ordinary shares to
close out the covered short position, the underwriters will consider, among
other things, the price of ordinary shares available for purchase in the open
market as compared to the price at which they may purchase additional ordinary
shares pursuant to the over-allotment option granted to them. "Naked" short
sales are any sales in excess of such over-allotment option. The underwriters
must close out any naked short position by purchasing ordinary shares in the
open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the ordinary shares in the open market after pricing that could adversely
affect investors who purchase in the offering. Stabilizing transactions consist
of various bids for or purchases of ordinary shares made by the underwriters in
the open market prior to the completion of this offering.

The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased ordinary
shares sold by or for the account of such underwriter in stabilizing or short
covering transactions.

Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of the
ordinary shares and, together with the imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the ordinary
shares. As a result, the price of the ordinary shares may be higher than the
price that otherwise might exist in the open market. If these activities are
commenced, they may be discontinued at any time. These transactions may be
effected on the NYSE, in the over-the-counter market or otherwise.

Each underwriter has agreed that (i) it has not offered or sold, and prior
to the six months after the date of issue of the notes will not offer or sell
any securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied, and will comply
with, all applicable provisions of the FSMA with respect to anything done by it
in relation to the securities in, from or otherwise involving the United
Kingdom, and (iii) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of the FSMA)
received by it in connection with the issue or sale of any securities in
circumstances in which section 21(1) of the FSMA does not apply to the issuer.

The ordinary shares may not be offered, sold, transferred or delivered in
or from The Netherlands, as part of their initial distribution or as part of
any re-offering, and neither this prospectus nor any other document in respect
of the offering may be distributed or circulated in The Netherlands, other than
to individuals or legal entities which include, but are not limited to, banks,
brokers, dealers, institutional investors and undertakings with a treasury
department, who or which trade or invest in securities in the conduct of a
business or profession.

The ordinary shares have not been and will not be registered under the
Securities and Exchange Law of Japan. Each underwriter has represented and
agreed that it has not offered or sold, and it will not offer or sell, directly
or indirectly, any ordinary shares in Japan or to, or for the account or
benefit

144

of, any resident of Japan or to, or for the account or benefit, of any resident
for reoffering or resale, directly or indirectly, in Japan or to, or for the
account or benefit of, any resident of Japan except (i) pursuant to an
exemption from the registration requirements of, or otherwise in compliance
with, the Securities and Exchange Law of Japan and (ii) in compliance with the
other relevant laws and regulations of Japan.

No offer to sell the ordinary shares has been or will be made in the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong"), by means of any document, other than to persons whose ordinary business
is to buy or sell shares or debentures, whether as principal or agent, except
in circumstances which do not constitute an offer to the public within the
meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and unless permitted
to do so under the securities laws of Hong Kong, no person has issued or had in
its possession for the purposes of issue, and will not issue or have in its
possession for the purpose of issue, any advertisement, document or invitation
relating to the ordinary shares in Hong Kong other than with respect to the
ordinary shares intended to be disposed of to persons outside Hong Kong or only
to persons whose business involves the acquisition, disposal or holding of
securities whether as principal or agent.

This prospectus has not been registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, each of the underwriters has agreed that
this prospectus and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the ordinary shares may
not be circulated or distributed, nor may the ordinary shares be offered or
sold, or be made the subject of an invitation for subscription or purchase,
whether directly or indirectly, to the public or any member of the public in
Singapore other than (i) to an institutional investor or other person specified
in Section 274 of the Securities and Futures Act 2001 of Singapore (the "SFA"),
(ii) to a sophisticated investor, and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in
accordance with the conditions of, any other applicable provision of the SFA.

This prospectus has not been, and will not be, lodged with the Australian
Securities and Investments Commission ("ASIC") as a disclosure document for the
purpose of the Australian Corporations Act 2001 (Cwlth) (the "Corporations
Act"). The ordinary shares may not be offered for sale (or transferred,
assigned or otherwise alienated) to investors in Australia for 12 months after
their issue, except in circumstances where disclosure to investors is not
required under Chapter 6D of the Corporations Act or unless a compliant
disclosure document is prepared and lodged with ASIC.

Because affiliates of Credit Suisse First Boston LLC currently own more
than 10% of the equity interests in us, this offering is being conducted in
accordance with Rule 2720 of the National Association of Securities Dealers.
See "Certain Relationships and Related Transactions -- Transactions and
Relationship with Underwriters." That rule requires that the initial public
offering price can be no higher than that recommended by a "qualified
independent underwriter," as defined by the NASD. Goldman, Sachs & Co. has
served in that capacity and performed due diligence investigations and reviewed
and participated in the preparation of the registration statement of which this
prospectus forms a part. Goldman, Sachs & Co. has received $1,000 from us as
compensation for such role.

The underwriters will not confirm sales to any accounts over which they
exercise discretionary authority without first receiving a written consent from
those accounts.

We estimate that our share of the total expenses of this offering,
excluding underwriting discounts and commissions, will be approximately $7.5
million.

A prospectus in electronic format will be made available on the web sites
maintained by one or more of the underwriters, or selling group members, if
any, participating in this offering and one or more of the underwriters
participating in this offering may distribute prospectuses electronically. The
representatives may agree to allocate a number of shares to underwriters and
selling group members

145

for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters and selling group members that will make
internet distributions on the same basis as other allocations.

We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act.

Several of the underwriters and their affiliates have provided from time
to time, and expect to provide in the future, investment and commercial banking
and financial advisory services to us for which they have received and may
continue to receive customary fees and commissions. Affiliates of Credit Suisse
First Boston LLC, Deutsche Bank Securities Inc. and UBS Securities LLC, three
of the underwriters of this offering, participate as lenders in the syndicate
of our credit facilities as described in "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

146

EXCHANGE RATE INFORMATION

Unless this prospectus provides a different rate, the translations of
British Pounds into U.S. Dollars have been made at the rate of (pounds
sterling)1 to $1.6970, which was the closing exchange rate on October 31, 2003
for the British Pound/U.S. Dollar exchange rate as displayed on the Bloomberg
Service under USD--GBP "Currencies" HP screen. Using this rate does not mean
that British Pound amounts actually represent those U.S. Dollars amounts or
could be converted into U.S. Dollars at that rate.

The following table sets forth the history of the exchange rates of one
British Pound to U.S. Dollars for the periods indicated.

BRITISH POUND/U.S. DOLLAR EXCHANGE RATE HISTORY(1)

LAST(2) HIGH LOW AVERAGE(3)
----------- ----------- ----------- -----------

Month Ended October 31, 2003 ............ 1.6970 1.7009 1.6602 1.6787
Month Ended September 30, 2003 .......... 1.6614 1.6621 1.5698 1.6135
Month Ended August 31, 2003 ............. 1.5818 1.6177 1.5711 1.5941
Month Ended July 31, 2003 ............... 1.6075 1.6723 1.5840 1.6221
Month Ended June 30, 2003 ............... 1.6502 1.6888 1.6298 1.6595
Month Ended May 31, 2003 ................ 1.6384 1.6493 1.5916 1.6222
Year Ended December 31, 2002 ............ 1.6099 1.6099 1.4088 1.5033
Year Ended December 31, 2001 ............ 1.4554 1.5049 1.3727 1.4398
Year Ended December 31, 2000 ............ 1.4938 1.6522 1.4016 1.5159

- ----------------
(1) Data obtained from FactSet.
(2) "Last" is the closing exchange rate on the last business day of each of
the periods indicated.
(3) "Average" is the average daily exchange rate during the periods
indicated.

147

LEGAL MATTERS

Certain matters as to U.S. law in connection with this offering will be
passed upon for us by LeBoeuf Lamb, Greene & MacRae, L.L.P., a limited
liability partnership including professional corporations, New York, New York.
The validity of the issuance of the ordinary shares under Bermuda law will be
passed upon for us by Appleby Spurling & Kempe, Hamilton, Bermuda. Certain
legal matters in connection with this offering will be passed upon for the
underwriters by Simpson Thacher & Bartlett LLP, New York, New York. Certain
partners of Simpson Thacher & Bartlett LLP, members of their families, related
persons and others, have an indirect interest, through limited partnerships
that are investors in BCP Excalibur Holdco (Cayman) Limited, BFIP Excalibur
Holdco (Cayman) Limited and BOCP Excalibur Holdco (Cayman) Limited, in less
than 1% of the ordinary shares of the Company. In addition, Simpson Thacher &
Bartlett LLP has in the past provided, and may continue to provide, legal
services to Blackstone and its affiliates.

EXPERTS

The consolidated balance sheet of Aspen Insurance Holdings Limited and its
subsidiaries as of December 31, 2002 and the related consolidated statements of
operations, shareholders' equity, comprehensive income and cash flows for the
period from incorporation on May 23, 2002 to December 31, 2002, the combined
balance sheets of the Syndicates as of December 31, 2002 and 2001 and the
related combined statements of operations, comprehensive income/(loss), members
deficits and cash flows for each of the years in the three year period ended
December 31, 2002 and the financial statement schedules for Aspen Insurance
Holdings Limited and the Syndicates included in the Registration Statement have
been audited by KPMG Audit Plc, independent auditors, as set forth in their
reports appearing herein. These financial statements and financial statement
schedules referred to above are included in reliance upon such reports of KPMG
Audit Plc, given upon the authority of such firm as experts in accounting and
auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC, a registration statement on Form F-1 under the
Securities Act with respect to the ordinary shares offered in this prospectus.
This prospectus, filed as part of the registration statement, does not contain
all of the information set forth in the registration statement and its exhibits
and schedules, portions of which have been omitted as permitted by the rules
and regulations of the SEC. For further information about us and our ordinary
shares, we refer you to the registration statement and to its exhibits and
schedules. Statements in this prospectus about the contents of any contract,
agreement or other document are not necessarily complete and, in each instance,
we refer you to the copy of such contract, agreement or document filed as an
exhibit to the registration statement, with each such statement being qualified
in all respects by reference to the document to which it refers. Anyone may
inspect the registration statement and its exhibits and schedules without
charge at the public reference facilities that the SEC maintains at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain copies of all or any part
of these materials from the SEC upon the payment of certain fees prescribed by
the SEC. You may obtain further information about the operation of the SEC's
Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also
inspect these reports and other information without charge at a web site
maintained by the SEC. The address of this site is http://www.sec.gov.

The Company will be subject to the informational requirements of the
Exchange Act. As a foreign private issuer (as defined in rules under the
Exchange Act), the Company is not required to comply with the periodic
reporting requirements imposed upon a U.S. domestic private issuer of equity
securities registered under the Exchange Act, and is exempt from the provisions
of, the Exchange Act prescribing the content and filing of proxy statements and
the solicitation of proxies and the provisions of Section 16 of the Exchange
Act relating to the reporting of securities transactions by certain persons and
the recovery of "short-swing" profits from the purchase or sale of securities.
Pursuant to a provision in our bye-laws, we will file with the SEC all annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports with
respect to specified events on

148

Form 8-K, as would be required of a U.S. domestic private issuer subject to
those particular requirements of the Exchange Act (including the informational
and timing requirements for filing such reports ). The audited financial
statements contained in such annual reports and unaudited quarterly financial
information contained in such quarterly reports will be prepared in accordance
with U.S. GAAP and will include "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for the relevant periods. You
will be able to inspect and copy these reports and other information at the
public reference facilities maintained by the SEC at the address noted above.
You also will be able to obtain copies of this material from the Public
Reference Room of the SEC as described above, or inspect them without charge at
the SEC's web site. We intend to furnish our shareholders with annual reports
containing consolidated financial statements audited by an independent
accounting firm.

ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAWS AND OTHER MATTERS

We are organized under the laws of Bermuda. In addition, some of our
directors and officers reside outside the United States, and all or a
substantial portion of their assets and our assets are or may be located in
jurisdictions outside the United States. Therefore, it may be difficult for
investors to effect service of process within the United States upon our
non-U.S. directors and officers or to recover against our company, or our
non-U.S. directors and officers on judgments of U.S. courts, including
judgments predicated upon the civil liability provisions of the U.S. federal
securities laws. However, we may be served with process in the United States
with respect to actions against us arising out of or in connection with
violations of U.S. federal securities laws relating to offers and sales of
ordinary shares made hereby by serving CT Corporation System, 111 Eighth
Avenue, New York, New York 10011, our U.S. agent irrevocably appointed for that
purpose.

We have been advised by Appleby Spurling & Kempe, our Bermuda counsel,
that there is doubt as to whether the Courts of Bermuda would enforce judgments
of U.S. courts obtained in actions against us or our directors and officers, as
well as the experts named herein, predicated upon the civil liability
provisions of the U.S. federal securities laws or original actions brought in
Bermuda against us or such persons predicated solely upon U.S. federal
securities laws. Further, we have been advised by Appleby Spurling & Kempe that
there is no treaty in force between the United States and Bermuda providing for
the reciprocal recognition and enforcement of judgments in civil and commercial
matters. As a result, whether a U.S. judgment would be enforceable in Bermuda
against us or our directors and officers depends on whether the U.S. court that
entered the judgment is recognized by the Bermuda court as having jurisdiction
over us or our directors and officers, as determined by reference to Bermuda
conflict of law rules. A judgment debt from a U.S. court that is final and for
a sum certain based on U.S. federal securities laws will not be enforceable in
Bermuda unless the judgment debtor had submitted to the jurisdiction of the
U.S. court, and the issue of submission and jurisdiction is a matter of Bermuda
(not U.S.) law.

In addition, and irrespective of jurisdictional issues, the Bermuda courts
will not enforce a U.S. federal securities law that is either penal or contrary
to public policy. It is the advice of Appleby Spurling & Kempe that an action
brought pursuant to a public or penal law, the purpose of which is the
enforcement of a sanction, power or right at the instance of the state in its
sovereign capacity, will not be entertained by a Bermuda Court. Some remedies
available under the laws of U.S. jurisdictions, including some remedies under
U.S. federal securities laws, would not be available under Bermuda law or
enforceable in a Bermuda court as they would be contrary to Bermuda public
policy. Further, no claim may be brought in Bermuda against us or our directors
and officers in the first instance for violation of U.S. federal securities
laws because these laws have no extraterritorial jurisdiction under Bermuda law
and do not have force of law in Bermuda. A Bermuda court may, however, impose
civil liability on us or our directors and officers if the facts alleged in a
complaint constitute or give rise to a cause of action under Bermuda law.

---------------------

149

We have applied for and expect to obtain consent for the issue and
transfer of the ordinary shares to and between non-residents of Bermuda for
exchange control purposes (and of up to 20% of the ordinary shares to and among
persons who are residents in Bermuda for exchange control purposes) from the
BMA as required by the Exchange Control Act 1972 of Bermuda and related
regulations, subject to the condition that the ordinary shares shall be listed
on the NYSE or any other appointed stock exchange. In addition, we will deliver
a copy of this prospectus to the Registrar of Companies in Bermuda for filing
pursuant to the Companies Act. However, the BMA and Registrar of Companies in
Bermuda accept no responsibility for the financial soundness of any proposal or
for the correctness of any of the statements made or opinions expressed in this
prospectus.

150

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
-----

AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002

Independent Auditors' Report ............................................................. F-2
Consolidated Statement of Operations for the Period from Incorporation on May 23, 2002
to December 31, 2002 .................................................................... F-3
Consolidated Balance Sheet as at December 31, 2002 ....................................... F-4
Consolidated Statement of Shareholders' Equity for the Period from Incorporation on
May 23, 2002 to December 31, 2002 ....................................................... F-5
Consolidated Statement of Comprehensive Income for the Period from Incorporation on
May 23, 2002 to December 31, 2002 ....................................................... F-6
Consolidated Statement of Cash Flows for the Period from Incorporation on May 23, 2002
to December 31, 2002 .................................................................... F-7
Notes to the Consolidated Financial Statements for the Period from Incorporation on May
23, 2002 December 31, 2002 .............................................................. F-8

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2003 TO SEPTEMBER 30,
2003

Condensed Consolidated Statements of Operations for the Nine Months Ended September 30,
2003 (Unaudited) and for the Period from Incorporation on May 23, 2002 to September 30,
2002 (Unaudited) ........................................................................ F-25
Condensed Consolidated Balance Sheets as at September 30, 2003 (Unaudited) and December
31, 2002 ................................................................................ F-26
Condensed Consolidated Statements of Change in Shareholders' Equity for the Nine Months
Ended September 30, 2003 (Unaudited) and for the Period from Incorporation on May 23,
2002 to December 31, 2002 ............................................................... F-27
Condensed Consolidated Statements of Comprehensive Income for the Nine Months Ended
September 30, 2003 (Unaudited) and for the Period from Incorporation on May 23, 2002 to
September 30, 2002 (Unaudited) .......................................................... F-28
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2003 (Unaudited) and for the Period from Incorporation on May 23, 2002 to September
30, 2002 (Unaudited) .................................................................... F-29
Notes to the Unaudited Condensed Consolidated Financial Statements for the Period from
January 1, 2003 to September 30, 2003 ................................................... F-30

F-1

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors of Aspen Insurance Holdings Limited:

We have audited the accompanying consolidated balance sheet of Aspen Insurance
Holdings Limited and its subsidiaries as of 31 December 2002, and the related
consolidated statements of operations, shareholders' equity, comprehensive
income and cash flows for the period from incorporation on 23 May 2002 to 31
December 2002. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Aspen
Insurance Holdings Limited and its subsidiaries as of 31 December 2002, and the
results of their operations and their cash flows for the period from
incorporation on 23 May 2002 to 31 December 2002, in conformity with accounting
principles generally accepted in the United States of America.

/s/ KPMG Audit Plc

London, United Kingdom
September 15, 2003

F-2

ASPEN INSURANCE HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

NOTES 2002
------- ----------------
($ IN MILLIONS,
EXCEPT PER
SHARE
AMOUNTS)

REVENUES
Net premiums earned (includes $74.3 million from related parties)............. 15 $ 120.3
Net investment income ........................................................ 5 8.5
Realized investment losses ................................................... 5 (0.1)
Foreign exchange gain ........................................................ 6 12.7
Other ........................................................................ 0.4
--------
Total Revenues .............................................................. 141.8
--------
EXPENSES
Insurance losses and loss adjustment expenses (includes $51.7 million for
related parties) ............................................................ 7, 15 (76.9)
Policy acquisition expenses (includes $14.1 million from related parties)..... (21.1)
Operating and administration expenses (includes $2.6 million to related
parties) .................................................................... (8.7)
Total Expenses .............................................................. (106.7)
--------
Income from operations before income tax ..................................... 35.1
Income tax expense ........................................................... 8 (6.5)
--------
NET INCOME .................................................................. $ 28.6
--------
Basic earnings per ordinary share ............................................ 3 $ 0.89
========
Diluted earnings per ordinary share .......................................... 3 $ 0.89
========

See accompanying notes to the consolidated financial statements

F-3

ASPEN INSURANCE HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2002

NOTES 2002
------- ----------------
($ IN MILLIONS,
EXCEPT SHARE
AMOUNTS)

ASSETS
Investments
Fixed maturities .................................................................. $ 87.3
Short-term investments ............................................................ 835.1
---------
Total investments ................................................................. 4 922.4

Cash and cash equivalents .......................................................... 9.6
Reinsurance recoverables (includes $10.4 million from related parties).............. 7 12.5
Ceded unearned premiums (includes $12.8 million from related parties)............... 18.9
Receivables
Underwriting premiums (includes $151.4 million from related parties)............... 214.5
Other ............................................................................. 0.8
Deferred policy acquisition costs (includes $13.9 million from related parties)..... 31.0
Office properties and equipment .................................................... 0.1
Intangible assets .................................................................. 13 2.0
---------
Total Assets ...................................................................... $ 1,211.8
=========

LIABILITIES
Insurance reserves:
Losses and loss adjustment expenses (includes $62.2 million for
related parties) ................................................................ 7 $ 93.9
Unearned premiums (includes $104.6 million for related parties).................... 215.7
---------
Total insurance reserves .......................................................... 309.6
Deferred income taxes .............................................................. 8 4.6
Payables:
Reinsurance premiums .............................................................. 2.1
Accrued expenses and other (includes $1.5 million to related parties).............. 17.4
---------
Total Liabilities ................................................................. $ 333.7
---------

SHAREHOLDERS' EQUITY
Ordinary shares: 56,876,360 ordinary shares of 0.15144558(cents) each .............. 9 $ 836.9
Retained earnings .................................................................. 28.6
Accumulated other comprehensive income, net of taxes
Unrealized gains on investments ................................................... 17 0.6
Unrealized gains on foreign currency .............................................. 17 12.0
---------
Total accumulated other comprehensive income ...................................... 12.6
---------
Total Shareholders' equity ........................................................ 878.1
---------
Total Liabilities and Shareholders' Equity ......................................... $ 1,211.8
=========

See accompanying notes to the consolidated financial statements

F-4

ASPEN INSURANCE HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

NOTES 2002
------- ----------------
($ IN MILLIONS)

Shareholders' Equity
Ordinary shares:
On May 23, 2002 .............................................. $ 0.0
Shares Issued:
New shares issued .......................................... 836.9
-------
End of Period ................................................ 9 836.9
-------

Retained earnings:
On May 23, 2002 .............................................. 0.0
Net income for the period .................................... 28.6
-------
End of Period ................................................ 28.6
-------

Unrealized gains on investments, net of taxes:
On May 23, 2002 .............................................. 0.0
Change for the period ........................................ 0.6
-------
End of Period ................................................ 17 0.6
-------

Unrealized gains on foreign currency translation, net of taxes:

On May 23, 2002 .............................................. 0.0
Change for the period ........................................ 12.0
-------
End of Period ................................................ 17 12.0
-------

Total Shareholders' Equity .................................... $ 878.1
=======

See accompanying notes to the consolidated financial statements

F-5

ASPEN INSURANCE HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

2002
----------------
($ IN MILLIONS)

Net income .......................................................... $ 28.6
Other comprehensive income, net of taxes
Change in unrealized gains on investments .......................... 0.6
Change in unrealized gains on foreign currency translation ......... 12.0
-------
Other comprehensive income ......................................... 12.6
-------
Comprehensive income ................................................ $ 41.2
=======

See accompanying notes to the consolidated financial statements

F-6

ASPEN INSURANCE HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

2002
----------------
($ IN MILLIONS)

Operating Activities
Net income (includes $6.1 million from related parties)................................ $ 28.6
Adjustments
Change in assets and liabilities net of effects of purchase of City Fire Insurance
Company Limited
Change in property-liability insurance reserves:
Losses and loss adjustment expenses (includes $62.2 million to
related parties) ................................................................ 86.0
Unearned premiums (includes $104.6 million for related parties).................... 210.6
Change in reinsurance balances:
Reinsurance recoverables (includes $10.4 million from related parties)............. (10.5)
Ceded unearned premiums (includes $12.8 million from related parties).............. (18.4)
Change in deferred policy acquisition costs (includes $13.9 million from related
parties) .......................................................................... (30.0)
Change in insurance premiums receivable (includes $151.4 million from
related parties) .................................................................. (209.7)
Change in reinsurance premiums payable ............................................. 2.1
Change in deferred income taxes .................................................... 3.8
Change in accounts receivable ...................................................... (0.8)
Change in accrued expenses and other (includes $1.5 million to related parties)..... 16.4
--------
Net Cash from Operating Activities ................................................... 78.1
--------
Investing Activities
Purchase of investments ............................................................... (963.2)
Proceeds from the sales and maturities of investments ................................. 63.5
Payment for purchase of City Fire Insurance Company Limited net of cash acquired ...... (17.7)
--------
Net Cash used for Investing Activities ............................................... (917.4)
--------
Financing Activities
Proceeds from the issuance of ordinary shares, net of issuance costs .................. 836.9
--------
Net Cash from Financing Activities ................................................... 836.9
--------
Effect of exchange rate movements on cash and cash equivalents ........................ 12.0
--------
Increase in cash and cash equivalents ................................................ 9.6
--------
Cash at beginning of the period ....................................................... 0.0
--------
Cash at end of the period ............................................................. $ 9.6
========

See accompanying notes to the consolidated financial statements

F-7

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation. Aspen Insurance Holdings Limited
("Aspen Holdings") was incorporated under the name of Exali Reinsurance
Holdings Limited ("Exali") on May 23, 2002 to hold the subsidiaries that
provide insurance and reinsurance on a worldwide basis. Exali subsequently
changed its name to Aspen Insurance Holdings Limited on November 20, 2002. On
June 21, 2002, Aspen Holdings acquired the entire issued share capital of The
City Fire Insurance Company Limited ("City Fire"). City Fire was renamed
Wellington Reinsurance Limited ("Wellington Re") and commenced underwriting on
June 23, 2002. On March 4, 2003, Wellington Re was renamed Aspen Insurance UK
Limited ("Aspen U.K."). Aspen Insurance Limited ("Aspen Bermuda") was
established on November 6, 2002 as Exali Insurance Limited and changed its name
to Aspen Insurance Limited on November 22, 2002. Aspen Insurance UK Services
Limited ("Aspen U.K. Services") provides services to Aspen Holdings and its
subsidiaries (collectively, the "Company") in its capacity as the employer of
the directors and staff of Aspen U.K.

The Consolidated Financial Statements of Aspen Holdings are prepared in
accordance with United States Generally Accepted Accounting Principles ("U.S.
GAAP"). The financial statements are presented on a consolidated basis
including the transactions of all operating subsidiaries. Transactions between
Aspen Holdings and its subsidiaries are eliminated within the consolidated
financial statements.

Use of Estimates. Estimates and assumptions are made by the directors that
have an effect on the amount reported within these consolidated financial
statements. The most significant estimates relate to the reserves for property
and liability losses. These estimates are continually reviewed and adjustments
made as necessary, but actual results could turn out significantly different
from those expected when the estimates were made.

ACCOUNTING FOR UNDERWRITING OPERATIONS

Premiums Earned. Assumed premiums are recognized as revenues
proportionately over the coverage period. Premiums earned are recorded in the
statement of operations, net of the cost of purchased reinsurance. Premiums not
yet recognized as revenue are recorded in the consolidated balance sheet as
unearned premiums, gross of any ceded unearned premiums. Written and earned
premiums, and the related costs, which have not yet been reported to the
Company are estimated and accrued. Due to the time lag inherent in reporting of
premiums by cedents, such estimated premiums written and earned, as well as
related costs, may be significant. Differences between such estimates and
actual amounts will be recorded in the period in which the actual amounts are
determined.

Premiums on proportional treaty type contracts are generally not reported
to the Company until after the reinsurance coverage is in force and the
syndicates are at risk. As a result, an estimate of these "pipeline" premiums
is recorded. The Company estimates pipeline premiums based on estimates of
ultimate premium, calculated unearned premium and premiums reported from ceding
companies. The Company estimates commissions, losses and loss adjustment
expenses on these premiums.

Reinstatement premiums and additional premiums are accrued as provided for
in the provisions of assumed reinsurance contracts, based on experience under
such contracts. Reinstatement premiums are the premiums charged for the
restoration of the reinsurance limit of a catastrophe contract to its full
amount after payment by the reinsurer of losses as a result of an occurrence.
These premiums relate to the future coverage obtained during the remainder of
the initial policy term and are earned over the remaining policy term.
Additional premiums are premiums charged after coverage has

F-8

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

expired, related to experience during the policy term, which are earned
immediately. An allowance for uncollectable premiums is established for
possible non-payment of such amounts due, as deemed necessary.

Outward reinsurance premiums are accounted for in the same accounting
period as the premiums for the related direct insurance or inwards reinsurance
business. Reinsurance contracts that operate on a "losses occurring during"
basis are accounted for in full over the period of coverage whilst "risk
attaching during" policies are expensed using the same ratio as the underlying
premiums on a daily pro rata basis.

Insurance Losses and Loss Adjustment Expenses. Losses represent the amount
paid or expected to be paid to claimants in respect of events that have
occurred on or before the balance sheet date. The costs of investigating,
resolving and processing these claims are known as loss adjustment expenses
("LAE"). The statement of operations records these losses net of reinsurance,
meaning that gross losses and loss adjustment expenses incurred are reduced by
the amounts recovered or expected to be recovered under reinsurance contracts.

Reinsurance. Written premiums earned and incurred claims and LAE all
reflect the net effect of assumed and ceded reinsurance transactions. Assumed
reinsurance refers to the Company's acceptance of certain insurance risks that
other insurance companies have underwritten. Ceded reinsurance means other
insurance companies have agreed to share certain risks with this Company.
Reinsurance accounting is followed when risk transfer requirements have been
met.

The Company regularly evaluates the financial condition of its reinsurers
and monitors the concentration of credit risk to minimize its exposure to
financial loss from reinsurers' insolvency. Where it is considered required,
appropriate provision is made for balances deemed irrecoverable from
reinsurers.

Insurance Reserves. Insurance reserves are established for the total
unpaid cost of claims and LAE, which cover events that have occurred by the
balance sheet date. These reserves reflect the Company's estimates of the total
cost of claims incurred but not yet reported to it ("IBNR"). Claim reserves are
reduced for estimated amounts of salvage and subrogation recoveries. Estimated
amounts recoverable from reinsurers on unpaid losses and LAE are reflected as
assets.

For reported claims, reserves are established on a case-by-case basis
within the parameters of coverage provided in the insurance policy or
reinsurance agreement. For IBNR claims, reserves are estimated using
established actuarial methods. Both case and IBNR reserve estimates consider
such variables as past loss experience, changes in legislative conditions,
changes in judicial interpretation of legal liability policy coverages, and
inflation.

Because many of the coverages underwritten involve claims that may not be
ultimately settled for many years after they are incurred, subjective judgments
as to the ultimate exposure to losses are an integral and necessary component
of the loss reserving process. Reserves are established by the selection of a
best estimate' from within a range of estimates. The Company continually
reviews its reserves, using a variety of statistical and actuarial techniques
to analyze current claims costs, frequency and severity data, and prevailing
economic, social and legal factors. Reserves established in prior periods are
adjusted as claim experience develops and new information becomes available.
Adjustments to previously estimated reserves are reflected in the financial
results of the period in which the adjustments are made.

Whilst the reported reserves make a reasonable provision for unpaid claim
and LAE obligations, it should be noted that the process of estimating required
reserves does, by its very nature, involve

F-9

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

uncertainty. The level of uncertainty can be influenced by factors such as the
existence of coverage with long duration payment patterns and changes in claims
handling practices, as well as the factors noted above. Ultimate actual
payments for claims and LAE could turn out to be significantly different from
our estimates.

Policy Acquisition Expenses. The costs directly related to writing an
insurance policy are referred to as policy acquisition expenses and consist of
commissions, premium taxes and other direct underwriting expenses. Although
these expenses are incurred when a policy is issued they are deferred and
amortized over the same period as the corresponding premiums are recorded as
revenues.

On a regular basis a recoverability analysis is performed of the deferred
policy acquisition costs in relation to the expected recognition of revenues,
including anticipated investment income, and reflect adjustments, if any, as
period costs. Should the analysis indicate that the acquisition costs are
unrecoverable, further analyses are performed to determine if a reserve is
required to provide for losses which may exceed the related unearned premium.

ACCOUNTING FOR INVESTMENTS

Fixed Maturities. The fixed maturity portfolio is composed primarily of
high-quality, U.S. and U.K. government securities. The entire fixed maturity
investment portfolio is classified as available for sale. Accordingly, that
portfolio is carried on the consolidated balance sheet at estimated fair value.
Fair values are based on quoted market prices from a third party pricing
service.

Short-term Investments. Short-term investments include highly liquid debt
instruments and commercial paper and are held as part of the investment
portfolio of the Company.

Realized Investment Gains and Losses. The cost of each individual
investment is recorded so that when an investment is sold the resulting gain or
loss can be identified and recorded in the statement of operations.

The difference between the cost and the estimated fair market value of all
investments is monitored. If we determine that any investment has experienced a
decline in value that is believed to be other than temporary, we consider the
current facts and circumstances, including the financial position and future
prospects of the entity that issued the investment security, and make a
decision to either record a write-down in the carrying value of the security or
sell the security; in either case a realized loss is recorded in the statement
of operations.

Unrealized Gains or Losses on Investments. For investments carried at
estimated fair value, the difference between amortized cost and fair value, net
of deferred taxes, is recorded as part of shareholders' equity. This difference
is referred to as unrealized gains or losses on investments. The change in
unrealized gains or losses, net of taxes, during the year is a component of
other comprehensive income.

Cash and Cash Equivalents. Cash and cash equivalents include cash in hand
and with banks.

DERIVATIVE FINANCIAL INSTRUMENTS

In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging Activities," all
derivatives are recorded on the consolidated balance sheet at fair value. The
accounting for the gain or loss due to the changes in the fair value of these
instruments is dependent on whether the derivative qualifies as a hedge. If the
derivative does not qualify as a hedge, the gains or losses are reported in
earnings when they occur. If the derivative

F-10

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

does qualify as a hedge, the accounting varies based on the type of risk being
hedged. The Company has not entered into any derivative contracts qualifying as
hedges during the reporting period.

INTANGIBLE ASSETS

Acquired insurance licenses are held in the consolidated balance sheet at
cost. This intangible asset is not currently being amortized as the directors
believe that these will have an indefinite life. The directors test for
impairment annually or when events or changes in circumstances indicate that
the asset might be impaired.

OFFICE PROPERTIES AND EQUIPMENT

Office equipment is carried at depreciated cost. These assets are
depreciated on a straight-line basis over the estimated useful lives of the
assets of four years.

FOREIGN CURRENCY TRANSLATION

The reporting currency of the Company is the U.S. Dollar. The functional
currencies of the Company's operations are U.S. Dollars for the reinsurance
operations segment and British Pounds for the U.K. insurance operations
segment. Transactions in currencies other than the functional currency of an
operations segment are measured in the functional currency of that operations
segment at the exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in non-functional currencies are
remeasured at the exchange rate prevailing at the balance sheet date. Any
resulting foreign exchange gains or losses are reflected in the statement of
operations.

Assets and liabilities of the Company's British Pound functional currency
operations segment are then translated into U.S. Dollars at the exchange rate
prevailing at the balance sheet date. Income and expenses of this operations
segment are translated at the average exchange rate for the period. The
unrealized gain or loss from this translation, net of tax, is recorded as part
of shareholders' equity. The change in unrealized foreign currency translation
gain or loss during the year, net of tax, is a component of other comprehensive
income.

EARNINGS PER SHARE

Basic earnings per share is determined by dividing income / loss available
to shareholders by the weighted average number of shares outstanding during the
period. Diluted earnings per share reflects the effect on earnings and average
number of shares outstanding associated with dilutive securities.

INCOME TAX

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

RELATED PARTY TRANSACTIONS

The following summarizes the related party transactions of the Company.

Wellington Underwriting plc

F-11

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

Wellington Underwriting plc ("Wellington") holds 21.2% of the ordinary
shares of Aspen Holdings and is represented on the board of directors of Aspen
Holdings. Details of the shareholding of Wellington are disclosed in note 9. In
addition, Wellington holds 3,781,120 options to subscribe for ordinary shares
of Aspen Holdings, as noted below and in note 12.

The principal operating subsidiary of the Company, Aspen U.K., has a
number of arrangements with Wellington. These arrangements can be summarized as
follows:

Quota Share Arrangements. For 2002, Wellington's managed Syndicate 2020
("Syndicate 2020") has placed a qualifying quota share contract with a
Berkshire Hathaway group company, National Indemnity Corporation of Omaha
("NICO"), and established a consortium Syndicate 3030 with another Berkshire
Hathaway subsidiary. Aspen U.K. has accessed certain of its business through
these arrangements.

On July 9, 2002, Aspen U.K. wrote two quota share contracts. Under the
first, Aspen U.K. assumed a 34% share of NICO's qualifying quota share
reinsurance of Syndicate 2020, subject to an overall premium limit of (pounds
sterling)63.8 million. Under the second, Aspen U.K. assumed a 70% reinsurance
quota share of Syndicate 3030. Of the gross written premiums of $374.8 million
for the period from May 23, 2002 to December 31, 2002, $98.2 million related to
the Syndicate 2020 qualifying quota share and $118.0 million to the quota share
of Syndicate 3030.

These arrangements were undertaken on a funds withheld basis whereby the
premiums due to Aspen U.K. will be paid net of claims and expenses, along with
interest due on the funds withheld, calculated at rates specified in the quota
share agreements. For 2003, the Company has entered into a 7.5% quota share
agreement directly with Syndicate 2020. The Company has an option, but no
contractual obligation, to assume up to a 20% quota share of Syndicate 2020's
business for subsequent years, while Syndicate 2020 has an option, but no
contractual obligation, to assume up to a 20% quota share of Aspen U.K.'s
business for subsequent years. These options will terminate for years after
2005 if Aspen Holdings completes an initial public offering prior to December
21, 2005. At December 31, 2002 the net amounts receivable from NICO and
Syndicate 3030 under these contracts were $7.4 million and $0.4 million
respectively, analyzed as follows:

NICO SYNDICATE 3030 TOTAL
----------- ----------------- ----------
($ IN MILLIONS)

ASSETS:
Reinsurance recoverable ..................... $ 6.3 $ 4.1 $ 10.4
Ceded unearned premiums ..................... 2.4 10.4 12.8
Underwriting premiums receivables ........... 98.2 118.0 216.2
Other receivables ........................... 0.0 0.1 0.1
------- -------- --------
$ 106.9 $ 132.6 $ 239.5
------- -------- --------
LIABILITIES:
Losses and loss adjustment expenses ......... $ (37.4) $ (24.8) $ (62.2)
Unearned premiums ........................... ( 30.0) ( 74.6) (104.6)
Reinsurance premiums payables ............... ( 24.4) ( 25.5) ( 49.9)
Accrued expenses and other payables ......... ( 7.7) ( 7.3) ( 15.0)
-------- -------- --------
( 99.5) (132.2) (231.7)
-------- -------- --------
$ 7.4 $ 0.4 $ 7.8
======== ======== ========

F-12

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

Option to Purchase Retrocession Agreement. The quota share arrangements
for 2002 described above were entered into pursuant to an option agreement
entered into on May 28, 2002, whereby Wellington and Aspen Holdings agreed to
pay NICO $2.5 million and $2.0 million, respectively, to procure (i) the
retrocession to a subsidiary of Aspen Holdings of the NICO qualifying quota
share of Syndicate 2020 and (ii) the reinsurance of Syndicate 3030. On June 21,
2002, Aspen Holdings (reimbursed by Aspen U.K. on the same day) repaid
Wellington $2.5 million for the amount that Wellington paid to NICO for the
option, together with a fee of $275,000 for the risk borne by Wellington during
the period from May 28, 2002 to June 21, 2002. Subsequently Aspen Holdings
recharged the cost of the option to Aspen U.K. The cost of these option
agreements has been treated as a policy acquisition cost and is charged to the
income statement in proportion to the premiums recognized under the contracts.

Provision of Services. The Company has entered into a contract for the
provision of services by a subsidiary company of Wellington to the Company.
These services include accounting, actuarial, operations, risk management and
technical support. This agreement is perpetual but may be terminated by either
party upon the occurrence of certain circumstances, such as the inability to
pay debts or upon an Initial Public Offering, and, after an initial period of 3
years, may be terminated by either party upon 18 months' prior notice. The
Company may also terminate specific services if it undertakes those services
itself and does not contract those services to a third party. The provision of
these services is covered by a detailed service level agreement and is priced
on an actual cost basis. The cost of these services in 2002 was $2.6 million,
and the amount due to Wellington at December 31, 2002 was $1.5 million.

Wellington Options. As disclosed in note 12, the Company granted options
to subscribe to its shares to Wellington and to a trust established for the
benefit of the unaligned members of Syndicate 2020 in consideration for the
transfer of an underwriting team from Wellington, the right to seek to renew
certain business written by Syndicate 2020, an agreement in which Wellington
agrees not to compete with Aspen U.K. through March 31, 2004, the use of the
Wellington name and logo and the provision of certain outsourced services to
the Company. These options have been recorded at a value of nil, equal to the
transferor's historical cost basis of the assets transferred to the Company.

Shares Issued to the Directors. Shares in Aspen Holdings have been issued
to the directors of Aspen Holdings and its subsidiaries in the period. These
amounts and the consideration received by the Company are disclosed in note 9.

2. ACQUISITION OF THE CITY FIRE INSURANCE COMPANY LIMITED

In June 2002, the Company completed the acquisition of City Fire for a
total consideration of $24.2 million (including acquisition costs and stamp
duty of $1.1 million). City Fire, at the date of acquisition, was not writing
any new or renewal business and its only employees were responsible for
managing its effective run-off. The name of City Fire was subsequently changed
to Wellington Reinsurance Limited and then to Aspen U.K., which became the
principal trading entity of the Company. The directors of Aspen Holdings have
assessed the fair value of the net tangible and financial assets acquired at
$22.8 million. An amount of $2.0 million, gross of $0.6 million deferred tax,
is the estimated fair value of that company's insurance licenses that are
treated as an intangible asset.

F-13

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

3. EARNINGS PER ORDINARY SHARE

($ AND SHARES IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
---------------------------

EARNINGS
Basic
Net income as reported and available to ordinary
shareholders .............................................. $ 28.6
------
Diluted
Net income as reported and available to ordinary
shareholders .............................................. 28.6
Effect of dilutive securities .............................. 0.0
------
Net diluted income as reported and available to ordinary
shareholders .............................................. 28.6
------
ORDINARY SHARES
Basic ...................................................... 32.0
------
Weighted average ordinary shares ........................... 32.0
------
Diluted
Weighted average ordinary shares ........................... 32.0
Weighted average effect of dilutive securities ............. 0.0
------
Total ...................................................... 32.0
======
EARNINGS PER ORDINARY SHARE
Basic ...................................................... $ 0.89
======
Diluted .................................................... $ 0.89
======

4. INVESTMENTS

The following presents the cost, gross unrealized gains and losses, and
estimated fair value of investments in fixed maturities and other investments:

AS AT DECEMBER 31, 2002
-------------------------------------------------------------------
($ IN MILLIONS)
COST OR GROSS GROSS ESTIMATED
AMORTIZED COST UNREALIZED GAINS UNREALIZED LOSSES FAIR VALUE
---------------- ------------------ ------------------- -----------

INVESTMENTS
Fixed maturities
Foreign governments ........... $ 56.9 $ 1.1 $ 1.4 $ 56.6
Corporate securities .......... 30.6 0.2 0.1 30.7
-------- ------ ------ --------
Total fixed maturities ......... 87.5 1.3 1.5 87.3
Short-term investments ......... 834.1 1.7 0.7 835.1
-------- ------ ------ --------
Total ......................... $ 921.6 $ 3.0 $ 2.2 $ 922.4
======== ====== ====== ========

The following table presents the breakdown of fixed maturities by year to
stated maturity. Actual maturities may differ from those stated as a result of
calls and prepayments:

F-14

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

FIXED MATURITIES BY MATURITY DATE

($ IN MILLIONS)
AMORTIZED ESTIMATED
COST FAIR VALUE
----------- -----------

One year or less ......................... $ 30.6 $ 30.7
Over one year through five years ......... 56.9 56.6
------- -------
Total ................................... $ 87.5 $ 87.3
======= =======

5. INVESTMENT TRANSACTIONS

The following table sets out an analysis of investment purchases, sales
and maturities:

($ IN MILLIONS)
----------------

Purchases
Fixed maturities .................... $ 129.1
Short-term investments .............. 834.1
--------
Total Purchases ..................... $ 963.2
========

Proceeds from sales and maturities

Fixed maturities
Sales .............................. $ 14.4
Maturities and redemptions ......... 49.1
--------
Total sales and maturities .......... 63.5
--------
Net purchases ....................... $ 899.7
========

The following is a summary of investment income:

($ IN MILLIONS)
----------------

Fixed maturities .................... $ 1.5
Short-term investments .............. 7.0
------
Net investment income ............... $ 8.5
======

F-15

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

The following table summarizes the pretax realized investment gains and
losses, and the change in unrealized gains of investments recorded in
shareholders' equity and in comprehensive income.

($ IN MILLIONS)
----------------

Pretax realized investment gains and losses
Short-term investments:
Gross realized gains ................................... $ 0.1
Gross realized losses .................................. (0.2)
------
Total fixed maturities ................................. (0.1)
------
Total pretax realized investment gains (losses) ......... $ (0.1)
======

Change in unrealized gains
Fixed maturities ........................................ $ (0.2)
Short-term investments .................................. 1.0
------
Total change in pretax unrealized gains ................. 0.8
------
Change in taxes ......................................... (0.2)
------
Total change in unrealized gains, net of taxes .......... $ 0.6
======

6. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments include futures, forward, swap and option
contracts and other financial instruments with similar characteristics. The
Company has very limited involvement with these instruments, primarily for the
purpose of protecting against fluctuations in foreign currency exchange rates.
The Company has not had any instruments that qualify as hedges under SFAS 133
during the reporting period.

Non-Hedge Derivatives -- During the period the Company sold forward, under
a contract which matured before the period end, (pounds sterling)230 million
at a fixed exchange rate. A gain of $12.7 million was realized under the
contract. This contract was taken out to protect the Company from exchange rate
fluctuations between the period of establishment of the Company and its receipt
of the proceeds from its second tranche of capital. There were no derivatives
outstanding at the end of the period.

F-16

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

7. RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table represents a reconciliation of beginning and ending
consolidated property -- liability insurance loss and loss adjustment expenses
("LAE") reserves:

RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES

AS AT
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

Provision for losses and LAE at date of incorporation ............... $ 0.0
Less reinsurance recoverable ........................................ 0.0
------
Net loss and LAE reserves at date of incorporation .................. 0.0

Loss and LAE reserves of subsidiary at date of acquisition .......... 6.1
Less reinsurance recoverables ....................................... ( 1.6)
------
Net loss and LAE reserves of subsidiary at date of acquisition ...... 4.5

Provision for losses and LAE for claims incurred
Current year ...................................................... 76.2
Prior years ....................................................... 0.7
------
Total incurred .................................................... 76.9
------

Losses and LAE payments for claims incurred
Current year ...................................................... ( 0.7)
Prior years ....................................................... ( 3.0)
------
Total paid ........................................................ ( 3.7)
------

Foreign exchange gains/(losses) ..................................... 3.7

Net loss and LAE reserves at year end ............................... 81.4
Plus reinsurance recoverables on unpaid losses at end of year ....... 12.5
------
Loss and LAE reserves at end of year ................................ $ 93.9
======

8. INCOME TAXES

Total income tax for the period from incorporation on May 23, 2002 to
December 31, 2002 is allocated as follows:

($ IN MILLIONS)
----------------

Income from operations ............................................. $ 6.5
Shareholders' equity, for unrealized change in gains on investments 0.2
-------
Total income tax ................................................... $ 6.7
=======

F-17

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

Income from continuing operations before tax and income tax expense
attributable to that income consists of:

INCOME CURRENT DEFERRED TOTAL
BEFORE INCOME INCOME INCOME
TAX TAXES TAXES TAXES
----------- --------- ---------- ----------
($ IN MILLIONS)

United Kingdom ......... $ 33.9 $ 2.5 $ 4.0 $ 6.5
Bermuda ................ 1.2 0.0 0.0 0.0
-------- ------- ------- -------
Total ................. $ 35.1 $ 2.5 $ 4.0 $ 6.5
======== ======= ======= =======

($ IN MILLIONS)
----------------

Income Tax Reconciliation
Income tax at the statutory rate applicable in the United
Kingdom (30%) ............................................. $ 10.5
Effect of exchange gains exempt from U.K. taxation ......... (3.6)
Effect of lower rate applicable to operations in Bermuda
(Bermudian operations taxed at 0%) ........................ (0.4)
-------
Total income tax expense .................................. $ 6.5
=======

The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities are presented in the following table:

($ IN MILLIONS)
----------------

Deferred tax liabilities
Insurance reserves ......................................... $ 4.0
Intangible assets .......................................... 0.6
------
Deferred tax liabilities ................................... $ 4.6
======

9. CAPITAL STRUCTURE

Aspen Holdings was formed on May 23, 2002 with the issue of 120,000 nil
paid shares with a par value of $0.1 to members of management of the Company. On
June 18, 2002 the denomination of the share capital was changed to British
Pounds and the par value of the shares changed to (pounds sterling)0.001. On
August 20, 2003, the denomination of the share capital was changed from British
Pounds to U.S. Dollars and the par value of the shares changed to
0.15144558(cents). Following the funding of Aspen Holdings by the accredited
investors on June 21, 2002 the nil paid shares were purchased by Aspen Holdings
and made available for reissue, extinguishing the liability of the original
shareholders for the amounts unpaid on those shares. The following summarizes
the capital structure:

NUMBER U.S.$000
------------ ---------

Authorized Share Capital
Ordinary Shares 0.15144558(cents) each ................. 76,416,910 116

Issued Share Capital of 0.15144558(cents) per share .... 56,876,360 86
Share Premium account .................................. 836,772
---------- -------
Issued Ordinary Shares ................................. 56,876,360 836,858
---------- -------

F-18

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

The proceeds from the issue of equities are shown net of related issuance
costs of $28.1 million. The shares in Aspen Holdings were issued to the
investors as follows:

NO. (pounds sterling)000 U.S.$000
------------ ----------------------- ---------

JUNE 21, 2002
Accredited investors ......................... 24,729,470 247,327 370,991
Members of management of the Company ......... 130,120 1,269 1,904

OCTOBER 16, 2002
Wellington Underwriting plc .................. 4,625,070 47,000 73,052

NOVEMBER 19, 2002
Wellington Underwriting plc .................. 4,874,930 49,763 79,044

NOVEMBER 29, 2002
Wellington Underwriting plc .................. 2,555,230 26,089 40,498
Accredited investors ......................... 19,910,690 199,093 298,640
Members of management of the Company ......... 40,630 420 629
---------- ------- -------

The remaining issued shares, numbering 10,220, were issued to staff of
Aspen Holdings and its subsidiaries at various times during the period to
December 31, 2002 for a total consideration of $165,000.

10. STATUTORY REQUIREMENTS AND DIVIDEND RESTRICTIONS

As a holding company, Aspen Holdings relies on dividends from its
insurance subsidiaries to provide cash flow to meet ongoing cash requirements,
including any future debt service payments and other expenses, and to pay
dividends, if any, to our shareholders. The Company's insurance subsidiaries
are subject to insurance laws and regulations in the jurisdictions in which
they operate, including Bermuda, the United Kingdom and the United States, and
are subject to significant regulatory restrictions limiting their ability to
declare and pay dividends.

Aspen Bermuda's ability to pay dividends and make capital distributions is
subject to certain regulatory restrictions based principally on the amount of
Aspen Bermuda's premiums written and net reserves for losses and loss expenses.

Under the jurisdiction of the Financial Services Authority ("FSA"), Aspen
U.K. must maintain a margin of solvency at all times, which is determined based
on the type and amount of insurance business written. The U.K. regulatory
requirements impose no explicit restrictions on Aspen U.K.'s ability to pay a
dividend, but Aspen U.K. would have to notify the FSA 28 days prior to any
proposed dividend payment.

Aspen Specialty will be subject to regulation by the State of North Dakota
Insurance Department regarding payment of dividends and capital distributions
in 2003.

F-19

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

Statutory capital and surplus as reported to the relevant regulatory
authorities for the principal operating subsidiaries of the Company as of
December 31, 2002 is as follows

BERMUDA U.K.
----------- ----------
($ IN MILLIONS)

Required statutory capital and surplus .......... $ 100.0 $ 53.8
Actual statutory capital and surplus ............ $ 199.3 $ 649.0

As of December 31, 2002, there are no statutory restrictions on the
payment of dividends from retained earnings by the Company as the minimum
statutory capital and surplus requirements are satisfied by the share capital
and additional paid-in capital of the Company in all jurisdictions.

As well, the minimum levels of solvency and liquidity have been met and
all applicable regulatory requirements and licensing rules complied with.

11. RETIREMENT PLANS

The Company operates a defined contribution retirement plan for the
majority of its employees at varying rates of their salaries, up to a maximum
of 20%. During the period, total contributions by the Company to the retirement
plan were $0.3 million.

12. SHARE OPTIONS

The Company issued options to subscribe for up to 6,787,880 ordinary
shares of 0.15144558(cents) each in Aspen Holdings to Wellington and the members
of Syndicate 2020 who are not corporate members of Wellington. The subscription
price payable under the options is initially (pounds sterling)10 and increases
by 5% per annum, less any dividends paid. Option holders are not entitled to
participate in any dividends prior to exercise and would not rank as a creditor
in the event of liquidation. The options are exercisable on the first registered
public offering of the ordinary shares in the United States or the first listing
of the ordinary shares on a stock exchange (a "Listing") or a sale of all or
substantially all of the business, assets or undertakings of Aspen Holdings and
its subsidiaries or a sale of 50% or more of the ordinary shares of Aspen
Holdings (a "Sale") or, if no Listing or Sale has occurred prior to June 21,
2007, at any time within the five business days following June 21, 2007. If not
exercised, the options will expire after five years but if a Listing occurs
within those five years the term is automatically extended to a period of ten
years.

F-20

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

13. INTANGIBLE ASSETS

AS AT DECEMBER
31, 2002
----------------
($ IN MILLIONS)

INSURANCE LICENSES
As at May 23, 2002 .............. $ 0.0
Cost in period .................. 2.0
------
End of period ................... 2.0
------

Impairments
As at May 23, 2002 .............. 0.0
Charge in period ................ 0.0
------
End of period ................... 0.0
------

Net Book Value
As at May 23, 2002 .............. 0.0
------

------
As at December 31, 2002 ......... $ 2.0

14. COMMITMENTS AND CONTINGENCIES

In the normal course of business, letters of credit are issued as
collateral on behalf of the business, as required within our reinsurance
operations. As of December 31, 2002, letters of credit with an aggregate amount
of (pounds sterling)47.4 million were outstanding. No amounts have been drawn
down on these letters of credit.

15. REINSURANCE CEDED

The primary purpose of the ceded reinsurance program is to protect the
Company from potential losses in excess of what the Company is prepared to
accept. It is expected that the companies to which reinsurance has been ceded
will honor their obligations. In the event that these companies are unable to
honor their obligations to the Company, the Company will pay these amounts.
Appropriate provision is made for possible non-payment of amounts due to the
Company.

Balances pertaining to reinsurance transactions are reported "gross" on
the consolidated balance sheet, meaning that reinsurance recoverable on unpaid
losses and ceded unearned premiums are not deducted from insurance reserves but
are recorded as assets.

The largest concentration of reinsurance recoverables as at December 31,
2002, excluding related party quota share arrangements, was with XL Re Limited
(Bermuda), which is rated A+ by A.M. Best and AA by Standard & Poor's for its
financial strength. The largest concentration of ceded unearned premiums as at
December 31, 2002, excluding related party quota share arrangements, was with
Everest Re (Bermuda) Limited, which is rated A+ (Superior) by A.M. Best, the
second highest of fifteen rating levels, and AA- (Very Strong) by Standard &
Poor's, the third highest highest of twenty-one rating levels for its financial
strength. Balances with XL Re represented 29.3% of reinsurance recoverables and
balances with Everest Re represented 23.6% of ceded unearned premiums.

F-21

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

The effect of assumed and ceded reinsurance on premiums written, premiums
earned and insurance losses and loss adjustment expenses is as follows:

FOR THE PERIOD FROM
INCORPORATION ON
MAY 23, 2002 TO
DECEMBER 31, 2002
--------------------
($ IN MILLIONS)

Premiums Written
Direct ........................................................... $ 86.6
Assumed .......................................................... 288.2
Ceded ............................................................ ( 62.2)
-------
Net premiums written ............................................. $ 312.6
=======

Premiums Earned
Direct ........................................................... $ 28.0
Assumed .......................................................... 135.8
Ceded ............................................................ ( 43.5)
-------
Net premiums earned .............................................. $ 120.3
=======

Insurance Losses and Loss Adjustment Expenses
Direct ........................................................... $ 17.2
Assumed .......................................................... 69.8
Ceded ............................................................ ( 10.1)
-------
Total net insurance losses and loss adjustment expenses ......... $ 76.9
=======

16. SEGMENT INFORMATION

The Company has two reportable segments, reinsurance operations and
insurance operations. The directors have determined these segments by reference
to the organization structure of the business and the different services
provided by the segments.

The accounting policies of both segments are the same as those described
in the summary of significant accounting policies. Results are analyzed
separately for each of our property-liability segments. Property-liability
underwriting assets are reviewed in total by the directors for the purpose of
decision-making.

Geographical Areas -- The following summary presents financial data of the
Company's operations based on their location.

($ IN MILLIONS)
----------------

Revenues
U.K. ......................... $ 32.2
U.S. ......................... 77.0
Non-U.S. or Non-U.K. ......... 11.1
-------
Net premiums earned .......... $ 120.3
=======

F-22

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

Segment Information -- The summary below presents revenues and pre-tax
income from operations for the reportable segments.

($ IN MILLIONS)
----------------

Revenues
Underwriting
Total primary insurance operations ......... $ 23.4
Total reinsurance operations ............... 96.9
-------
Total Underwriting .......................... 120.3
Investment Operations
Net investment income ...................... 8.5
Realized investment gains (losses) ......... (0.1)
-------
Total investment operations ................ 8.4
-------
Other ....................................... 13.1
-------
Total Revenues ........................... $ 141.8
=======

($ IN MILLIONS)
----------------

Expenses
Underwriting -- Claims and expenses
Total primary insurance operations ......... $ 21.4
Total reinsurance operations ............... 85.3
-------
Total Underwriting .......................... 106.7
Investment Operations
Net investment income ...................... --
Realized investment gains (losses) ......... --
-------
Total investment operations ................ --
-------
Total Expenses ........................... $ 106.7
=======

($ IN MILLIONS)
----------------

INCOME FROM OPERATIONS BEFORE INCOME TAXES

Underwriting
Total primary insurance operations ......... $ 2.0
Total reinsurance operations ............... 11.6
------
Total Underwriting .......................... 13.6
Investment Operations
Net investment income ...................... 8.5
Realized investment gains (losses) ......... (0.1)
------
Total investment operations ................ 8.4
------
Other ....................................... 13.1
------
Total Income before income taxes ......... $ 35.1
======

F-23

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

17. OTHER COMPREHENSIVE INCOME

Other comprehensive income is defined as any change in the Company's
equity from transactions and other events originating from non-owner sources.
These changes are comprised of our reported net income, changes in unrealized
gains and losses on investments and changes in unrealized foreign currency
adjustments, net of taxes. The following table sets out the components of the
Company's other comprehensive income, other than net income.

INCOME TAX
PRE-TAX EFFECT AFTER TAX
--------- ----------------- ----------
($ IN MILLIONS)

OTHER COMPREHENSIVE INCOME
Unrealized gains on investments .................... $ 3.0 $ (1.0) $ 2.0
Unrealized losses on investments ................... ( 2.2) 0.8 ( 1.4)
Net change in foreign currency translation ......... 12.0 -- 12.0
------ ------ ------
Total other comprehensive income ................ $ 12.8 $ (0.2) $ 12.6
====== ====== ======

18. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

($ IN MILLIONS)
----------------

CASH PAID DURING THE YEAR FOR:

Income taxes ................. $ 3.2

NON-CASH INVESTING AND FINANCING ACTIVITIES:

The Company purchased all of the capital stock of City Fire Insurance Company
Ltd for $24.2 million. In conjunction with the acquisition, liabilities were
assumed as follows:

Fair value of assets acquired, including cash of $6.5 million....... $ 33.0
Cash paid for the capital stock .................................... (24.2)
-------
Liabilities assumed ................................................ $ 8.8
=======

19. SUBSEQUENT EVENTS

On August 20, 2003, the shareholders of Aspen Holdings approved the
establishment of the 2003 Share Incentive Plan under which options for
3,884,020 ordinary shares will be issued to directors and employees of the
Company. The options are subject to certain restrictions on vesting but, when
vested, can be exercised at a price of (pounds sterling)10.70 per share. The
Company will follow the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation" for any of the Company's plans.

On August 26, 2003, the Company entered into a credit facility with a
syndicate of commercial banks under which it may, subject to the terms of the
credit agreements, borrow up to $150 million for periods of up to three years
and a further $50 million for periods of up to one year. Credit Suisse First
Boston, an affiliate of Credit Suisse First Boston Private Equity, which is a
shareholder of the Company, is a member of the syndicate on terms and
conditions similar to other syndicate members.

On September 5, 2003, Aspen U.S. Holdings acquired Dakota Specialty
Insurance Company for cash consideration of $20.9 million. Dakota Specialty
will be renamed Aspen Specialty Insurance Company and is eligible to operate as
an insurer in the excess and surplus lines markets of many states of the United
States.

F-24

ASPEN INSURANCE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) AND FOR THE PERIOD
FROM
INCORPORATION ON MAY 23, 2002 TO SEPTEMBER 30, 2002 (UNAUDITED)

PERIOD FROM
INCORPORATION ON
NINE MONTHS ENDED MAY 23, 2002 TO
SEPTEMBER 30, 2003 SEPTEMBER 30, 2002
-------------------- -------------------
($ IN MILLIONS, EXCEPT SHARE AND PER SHARE
AMOUNTS)

REVENUES
Net premiums earned (includes $99.2 million (2002 -
$37.7 million) from related parties)........................ $ 539.0 $ 51.7
Net investment income ....................................... 16.7 3.2
Realized investment losses .................................. (1.8) (0.2)
Other ....................................................... 0.1 12.9
----------- -----------
Total Revenues ............................................. 554.0 67.6
----------- -----------
EXPENSES
Insurance losses and loss adjustment expenses
(includes $68.3 million (2002 - $26.7 million) from
related parties) ........................................... (276.4) (35.5)
Policy acquisition expenses (includes $20.3 million
(2002 - $5.6 million) from related parties)................. (107.4) (7.8)
Operating and administration expenses (includes $5.2
million (2002 - $0.4 million) from related parties)......... (33.4) (2.1)
----------- -----------
Total Expenses ............................................. (417.2) (45.4)
----------- -----------
Income from operations before income tax .................... 136.8 22.2
Income tax expense .......................................... (39.2) (6.7)
----------- -----------
NET INCOME .................................................. $ 97.6 $ 15.5
----------- -----------
PER SHARE DATA
Weighted average number of ordinary shares and
ordinary share equivalents:
Basic .................................................... 56,898,680 24,859,590
Diluted .................................................. 57,257,360 54,310,722
Basic earnings per ordinary share ........................... $ 1.72 $ 0.62
----------- -----------
Diluted earnings per ordinary share ......................... $ 1.71 $ 0.29
=========== ===========

See accompanying notes to the unaudited condensed consolidated financial
statements

F-25

ASPEN INSURANCE HOLDINGS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002

SEPTEMBER 30, 2003 DECEMBER 31, 2002
-------------------- ------------------
($ IN MILLIONS, EXCEPT SHARE
AND PER SHARE AMOUNTS)

ASSETS
Investments
Fixed maturities ................................................. $ 617.4 $ 87.3
Short-term investments ........................................... 571.6 835.1
--------- ---------
Total investments ................................................ 1,189.0 922.4

Cash and cash equivalents ......................................... 92.8 9.6
Reinsurance recoverables
Unpaid losses (includes $16.5 million (2002 - $10.4 million)
from related parties) .......................................... 45.2 12.5
Ceded unearned premiums (includes $29.4 million (2002 -
$12.8 million) from related parties)............................ 85.1 18.9
Receivables
Underwriting premiums (includes $234.2 million (2002 - $151.4
million) from related parties) ................................. 635.5 214.5
Other ............................................................ 68.0 0.8
Deferred policy acquisition costs (includes $13.4 million (2002 -
$13.9 million) from related parties).............................. 127.9 31.0
Office properties and equipment ................................... 0.2 0.1
Intangible assets ................................................. 8.5 2.0
--------- ---------
Total Assets ..................................................... $ 2,252.2 $ 1,211.8
========= =========

LIABILITIES
Insurance reserves
Losses and loss adjustment expenses (includes $90.0 million
(2002 - $62.2 million) from related parties).................... $ 382.0 $ 93.9
Unearned premiums (includes $124.1 million (2002 -
$104.6 million) from related parties)........................... 727.6 215.7
--------- ---------
Total insurance reserves ......................................... 1,109.6 309.6
Payables:
Reinsurance premiums (includes $51.5 million (2002 - $0)
from related parties) .......................................... 79.7 2.1
Accrued expenses and other payables (includes $2.6 million
(2002 - $1.5 million) from related parties)..................... 72.0 22.0
--------- ---------
Total Liabilities ................................................ $ 1,261.3 $ 333.7
--------- ---------

SHAREHOLDERS' EQUITY
Ordinary shares: 56,924,120 ordinary shares of 0.15144558(cents) each
(2002 -- 56,876,360) .............................................. $ 844.2 $ 836.9
Retained earnings ................................................. 126.2 28.6
Accumulated other comprehensive income, net of taxes .............. 20.5 12.6
--------- ---------
Total shareholders' equity ....................................... 990.9 878.1
--------- ---------
Total Liabilities and Shareholders' Equity ........................ $ 2,252.2 $ 1,211.8
========= =========

See accompanying notes to the unaudited condensed consolidated financial
statements

F-26

ASPEN INSURANCE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGE
IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) AND FOR THE PERIOD
FROM INCORPORATION
ON MAY 23, 2002 TO DECEMBER 31, 2002

PERIOD FROM
INCORPORATION ON
NINE MONTHS ENDED MAY 23, 2002 TO
SEPTEMBER 30, 2003 DECEMBER 31, 2002
-------------------- ------------------
($ IN MILLIONS)

Shareholders' Equity
Ordinary shares:
Beginning of Period ........................................... $ 836.9 --
Shares Issued:
New shares issued ........................................... 0.8 836.9
Share-based compensation ...................................... 6.5 --
--------- -------
End of Period ................................................. 844.2 836.9
--------- -------

Retained earnings:
Beginning of Period ........................................... 28.6 --
Net income for the Period ..................................... 97.6 28.6
--------- -------
End of Period ................................................. 126.2 28.6
--------- -------

Accumulated other comprehensive income, net of taxes
Unrealized gains on foreign currency translation, net of taxes:

Beginning of Period ........................................... 12.0 --
Change for the Period ......................................... 5.5 12.0
--------- -------
End of Period ................................................. 17.5 12.0
--------- -------
Unrealized gains on investments, net of taxes:
Beginning of Period ........................................... 0.6 --
Change for the Period ......................................... 2.4 0.6
--------- -------
End of Period ................................................. 3.0 0.6
--------- -------
Total accumulated other comprehensive income ................... 20.5 12.6

--------- -------
Total Shareholders' Equity ..................................... $ 990.9 $ 878.1
========= ========

See accompanying notes to the unaudited condensed consolidated financial
statements

F-27

ASPEN INSURANCE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) AND FOR THE PERIOD
FROM INCORPORATION
ON MAY 23, 2002 TO SEPTEMBER 30, 2002 (UNAUDITED)

PERIOD FROM
NINE MONTHS INCORPORATION ON
ENDED MAY 23, 2002 TO
SEPTEMBER 30, 2003 SEPTEMBER 30, 2002
-------------------- -------------------
($ IN MILLIONS)

Net income .......................................................... $ 97.6 $ 15.5
Other comprehensive income, net of taxes
Change in unrealized gains on investments .......................... 2.4 0.8
Change in unrealized gains on foreign currency translation ......... 5.5 5.0
-------- -------
Other comprehensive income ......................................... 7.9 5.8
-------- -------
Comprehensive income ................................................ $ 105.5 $ 21.3
======== =======

See accompanying notes to the unaudited condensed consolidated financial
statements

F-28

ASPEN INSURANCE HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) AND FOR THE PERIOD
FROM INCORPORATION
ON MAY 23, 2002 TO SEPTEMBER 30, 2002 (UNAUDITED)

PERIOD FROM
INCORPORATION ON
NINE MONTHS ENDED MAY 23, 2002 TO
SEPTEMBER 30, 2003 SEPTEMBER 30, 2002
-------------------- -------------------
($ IN MILLIONS)

OPERATING ACTIVITIES:
Net income ................................................................. $ 97.6 $ 15.5
Adjustments
Amortization of premium or discount on investments ........................ 2.0 --
Share-based compensation expense .......................................... 6.5 --
Changes in insurance reserves:
Losses and loss adjustment expenses (includes $27.8 million (2002 -
$33.2 million) from related parties).................................... 288.5 48.0
Unearned premiums (includes $19.5 million (2002 - $125.2 million)
from related parties) .................................................. 512.6 224.8
Changes in reinsurance balances:
Reinsurance recoverables (includes $6.1 million (2002 - $6.3 million)
from related parties) .................................................. (32.5) (8.0)
Ceded unearned premiums (includes $16.6 million (2002 - $33.1
million) from related parties) ......................................... (66.0) (41.1)
Change in accrued investment income and other receivables ................. (67.0) 2.8
Change in deferred policy acquisition costs (includes $0.5 million
(2002 - $13.1 million) from related parties)............................. (96.7) (34.4)
Change in reinsurance premiums payable (includes $51.5 million (2002
- $0) from related parties).............................................. 77.8 3.7
Change in premiums receivable (includes $82.8 million (2002 - $108.5
million) from related parties) .......................................... (420.4) (197.0)
Change in accrued expenses and other payables (includes $1.1 million
(2002 - $0.4 million) from related parties).............................. 50.2 9.3
Other ..................................................................... -- (14.3)
---------- --------
NET CASH FROM OPERATING ACTIVITIES ......................................... 352.6 9.3
---------- --------

INVESTING ACTIVITIES:
Purchases of fixed maturities .............................................. (1,048.4) (179.7)
Proceeds from sales and maturities of fixed maturities ..................... 520.6 3.9
Net (purchases)/sales of short-term investments ............................ 263.9 (177.8)
Payments for acquisition net of cash acquired .............................. (6.6) (1.4)
---------- --------
NET CASH USED IN INVESTING ACTIVITIES ...................................... (270.5) (355.0)
---------- --------
FINANCING ACTIVITIES:
Proceeds from the issuance of Ordinary Shares, net of issuance costs ....... 0.8 346.6
---------- --------
NET CASH FROM FINANCING ACTIVITIES ......................................... 0.8 346.6
---------- --------
EFFECT OF EXCHANGE RATE MOVEMENTS ON CASH AND EQUIVALENTS .................. 0.3 5.0
---------- --------
INCREASE IN CASH AND CASH EQUIVALENTS ...................................... 83.2 5.9
Cash and cash equivalents at beginning of the period ....................... 9.6 --
---------- --------
Cash and cash equivalents at end of the period ............................. 92.8 5.9
---------- --------
Supplemental disclosure of cash flow information:
---------- --------
Cash paid during the period for income taxes ............................... 11.3 3.2
---------- --------

See accompanying notes to the unaudited condensed consolidated financial
statements

F-29

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2003 TO SEPTEMBER 30, 2003 AND
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO SEPTEMBER 30, 2002
($ IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. GENERAL

Aspen Insurance Holdings Limited ("Aspen Holdings") is a Bermuda holding
company. Aspen Holdings provides, through its principal operating subsidiaries,
property and casualty reinsurance in the global markets and property and
liability insurance principally in the United Kingdom. The principal operating
subsidiaries are Aspen Insurance UK Limited, located in London, and Aspen
Insurance Limited, located in Bermuda.

The accompanying unaudited condensed consolidated financial statements
have been prepared on the basis of accounting principles generally accepted in
the United States for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Results for the nine month period ended September 30, 2003 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2003. The unaudited condensed consolidated financial statements include the
accounts of Aspen Holdings and its wholly-owned subsidiaries, which are
collectively referred to herein as the "Company." All intercompany transactions
and balances have been eliminated on consolidation. Management is required to
make estimates and assumptions that affect the amounts reported in the
unaudited condensed consolidated financial statements and accompanying
disclosures. Actual results could differ from those estimates. Among other
matters, significant estimates and assumptions are used to record premiums and
to record reserves for losses and loss adjustment expenses. Estimates and
assumptions are periodically reviewed and the effects of revisions are recorded
in the consolidated financial statements in the period that they are determined
to be necessary.

These unaudited condensed consolidated financial statements and notes
thereto should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 2002 contained
elsewhere in this prospectus. The amounts in those notes have not changed
materially except as a result of transactions in the ordinary course of
business or as otherwise disclosed in these notes.

F-30

ASPEN INSURANCE HOLDINGS LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE PERIOD FROM JANUARY 1, 2003 TO SEPTEMBER 30, 2003 AND
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO SEPTEMBER 30, 2002
($ IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2. EARNINGS PER ORDINARY SHARES

Basic earnings per ordinary share are calculated by dividing net income
available to holders of Aspen Holdings' ordinary shares by the weighted average
number of ordinary shares outstanding. Diluted earnings per ordinary share are
based on the weighted average number of ordinary shares and dilutive potential
ordinary shares outstanding during the period of calculation using the treasury
stock method.

The following table sets forth the computation of basic and diluted
earnings per share for the nine months ended September 30, 2003 and the period
from incorporation on May 23, 2002 to September 30, 2002:

PERIOD FROM
INCORPORATION
NINE MONTHS ENDED ON MAY 23, 2002
SEPTEMBER 30, 2003 TO SEPTEMBER 30, 2002
-------------------- ----------------------
($ IN MILLIONS, EXCEPT SHARE AND
PER SHARE AMOUNTS)

EARNINGS
Basic ..................................................
Net income as reported and available to ordinary
shareholders .......................................... $ 97.6 $ 15.5
----------- -----------
Diluted
Net income as reported and available to ordinary
shareholders .......................................... 97.6 15.5
Effect of dilutive securities .......................... -- --
----------- -----------
ORDINARY SHARES
Basic
Weighted average ordinary shares ....................... 56,898,680 24,859,590
----------- -----------
Diluted
Weighted average ordinary shares ....................... 56,898,680 24,859,590
Weighted average effect of dilutive securities ......... 358,680 29,451,132
----------- -----------
Total .................................................. 57,257,360 54,310,722
=========== ===========
EARNINGS PER ORDINARY SHARE
Basic .................................................. $ 1.72 $ 0.62
=========== ===========
Diluted ................................................ $ 1.71 $ 0.29
=========== ===========

The share capital of the Company was issued in two tranches with the
second tranche issued on November 29, 2002. For the period from incorporation
on May 23, 2002 to September 30, 2002, the second tranche of unpaid share
capital, supported by irrevocable letters of credit, was considered to be
dilutive.

3. SEGMENT INFORMATION

The Company has two reportable segments, reinsurance operations and
insurance operations. Management evaluates the performance of each segment
based on underwriting results net of all expenses.

F-31

ASPEN INSURANCE HOLDINGS LIMITED

The following table provides a summary of the segment revenues, results
and reserves for the nine months ended September 30, 2003 and for the period
from incorporation on May 23, 2002 to September 30, 2002:

NINE MONTHS ENDED SEPTEMBER 30, 2003
--------------------------------------------
REINSURANCE INSURANCE TOTAL
------------- ----------- --------------
($ IN MILLIONS, EXCEPT PERCENTAGES)

REVENUES:
Gross premiums written ............................... $ 939.6 $ 222.2 $ 1,161.8
Gross premiums earned ................................ 521.0 145.9 666.9
Net premium earned ................................... 403.7 135.3 539.0
EXPENSES:
Losses and loss adjustment expenses .................. (193.3) (83.1) (276.4)
Policy acquisition, operating and administration
expenses ............................................ (120.1) (20.7) (140.8)
-------- -------- ----------
Underwriting profit before investment income ......... 90.3 31.5 121.8
======== ======== ==========
Investment return .................................... 14.9
Other net income ..................................... 0.1
----------
Income before income tax ............................ 136.8
==========
RATIOS:
Loss ratio ........................................... 48% 61% 51%
Expense ratio ........................................ 30 15 26
-------- -------- ----------
Combined ratio ...................................... 78% 76% 77%
-------- -------- ----------
Reserves for loss and loss adjustment expenses,
net of reinsurance ................................ $ 240.4 $ 96.4 $ 336.8
======== ======== ==========

F-32

ASPEN INSURANCE HOLDINGS LIMITED

PERIOD FROM INCORPORATION ON
MAY 23, 2002 TO SEPTEMBER 30, 2002
------------------------------------------
REINSURANCE INSURANCE TOTAL
------------- ----------- ------------
($ IN MILLIONS, EXCEPT PERCENTAGES)

REVENUES:
Gross premiums written ............................... $ 257.2 40.6 $ 297.8
Gross premiums earned ................................ 68.6 7.1 75.7
Net premium earned ................................... 45.7 6.0 51.7
EXPENSES:
Losses and loss adjustment expenses .................. (31.8) (3.7) (35.5)
Policy acquisition, operating and administration
expenses ............................................ (9.2) (0.7) (9.9)
-------- ------ ---------
Underwriting profit before investment income ......... 4.7 1.6 6.3
======== ====== =========
Investment return .................................... 3.0
Other net income ..................................... 12.9
---------
Income before income tax ............................. 22.2
=========
RATIOS:
Loss ratio ........................................... 70% 62% 69%
Expense ratio ........................................ 20 12 19
-------- ------ ---------
Combined ratio ...................................... 90% 74% 88%
======== ====== =========
Reserves for loss and loss adjustment expenses,
net of reinsurance ................................ $ 36.3 $ 3.7 $ 40.0
======== ====== =========

F-33

ASPEN INSURANCE HOLDINGS LIMITED

4. RESERVES FOR LOSSES AND ADJUSTMENT EXPENSES

The following table represents a reconciliation of beginning and ending
consolidated loss and loss adjustment expenses ("LAE") reserves:

RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES

AS AT SEPTEMBER 30,
2003
--------------------
($ IN MILLIONS)

Provision for losses and LAE at January 1, 2003 ...................... $ 93.9
Less reinsurance recoverable ......................................... 12.5
--------
Net loss and LAE reserves at January 1, 2003 ......................... 81.4
--------
Losses and LAE reserves of subsidiary at date of acquisition ......... 21.8
Less reinsurance recoverable ......................................... (14.0)
--------
Net losses and LAE reserves of subsidiary at date of acquisition ..... 7.8
--------

Provision for losses and LAE for claims incurred:
Current year ........................................................ 285.9
Prior years ......................................................... (9.5)
--------
Total incurred ...................................................... 276.4
--------

Losses and LAE payments for claims incurred:
Current year ........................................................ (26.8)
Prior years ......................................................... (7.6)
--------
Total paid .......................................................... (34.4)
--------

Foreign exchange gains/(losses) ...................................... 5.6

Net loss and LAE reserves at September 30, 2003 ...................... 336.8
Plus reinsurance recoverables on unpaid losses at end of year ........ 45.2
--------
Loss and LAE reserves at September 30,2003 ........................... $ 382.0
========

5. INCOME TAXES

Income tax attributable to income from operations reflects the statutory
rate of 30% applicable in the United Kingdom as reduced by the effect of the
zero tax rate applicable to operations in Bermuda.

6. COMMITMENTS AND CONTINGENCIES

In the normal course of business, letters of credit are issued as
collateral on behalf of the business, as required within our reinsurance
operations. As of September 30, 2003 letters of credit

F-34

ASPEN INSURANCE HOLDINGS LIMITED

with an aggregate amount of $13.3 million and (pounds sterling)47.4 million
were outstanding (as of September 30, 2002 and December 31, 2002 - (pounds
sterling)47.4 million). The Company has funds on deposit of $13.3 million as
collateral for the letters of credit.

7. RELATED PARTY TRANSACTIONS

Aspen Holdings' operating subsidiary in the United Kingdom, Aspen U.K.,
participates in certain quota share arrangements with Syndicates 2020 and 3030.
Aspen U.K.'s participation in these arrangements with the Syndicates
constituted approximately 5% of our gross premiums written for the nine months
ended September 30, 2003, a significant reduction from approximately 58% of our
gross premiums written for the period from our incorporation on May 23, 2002
through December 31, 2002.

A subsidiary operation of Aspen Holdings entered into four proportional
reinsurance contracts with effect from January 1, 2003 with a subsidiary of
Montpelier Re Holdings Limited ("Montpelier Re"). Reinsurance premiums ceded
under the contracts in the nine months ended September 30, 2003 were $59.9
million. The amount payable by the Company in respect of these transactions as
at September 30, 2003 was $51.5 million.

Montpelier Re owns approximately 7% of the issued share capital of Aspen
Holdings and the Chief Executive Officer of Montpelier Re is a director of
Aspen Holdings.

8. DERIVATIVE FINANCIAL INSTRUMENTS

The Company did not enter into any derivative contracts during the nine
months ended September 30, 2003 or in the period from incorporation to
September 30, 2002. There were no derivatives outstanding as at December 31,
2002 or September 30, 2003.

9. ACQUISITION OF DAKOTA SPECIALTY INSURANCE COMPANY

On September 5, 2003 Aspen U.S. Holdings acquired Dakota Specialty
Insurance Company for cash consideration of $20.9 million (including
acquisition costs of $1.1 million). At the date of acquisition, Dakota
Specialty was not writing any new or renewal business and had no employees. The
directors of Aspen Holdings have assessed the fair value of the net tangible
assets acquired at $15.3 million. An amount of $6.5 million, gross of $0.9
million deferred tax, is the estimated value of the intangible asset.

10. SHARE OPTIONS

The Company has issued options under two schemes: investor options and
employee options. The investor options were issued on June 21, 2002 in
consideration for the transfer of an underwriting team from Wellington, the
right to seek to renew certain business written by Syndicate 2020, an agreement
in which Wellington agrees not to compete with Aspen U.K. through March 31,
2004, the use of the Wellington name and logo and the provision of certain
outsourced services to the Company, and confer the option to subscribe for
6,787,880 ordinary shares of Aspen Holdings to Wellington and the members of
Syndicate 2020 who are not corporate members of Wellington. The subscription
price payable under the options is initially (pounds sterling)10 and increases
by 5% per annum, less any dividends paid. Option holders are not entitled to
participate in any dividends prior to exercise and would not rank as a creditor
in the event of liquidation. The options are exercisable on the initial public
offering of the ordinary shares in the United States or the first listing of
the ordinary shares on a stock exchange (a "Listing") or a sale of all or
substantially all of the business, assets or undertakings of Aspen Holdings

F-35

ASPEN INSURANCE HOLDINGS LIMITED

and its subsidiaries or a sale of 50% or more of the ordinary shares of Aspen
Holdings (a "Sale") or, if no Listing or Sale has occurred prior to June 21,
2007, at any time within the five business days following June 21, 2007. If not
exercised, the options will expire after five years but if a Listing occurs
within those five years the term is automatically extended to a period of ten
years.

The following table summarizes information about investor options
outstanding at December 31, 2002 and September 30, 2003 to purchase non-voting
shares, which non-voting shares will automatically convert into ordinary shares
upon a Listing, such as an initial public offering, or, if issued after the
completion of such a Listing, upon issuance:

OPTIONS
---------------------------
OPTION HOLDER OUTSTANDING EXERCISABLE EXERCISE PRICE(1) EXPIRATIONS
- ------------------------------------- ------------- ------------- ---------------------- --------------

Wellington Underwriting plc ......... 3,781,120 3,781,120 (pounds sterling)10 June 21, 2012
Names' Trustee ...................... 3,006,760 3,006,760 (pounds sterling)10 June 21, 2012
--------- ---------
6,787,880 6,787,880

- ----------
(1) To be increased by 5% per annum from June 21, 2002 to date of
exercise, less the amount of any prior dividend or distribution per
share.

On August 20, 2003 the Company granted 3,884,020 options to employees
under the Aspen Insurance Holdings Limited 2003 Share Incentive Plan. The
initial grant options have a term of ten years and an exercise price of
(pounds sterling)10.70 per share. Sixty-five percent of the initial grant
options are subject to time-based vesting with 20% vesting upon grant and 20%
vesting on each December 31 of the calendar years 2003, 2004, 2005 and 2006.
The remaining 35% of the initial grant options are subject to performance-based
vesting. In addition to the initial grant of 3,884,020 options, 1,840,550
options are reserved for additional grants following the completion of the
Company's initial public offering.

The following table summarizes information about employee options
outstanding to purchase ordinary shares at September 30, 2003:

OPTIONS
--------------------------- WEIGHTED AVERAGE
OPTION HOLDER OUTSTANDING EXERCISABLE EXERCISE PRICE FAIR VALUE
- ------------------- ------------- ------------- ------------------------- -----------------------

Employees ......... 3,884,020 640,860 (pounds sterling)10.70 (pounds sterling)3.34

The Company follows Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," which establishes a fair value-based
method of accounting for share-based compensation plans.

Compensation cost charged against income was $6.5 million for the nine
months ended September 30, 2003. The per share weighted fair value of the share
options granted under the 2003 Share Incentive Plan is (pounds sterling)3.34.
This amount was estimated on the date of the grant using the Black-Scholes
Option Pricing Model under the following assumptions: risk-free interest rate
of 4.70%; dividend yield of 0.6%; expected life of 7 years; share price
volatility of zero (as the minimum value method was utilized); and foreign
currency volatility of 9.40% (as the exercise price is in British Pounds and
the share price of the Company is in U.S. Dollars).

11. SUBSEQUENT EVENTS

The Company has entered into a credit facility with a syndicate of
commercial banks under which it may, subject to the terms of the credit
agreements, borrow up to $150 million for periods of up to three years and a
further $50 million for periods of up to one year. Credit Suisse First Boston,
an

F-36

ASPEN INSURANCE HOLDINGS LIMITED

affiliate of Credit Suisse First Boston Private Equity, which is a shareholder
of the Company, is a member of the syndicate on terms and conditions similar to
other syndicate members.

On October 15, 2003, we drew down $90 million on the three-year credit
facility. Of these borrowings, $81 million was used to provide part of the
initial capital to Aspen U.S. and the balance was used to provide working
capital to Aspen Holdings. The initial interest rate is three-month LIBOR plus
60 basis points. The $90 million balance is due and payable by October 14,
2006.

On November 6, 2003, the Board of Directors of the Company authorized a 10
for 1 share split of the Company's ordinary shares. The share split has been
reflected in the financial information for all periods presented, and all
applicable references as to the number of ordinary shares, ordinary share
equivalents, including exercise prices where applicable, and per share
information have been represented.

F-37

INDEX TO SYNDICATES 2020 AND 3030 FINANCIAL STATEMENTS

PAGE
-----

Independent Auditors' Report ................................................. P-2
Combined Statements of Operations for the Years Ended December 31, 2002, 2001
and 2000 .................................................................... P-3
Combined Statements of Comprehensive Income/(Loss) for the Years Ended
December 31, 2002, 2001 and 2000 ............................................ P-3
Combined Balance Sheets as at December 31, 2002 and 2001 ..................... P-4
Combined Statements of Members' Deficit for the Years Ended December 31, 2002,
2001 and 2000 ............................................................... P-5
Combined Statements of Cash Flows for the Years Ended December 31, 2002, 2001
and 2000 .................................................................... P-6
Notes to Syndicates Financial Statements ..................................... P-7

P-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Wellington Underwriting Agencies Limited:

We have audited the accompanying combined balance sheets of Syndicates 2020 and
3030 as of 31 December 2002 and 2001 and the related combined statements of
operations and comprehensive income/(loss), members' deficit, and cash flows
for each of the years in the three year period ended 31 December 2002. These
combined financial statements are the responsibility of Wellington Underwriting
Agencies Limited. Our responsibility is to express an opinion on these combined
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the combined
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined balance sheets of Syndicates
2020 and 3030 as of 31 December 2001 and 31 December 2002 and the results of
their operations and their cash flows for each of the years in the three year
period ended 31 December 2002, in conformity with accounting principles
generally accepted in the United States of America.

/s/ KPMG Audit Plc

London, United Kingdom
September 15, 2003

P-2

SYNDICATES 2020 AND 3030

COMBINED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
-------------------------------
2002 2001 2000
-------- --------- --------
($ IN MILLIONS)

REVENUES
Net premiums earned ................................... $ 863 $ 562 $ 466
Net investment income ................................. 31 35 35
Realized investment gains ............................. 4 17 1
Foreign exchange gains/(losses) ....................... (14) (10) 9
------ ------ ------
Total Revenues ........................................ 884 604 511
------ ------ ------
EXPENSES
Insurance losses and loss adjustment expenses ......... (523) (605) (275)
Policy acquisition expenses ........................... (254) (189) (146)
Operating and administration expenses ................. (36) (27) (26)
------ ------ ------
TOTAL EXPENSES ........................................ (813) (821) (447)
------ ------ ------
Net income/(loss) ..................................... $ 71 $ (217) $ 64
====== ====== ======

COMBINED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

YEAR ENDED DECEMBER 31,
-----------------------------
2002 2001 2000
------ ---------- -------
($ IN MILLIONS)

Net income/(loss) ..................................... $ 71 $ (217) $ 64
Other comprehensive income/(loss):
Change in unrealized gains/(losses)
on investments ....................................... 9 3 8
----- ------ -----
Comprehensive income/(loss) ........................... $ 80 $ (214) $ 72
===== ====== =====

See accompanying notes to the Syndicates financial statements

P-3

SYNDICATES 2020 AND 3030

COMBINED BALANCE SHEETS

YEAR ENDED DECEMBER 31,
------------------------
2002 2001
---------- -----------
($ IN MILLIONS)

ASSETS
Investments, at fair value
Fixed Maturities (amortized cost: 2002-$735 million, 2001-$710
million) ............................................................... $ 747 $ 714
Short-term investments (amortized cost: 2002-$346 million,
2001-$103 million)...................................................... 348 104
------- -------
Total Investments .......................................................... 1,095 818
------- -------
Cash and cash equivalents, at fair value ................................... 104 16
Overseas regulatory deposits -- restricted cash ............................ 114 91
Reinsurance recoverables on unpaid losses (Including bad debt provision of
2002-$50 million; 2001-$32 million)........................................ 1,224 1,501
Reinsurance recoverables on paid losses .................................... 404 251
Ceded unearned premiums .................................................... 282 154
Receivables
Underwriting premiums ................................................... 676 285
Other ................................................................... 72 182
Deferred policy acquisition costs .......................................... 144 118
------- -------
TOTAL ASSETS ............................................................... $ 4,115 $ 3,416
======= =======
LIABILITIES
Insurance Reserves
Losses and loss adjustment expenses ..................................... $ 2,555 $ 2,509
Unearned premiums ....................................................... 821 576
------- -------
Total insurance reserves ................................................... 3,376 3,085
------- -------
Payables:
Reinsurance premiums .................................................... 689 376
Accrued expenses and other payables ..................................... 145 123
Commitments and contingencies (Note 7) .....................................
------- -------
TOTAL LIABILITIES .......................................................... $ 4,210 $ 3,584
======= =======
MEMBERS' DEFICIT
Retained earnings (accumulated deficit) .................................... $ (64) $ (135)
Net amounts paid to Syndicate members ...................................... (46) (39)
Accumulated other comprehensive income .....................................
Unrealized gains on investments ......................................... 15 6
------- -------
TOTAL MEMBERS' DEFICIT ..................................................... $ (95) $ (168)
======= =======
TOTAL LIABILITIES AND MEMBERS' DEFICIT ..................................... $ 4,115 $ 3,416
======= =======

See accompanying notes to the Syndicates financial statements

P-4

SYNDICATES 2020 AND 3030

COMBINED STATEMENTS OF MEMBERS' DEFICIT

YEAR ENDED DECEMBER 31,
-------------------------------------
2002 2001 2000
------------ --------- ----------
($ IN MILLIONS)

MEMBERS' DEFICIT
Retained earnings (accumulated deficit):
Start of year ................................... $(135) $ 82 $ 18
Net income/(loss) for the year .................. 71 (217) 64
----- ------ ----
End of year ..................................... (64) (135) 82
----- ------ ----
Net amounts paid to Syndicate members:
Start of year ................................... (39) (88) (31)
Amounts received from Syndicate members ......... -- 74 --
Amounts paid to Syndicate members ............... (7) (25) (57)
-------- ------ ----
End of year ..................................... (46) (39) (88)
------- ------ ----
Unrealized gains/(losses) on investments:
Start of year ................................... 6 3 (5)
Change for the year ............................. 9 3 8
------- ------ ------
End of year ..................................... 15 6 3
------- ------ ------
TOTAL MEMBERS' DEFICIT .......................... $ (95) $ (168) $ (3)
======= ====== ======

See accompanying notes to the Syndicates financial statements

P-5

SYNDICATES 2020 AND 3030

COMBINED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-------------------------------------------
2002 2001 2000
-------------- ------------ -----------
($ IN MILLIONS)

OPERATING ACTIVITIES
Net income/(loss) ............................................. $ 71 $ (217) $ 64
Adjustments
Change in property-liability insurance reserves:
Losses and loss adjustment expenses ........................ (2) 993 252
Unearned premiums .......................................... 230 204 25
Change in reinsurance balances:
Reinsurance recoverables on paid losses .................... 300 (712) (211)
Ceded unearned premiums .................................... (122) (56) (7)
Change in deferred policy acquisition costs ................... (23) (51) (3)
Change in reinsurance premiums payable ........................ 301 205 63
Change in reinsurance recoverables on paid losses ............. (153) (130) (110)
Change in accounts receivable ................................. (259) (91) 59
Change in accrued expenses and other payables ................. 19 106 (114)
Other ......................................................... 4 (15) 2
--------- -------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ........... 366 236 20
--------- -------- -------
INVESTING ACTIVITIES
Overseas regulatory deposits placed ........................... (23) (9) (46)
Purchase of investments ....................................... (2,996) (2,008) (752)
Proceeds from the sales and maturities of investments ......... 2,730 1,704 812
--------- --------- -------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES ........... (289) (313) 14
--------- --------- -------
FINANCING ACTIVITIES
Amounts distributed to Syndicate members ................... (7) (25) (57)
Amounts received from Syndicate members .................... -- 74 --
--------- --------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ........... (7) 49 (57)
---------- --------- -------
EFFECTS OF EXCHANGE RATE MOVEMENTS ON CASH AND CASH
EQUIVALENTS .................................................. 18 7 (34)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .............. 88 (21) (57)
Cash at beginning of the year ................................. 16 37 94
--------- --------- -------
Cash at end of the year ....................................... $ 104 $ 16 $ 37
========= ========= =======

See accompanying notes to the Syndicates financial statements

P-6

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

Status of Syndicate 2020 and Syndicate 3030 as Predecessor to the Company

Aspen Insurance Holdings Limited ("Aspen Holdings") was formed in May
2002. The management of Aspen Holdings largely comprises the management team
for the lines of business which were underwritten by Aspen Holdings' insurance
subsidiaries after being developed by Syndicate 2020 and Syndicate 3030.

As a result, the predecessor to Aspen Holdings comprises the combined
businesses of Syndicate 2020, and for the period that it conducted business,
Syndicate 3030 (the "Syndicates"). The method by which Aspen Holdings assumed
this business is described in detail in Note 10.

Constitution of the Syndicates

The Syndicates operate within Lloyd's which has a unique operating
structure allowing individuals and corporations ("Members") to participate in
the underwriting of insurance risks. Members of Lloyd's join together on an
annual basis to form syndicates. These Members may be either individuals or
corporate members.

As Lloyd's syndicates, the Syndicates operate as annual joint ventures
between their Members that are fully accounted for and settled at the end of a
36-month period. The declared results are distributed to (or collected from)
the Members who are responsible at an individual level for any of the tax
liabilities thereon. The Members of these Syndicates pledge capital to support
the syndicates for each underwriting year of account and a proportion of the
capital pledged is deposited at Lloyd's. The Syndicates are allowed to
underwrite up to a premium capacity based on the level of capital committed for
each underwriting year of account.

Each Lloyd's syndicate is managed by a managing agent. Wellington
Underwriting Agencies Limited ("WUAL") is the managing agent of the Syndicates.
WUAL appoints and employs the staff of the Syndicates, including the Chief
Underwriting Officer and, also provides the business infrastructure and support
services. WUAL recharges the Syndicates for the cost of services provided and
also charges fees and profit commission based on the Syndicates' capacity and
profits respectively.

WUAL maintains the Syndicates' accounting records and prepares their
annual reports in accordance with the Lloyd's Syndicate Accounting Bye-Law,
which uses the Lloyd's three year funded basis of accounting. These annual
reports include the results of underwriting, Syndicate operating expenses and
investment income earned on insurance funds, but do not include details of the
capital deposited by Members, the investment income earned thereon and the
members' liability for tax on the results of the syndicate. This is because the
capital supporting these Syndicates, investment income earned thereon and tax
on Syndicates' results are the responsibility of the members of the Syndicates
and not of the Syndicates themselves.

The financial statements of the Syndicates have been prepared for the
purpose of this Prospectus in accordance with United States Generally Accepted
Accounting Principles ("U.S. GAAP"). The financial statements for the year
ended December 31, 2002 include the transactions of Syndicate 3030 which
commenced business on June 1, 2002 and underwrote on a co-insurance basis with
Syndicate 2020 for that year only. Transactions between Syndicate 2020 and
Syndicate 3030 have been eliminated.

P-7

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates

Estimates and assumptions are made by the directors of WUAL that have an
effect on the amounts reported within these combined financial statements. The
most significant estimates relate to the reserves for property and liability
losses. These estimates are continually reviewed and adjustments made as
necessary, but actual results could turn out significantly different from those
expected when the estimates were made.

ACCOUNTING FOR UNDERWRITING OPERATIONS

Premiums Earned

Assumed premiums are recognized as revenues proportionately over the
coverage period. Premiums earned are recorded in the statement of operations,
net of the cost of purchased reinsurance. Premiums not yet recognized as
revenue are recorded in the balance sheet as unearned premiums, gross of any
ceded unearned premiums. Written and earned premiums, and the related costs,
which have not yet been reported to the Syndicates are estimated and accrued.
Due to the time lag inherent in reporting of premiums by cedents, such
estimated premiums written and earned, as well as related costs, may be
significant. Differences between such estimates and actual amounts will be
recorded in the period in which the actual amounts are determined.

Premiums on proportional treaty contracts are generally not reported to
the Syndicates until after the reinsurance coverage is in force and the
Syndicates are at risk. As a result an estimate of these "pipeline" premiums is
recorded. The directors of WUAL estimate pipeline premiums based on estimates
reported from ceding companies. The directors of WUAL estimate commissions,
losses and loss adjustment expenses on these premiums.

Outward reinsurance premiums are accounted for in the same accounting
period as the premiums for the related direct insurance or inwards reinsurance
business. Reinsurance contracts that operate on a "losses occurring during"
basis are accounted for in full over the period of coverage whilst "risks
attaching during" policies are expensed using the same ratio as the underlying
premiums on a daily pro rata basis.

Insurance Losses and Loss Adjustment Expenses

Losses represent the amount paid or expected to be paid to claimants in
respect of events that have occurred on or before the balance sheet date. The
costs of investigating, resolving and processing these claims are known as loss
adjustment expenses ("LAE"). The statement of operations records these losses
net of reinsurance, meaning that gross losses and loss adjustment expenses
incurred are reduced by the amounts recovered or expected to be recovered under
reinsurance contracts.

P-8

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

Reinsurance

Written premiums earned and incurred claims and LAE all reflect the net
effect of assumed and ceded reinsurance transactions in the income statement.
Assumed reinsurance refers to the Syndicates' acceptance of certain insurance
risks that other insurance companies have underwritten. Ceded reinsurance means
other insurance companies have agreed to share certain risks with the
Syndicates. Reinsurance accounting is followed when risk transfer requirements
have been met.

WUAL regularly evaluates the financial condition of its reinsurers and
monitors the concentration of credit risk to minimize the Syndicates' exposure
to financial loss from reinsurers' insolvency. Where it is considered required,
appropriate provision is made for balances deemed irrecoverable from
reinsurers.

Insurance Reserves

Insurance reserves are established for the total unpaid cost of claims and
LAE, which cover events that have occurred by the balance sheet date. These
reserves reflect estimates by the directors of WUAL of the total cost of claims
incurred but not yet reported to it ("IBNR"). Claim reserves are reduced for
estimated amounts of salvage and subrogation recoveries. Estimated amounts
recoverable from reinsurers on unpaid losses and LAE are reflected as assets.

Because many of the coverages underwritten involve claims that may not be
ultimately settled for many years after they are incurred, subjective judgments
as to the ultimate exposure to losses are an integral and necessary component
of the loss reserving process. Reserves are established by the selection of a
"best estimate" from within a range of estimates. The directors of WUAL
continually review the Syndicates' reserves, using a variety of statistical and
actuarial techniques to analyze current claims costs, frequency and severity
data, and prevailing economic, social and legal factors. Reserves established
in prior periods are adjusted as claim experience develops and new information
becomes available. Adjustments to previously estimated reserves are reflected
in the financial results of the period in which the adjustments are made.

While the directors of WUAL believe that the reported reserves make a
reasonable provision for unpaid claim and LAE obligations, it should be noted
that the process of estimating required reserves does, by its very nature,
involve uncertainty. The level of uncertainty can be influenced by factors such
as the existence of coverage with long duration payment patterns and changes in
claims handling practices, as well as the factors noted above. Ultimate actual
payments for claims and LAE could turn out to be significantly different from
estimates made.

Policy Acquisition Expenses

The costs directly related to writing an insurance policy are referred to
as policy acquisition expenses and consist of commissions, premium taxes and
other direct underwriting expenses. Although these expenses are incurred when a
policy is issued they are deferred and amortized over the same period as the
corresponding premiums are recorded as revenues.

P-9

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

unrecoverable, further analyses are performed to determine if a reserve is
required to provide for losses which may exceed the related unearned premium.

ACCOUNTING FOR INVESTMENTS

Fixed Maturities

The fixed maturity portfolio is composed primarily of high quality, U.S.
and U.K. government securities. The entire fixed maturity investment portfolio
is classified as available for sale. Accordingly, that portfolio is carried on
the balance sheet at estimated fair value. Fair values are based on quoted
market prices from a third party pricing service.

Short-term investments

Short-term investments include highly liquid debt instruments and
commercial paper. The investments are classified as available for sale and are
therefore carried on the balance sheet at estimated fair value.

Overseas Regulatory Deposits

Overseas Regulatory Deposits are restricted in use as they are required to
enable the Syndicates to write business in the relevant territories.

Realized Investment Gains and Losses

When an investment is sold the resulting gain or loss is recorded in the
combined statement of operations.

If the Directors of WUAL determine that any investment has experienced a
decline in value that is believed to be other than temporary, the directors of
WUAL will consider the current facts and circumstances, including the financial
position and future prospects of the entity that issued the investment
security, and make a decision to either record a write-down in the carrying
value of the security to its fair value, thereby establishing a new cost basis
for the security, or sell the security; in either case a realized loss is
recorded in the statement of operations.

Unrealized Gains or Losses on Investments

For investments carried at estimated fair value, the difference between
amortized cost and fair value is recorded as part of members' interests. This
difference is referred to as unrealized gains or losses on investments. The
change in unrealized gains or losses, during the year is a component of other
comprehensive income.

Cash and cash equivalents

Cash and cash equivalents are short-term highly liquid investments that
are readily convertible to known amounts of cash, and that are so near maturity
that they present insignificant risk of changes in value because of changes in
interest rates.

DERIVATIVE FINANCIAL INSTRUMENTS

In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging Activities", all
derivatives are recorded on the balance sheet at fair value. The accounting for
the gain or loss due to the changes in the fair value of these instruments is
dependent on whether the derivative qualifies as a hedge. If the derivative
does not

P-10

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

qualify as a hedge, the gains or losses are reported in earnings when they
occur. If the derivative does qualify as a hedge, the accounting varies based
on the type of risk being hedged.

FOREIGN CURRENCY TRANSLATION

The functional and reporting currency of the Syndicates' operations is
U.S. Dollars. Transactions in currencies other than the functional currency are
measured at the exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in non-functional currencies are
re-measured at the exchange rate prevailing at the balance sheet date. Any
resulting foreign exchange gains or losses are reflected in the combined
statement of operations.

2. INVESTMENTS

The following presents the cost, gross unrealized gains and losses, and
estimated fair value of investments in fixed maturities and other investments:

AS OF DECEMBER 31, 2002
-------------------------------------------------------
($ IN MILLIONS)
COST OR GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ------------ ------------ -----------

Fixed maturities
Foreign Governments ............ $ 235 $ 3 -- $ 238
Corporate Securities ........... 500 9 -- 509
------- ---- -- -------
Total Fixed maturities ......... 735 12 -- 747
Short-Term Investments ......... 346 2 -- 348
------- ---- -- -------
Total .......................... $ 1,081 $ 14 -- $ 1,095
======= ==== == =======

AS OF DECEMBER 31, 2002
----------------------------------------------------------
($ IN MILLIONS)
Fixed maturities
Foreign Governments ............ $ 353 $ 1 $ (1) $ 353
Corporate Securities ........... 357 4 -- 361
--------- ---- ---- -------
Total Fixed maturities ......... 710 5 (1) 714
Short-Term Investments ......... 103 1 -- 104
--------- ---- ---- -------
Total .......................... $ 813 $ 6 $ (1) $ 818
========= ==== ==== =======

P-11

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents the breakdown of investments as at December
31, 2002 to stated maturity. Actual maturities may differ from those stated as
a result of calls and prepayments:

AS OF DECEMBER 31, 2002
--------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
----------- ------------
($ IN MILLIONS)

Fixed maturities:
One year or less .......................................... $ 314 $ 317
Over one year through five years .......................... 365 377
Over five years ........................................... 56 53
------- -------
735 747
Short-term investments:
One year or less .......................................... 346 348
Over one year through five years .......................... -- --
Over five years ........................................... -- --
------- -------
Total ..................................................... $ 1,081 $ 1,095
======= =======

3. INVESTMENT TRANSACTIONS

The following is a summary of investment income:

YEAR ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
--------- ---------- ---------
($ IN MILLIONS)

Fixed Maturities $ 24 $ 32 $ 21
Short-Term Investments ........................... 10 5 16
Investment Expenses .............................. (3) (2) (2)
----- ----- -----
Net investment income ............................ $ 31 $ 35 $ 35
===== ===== =====

The following table summarizes the realized investment gains and losses,
and the change in unrealized gains on investments recorded in shareholders'
equity and in comprehensive income:

YEAR ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
--------- ---------- ---------
($ IN MILLIONS)

Short term investments:
Realized investment gains ........................ $ 1 $ 10 --
Fixed Maturities:
Gross realized gains ............................. 5 9 3
Gross realized losses ............................ (2) (2) (2)
----- ----- ----
Realized investment gains/(losses) ............... 3 7 1
----- ----- ----
Total realized investment gains/(losses) ......... 4 17 1
----- ----- ----
Change in Unrealized gains
Fixed Maturities ................................. 8 (1) 13
Short-term investments ........................... 1 4 (5)
----- ----- ----
Total change in unrealized gains ................. $ 9 $ 3 $ 8
----- ----- -----

P-12

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

4. SEPTEMBER 11, 2001 TERRORIST ATTACK

The estimates of the ultimate gross and net losses at December 31, 2002
and 2001 arising from the terrorist attacks in the United States of America on
September 11, 2001 are set out below:

MOVEMENT FOR
AS OF THE YEAR ENDED AS OF
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2002 2002 2001
-------------- ---------------- -------------
($ IN MILLIONS)

Total estimated gross loss ...................... $ 886 $(32) $ 918
Estimated reinstatement premiums receivable ..... (32) 1 (33)
Estimated reinsurance recoverable* .............. (719) 27 (746)
Estimated reinstatement premiums payable ........ 98 (2) 100
------ ------- ------
Total estimated net loss ........................ $ 233 $ (6) $ 239
====== ====== ======

* net of provision for bad debts of $11.3 million

A loss of $239 million was recorded in the Income Statement for the year
ended December 31, 2001. A profit of $6 million has been recognized in the
Income Statement for the year ended December 31, 2002.

Movements of the individual components and the resulting balances at
December 31, 2002 comprise the following:

OUTSTANDING AND
IBNR CLAIMS ESTIMATED
PAID RESERVE REINSTATEMENTS ULTIMATE NET LOSS
------ ---------------- ---------------- -----------------
($ IN MILLIONS)

January 1, 2002 .................. $ 2 $ 170 $ 67 $ 239
Movement ......................... 12 (17) (1) (6)
---- ----- ------ -------
December 31, 2002 ................ $ 14 $ 153 $ 66 $ 233
==== ===== ===== ======

The method used in assessing the ultimate losses at December 31, 2002 is
consistent with the approach taken at December 31, 2001. Specific provisions
have been made based on notification of losses incurred received from
policyholders, intermediaries and loss adjusters and in the light of other
information available. Amongst other things, these specific provisions are
sensitive to assumptions about the quantum of property damage. Additionally,
estimates for business interruption claims, for which notifications are based
upon policyholders' computation of their own losses will change as forensic
claims investigations determine a more realistic amount of loss. Additional
provisions (incurred but not reported reserves) continue to be held at December
31, 2002 to provide for additional claims which have been incurred but not
reported, or increases in the estimates already reported by policyholders.
Independent actuaries have reviewed such estimates.

Uncertainties continue to exist as to whether the destruction of the twin
towers of the World Trade Center ("WTC") constitutes one event or two for the
purposes of aggregation of losses under insurance and reinsurance policies.
Based on legal advice, the directors of WUAL continue to consider that a one
event basis is the correct interpretation of the policies, which is a matter in
current litigation among insurers (including Syndicate 2020) and those holding
property interests in the WTC. If a two event loss basis were to be applied, it
is estimated that the loss to the Syndicates from direct and reinsurance
policies would increase by approximately $141 million gross and $13 million net
of reinsurance. Estimated reinsurance recoveries on ultimate losses (net of
provisions for bad debt) total $719 million of which $277 million had been
received at December 31, 2002. A further $326 million is supported by
outstanding claims advances or letters of credit received from reinsurers as
security for

P-13

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

the amount which will become due and payable when the underlying claims are
settled. Of the uncollateralized amount, 98.2% is associated with reinsurers
with a rating of A or better.

The directors of WUAL consider that the WTC loss estimate continues to be
the best estimate that can be made on the basis of information currently
available. The directors are, however, aware that this estimate is subject to
uncertainties, the outcome of which could have a positive or a negative impact
on such an estimate. As further information becomes available and as claims in
dispute are eventually resolved, the estimate of ultimate losses will be
revised. It may take some time to resolve such uncertainties.

5. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments include futures, forward, swap and option
contracts and other financial instruments with similar characteristics. The
Syndicates have no involvement with these instruments, other than with respect
to certain forward contracts entered into primarily for the purpose of
protecting against fluctuations in foreign currency exchange rates and which
did not qualify as hedges under SFAS No. 133 during the reporting period.

Non-hedge Derivatives -- During the year ended December 31, 2002, the
Syndicates entered into foreign exchange contracts which matured after the year
end for the purchase of (pounds sterling)37.9 million at a fixed exchange
rate. Similar contracts were outstanding at the end of 2001 and 2000 for the
purchase of (pounds sterling)51.4 million and (pounds sterling)23.7 million,
respectively. A gain of $7.1 million (2001: loss of $2.1 million); (2000: gain
of $0.3 million) was realized under these contracts. These contracts were taken
out to protect the Syndicates from exchange rate fluctuations.

P-14

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

6. RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table represents a reconciliation of beginning and ending
property -- liability insurance loss and LAE reserves.

YEAR ENDED DECEMBER 31,
------------------------------------------
2002 2001 2000
---------- ------------- -------------
($ IN MILLIONS)

Provision for losses and LAE at start of year ......... $ 2,509 $ 1,501 $ 1,289
Less reinsurance recoverable .......................... (1,501) (781) (590)
-------- ------- -------
Net loss and LAE reserves at start of year ............ 1,008 720 699
-------- ------- -------
Provision for losses and LAE for claims incurred
Current year .......................................... 570 579 260
Prior years ........................................... (47) 26 15
-------- ------- -------
Total incurred ........................................ 523 605 275
-------- ------- -------
Losses and LAE payments for claims incurred
Current year .......................................... (81) (116) (80)
Prior years ........................................... (151) (196) (167)
-------- ------- -------
Total paid ............................................ (232) (312) (247)
-------- ------- -------
Foreign Exchange gains/(losses) ....................... 32 (5) (7)
Net loss and LAE reserves at year end ................. 1,331 1,008 720
Plus reinsurance recoverables on unpaid
losses at end of year ................................ 1,224 1,501 781
-------- -------- --------
Loss and LAE reserves at end of year .................. $ 2,555 $2,509 $1,501
======== ======== ========

The Syndicates have no material exposures to environmental or asbestos
liabilities. There are no exposures arising on policies incepting before
January 1, 1993 as all policies for that period have been reinsured into
Equitas, the run-off reinsurer established by Lloyd's of London. Policies since
then were normally written with specific exclusions for asbestos and
environmental liabilities.

The $47 million prior year reduction in the provision for losses and LAE
for claims incurred recognized in the 2002 calendar year represents a
redundancy on the opening reserves of approximately 5%. The redundancy arises
from the business written in 2001 where the reserves established were primarily
based upon historical trends due to the delay in claims being reported.
Subsequent to the year end, the level of claims development was below
historical trends which has resulted in a reassessment of the reserves held at
December 31, 2001 and the reported redundancy.

7. COMMITMENTS AND CONTINGENCIES

In the normal course of business letters of credit are issued as
collateral on behalf of the business, as required within our reinsurance
operations. As of December 31, 2002, letters of credit with an aggregate amount
of $114 million were outstanding (December 31, 2001: $91 million; December 31,
2000: $82 million). No amounts have been drawn down on these letters of credit.

Legal matters

In the ordinary courses of conducting business, the Syndicates have been
named as defendants in various lawsuits. Some of these lawsuits attempt to
establish liability under reinsurance contracts issued by the Syndicates'
underwriting operations. Plaintiffs in these lawsuits are asking for money

P-15

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

damages or to have the court direct the activities of the Syndicates'
operations in certain ways. It is possible that the settlement of these
lawsuits may be material to the Syndicates' results of operations and liquidity
in the period in which they occur. However, the Directors of WUAL believe the
total amounts that the Syndicates will ultimately have to pay in these matters
will have no material effect on the Syndicates' overall financial position.

Citibank, N.A.

Certain members of Lloyd's ("Names") have commenced legal proceedings
against Citibank, N.A. ("Citibank"), as trustee of the Lloyd's American Trust
Funds ("LATFs"), regarding the operation of the LATFs. Lloyd's is not a party
to the proceedings. This action was brought prior to the completion of
RECONSTRUCTION AND RENEWAL. The Names in these proceedings allege that Citibank
breached its duties as the trustee of the LATFs by, inter alia: (1) engaging in
a pattern of transferring money from the trust funds of solvent Names to trust
funds of insolvent Names in order to meet the latter's obligations; (2)
engaging in unauthorized commingling of the assets from the different trust
funds; and (3) failing to maintain appropriate and necessary records with
respect to each trust fund. The Court has certified the proceedings as a class
action, the class being of all those names who have not settled with Citibank
through the 1996 Reconstruction & Renewal settlement offer or otherwise.

At the beginning of 1997, on the application of Citibank, the U.S.
District Court dismissed a number of the Names' claims. The Court held,
however, that the plaintiffs may continue to bring their claim for damages for
breach of fiduciary duty by Citibank in U.S. courts. These initial findings
were on preliminary motion, and are not findings on the merits of the claims.

Citibank strongly denies the allegations made by the Names and will
vigorously defend the proceedings if pursued. Under the terms of the Lloyd's
American Trust Deed ("LATD"), Citibank has a right to reimbursement from the
LATFs of expenses (including legal fees) properly incurred by Citibank in its
capacity as trustee and in certain circumstances a preferred lien for up to 1%
of the LATFs' principal and income in order to cover reimbursable expenses and
liabilities. At this time Citibank is not seeking to recover its fees and
expenses from the LATFs.

E.C. Aviation Inquiry

The E.C. competition directorate is currently investigating certain
agreements in the market for aviation and hull war insurance within the
European Community which followed the events of September 11, 2001.

We believe that the industry response to the events in question was the
least restrictive means of ensuring the continued availability of insurance
cover to airlines.

We are advised, however, that there is a risk that the European Commission
may consider imposing fines should they establish an infringement of Article
81(1) of the E.C. Treaty (which prohibits any arrangement which restricts
competition in a market and which affects E.U. trade).

8. REINSURANCE CEDED

The primary purpose of the ceded reinsurance program is to protect the
Syndicates from potential losses in excess of what the Syndicates are prepared
to accept. It is expected that the companies to which reinsurance has been
ceded will honor their obligations. In the event that these companies are
unable to honor their obligations to the Syndicates, the Syndicates will pay
these amounts. Appropriate provision is made for possible non-payment of
amounts due to the Syndicates.

P-16

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

Balances pertaining to reinsurance transactions are reported "gross" on
the combined balance sheet, meaning that reinsurance recoverable on unpaid
losses and ceded unearned premiums are not deducted from insurance reserves but
are recorded as assets.

Excluding related party quota share arrangements, there was no exposure
with any reinsurer of more than 10% of unearned premiums. The largest
concentration of reinsurance recoverables as at December 31, 2002, excluding
related party quota share arrangements, was with Munich Re which represented
12% of total recoverables.

The effect of assumed and ceded reinsurance on premiums written, premiums
earned and insurance losses and loss adjustment expenses is as follows:

YEAR ENDED DECEMBER 31,
------------------------------------
2002 2001 2000
---------- ----------- ---------
($ IN MILLIONS)

Premiums Written
Direct ....................................... $ 1,091 $ 518 $ 372
Assumed ...................................... 758 744 385
Ceded ........................................ (865) (574) (262)
------- -------- ------
Net premiums written ......................... 984 688 495
------- -------- ------
Premiums Earned
Direct ....................................... 926 430 359
Assumed ...................................... 687 618 370
Ceded ........................................ (750) (486) (263)
------- -------- ------
Net premiums earned .......................... 863 562 466
------- -------- ------
Insurance Losses and Loss Adjustment Expenses

Direct ....................................... 483 663 535
Assumed ...................................... 359 951 553
Ceded ........................................ (319) (1,009) (813)
------- -------- ------
Total net insurance losses and loss adjustment
expenses .................................... $ 523 $ 605 $ 275
======= ======== ======

9. OTHER COMPREHENSIVE INCOME

Other comprehensive income is defined as any change in the Syndicates
members' interests from transactions and other events originating from
non-member sources. These changes are comprised of the Syndicates' reported net
income and changes in unrealized gains and losses on investments. The following
table sets out the components of the Syndicates' comprehensive income, other
than net income.

YEAR ENDED DECEMBER 31,
-------------------------------
2002 2001 2000
------ --------- ----------
($ IN MILLIONS)

Unrealized gains on investments .......... $ 9 $ 4 $ 13
Unrealized losses on investments ......... -- (1) (5)
--- ------ ------
Total other comprehensive income ......... $ 9 $ 3 $ 8
=== ===== =====

P-17

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

10. RELATED PARTY TRANSACTIONS

The following summarizes the related party transactions of the Syndicates:

WELLINGTON UNDERWRITING PLC ("Wellington")

Wellington is the holding company of WUAL and of certain corporate Members
of Lloyd's which are Members of Syndicate 2020.

Management fees paid to WUAL in respect of the Syndicates in 2002 were
$6.0 million (2001: $4.3 million; 2000: $3.1 million). There were no payments
outstanding at the year end (2001: nil; 2000: nil).

WELLINGTON SYNDICATE SERVICES LIMITED ("WSS")

WSS is a wholly owned subsidiary of Wellington.

Activities

WSS introduces terrorism, cargo, political risk, commercial lines,
accident and health, hull, and war marine liability business to Syndicate 2020
and commercial lines business to Syndicate 3030. All business is introduced by
WSS to the participating Syndicates by means of registered binding authorities.

Premium Income

The percentage of total net written premium income introduced by WSS to
Syndicate 2020 during 2002 was 10% (2001 and 2000 -- 3.3%). The percentage of
total net written premium income introduced to Syndicate 3030 was 4.5% for
2002. WSS does not charge income or commission to Syndicate 2020 or Syndicate
3030.

WELLINGTON UNDERWRITING INC ("WU Inc.")

WU Inc. is a wholly owned subsidiary of Wellington.

Activities

WU Inc., which is a company incorporated in Delaware in the USA,
introduces US property and casualty facultative reinsurance business to
Syndicate 2020 by way of a registered binding authority.

Premium Income

All premium income introduced by WU Inc. to WUAL in the years 2000, 2001
and 2002 was underwritten by Syndicate 2020. The percentage to total net
premium income introduced to WU Inc. to Syndicate 2020 during 2002 was 10.7%
(2001 -- 5.6%; 2000 -- 1.4%). WU Inc. charged binder commission of $18.2
million (2001: $10.5 million; 2000: $6.5 million) in respect of business
introduced to Syndicate 2020.

WU Inc. also charged Syndicate 2020 a profit commission of $0.9 million
(2001: $0.5 million; 2000: $0.6 million)

SWISS RE

Syndicate 2020 has entered into various reinsurance contracts with Swiss
Re which currently owns 9.5% of the share capital of Wellington. Prior to July
17, 2001, it owned more than 10.0% of the share capital of Wellington. The
terms of these contracts are similar to those that are available to

P-18

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

non-related cedents. Premium payable under these contracts amount to
approximately 1.6% of the reinsurance premiums payable for 2002 (2001: 23%;
2000: 3%).

ASPEN HOLDINGS AND ASPEN INSURANCE UK LIMITED ("Aspen U.K.")

Aspen U.K. is an insurance company based in London which is authorized by
the FSA. Following approval by the underwriting members of Syndicate 2020, on
June 20, 2002 Lloyd's granted all necessary consents for WUAL to transfer the
Casualty and Property Reinsurance, UK Liability and UK Commercial Lines
business written by Syndicate 2020 to Aspen U.K. Aspen U.K. is a wholly owned
subsidiary of Aspen Holdings.

The management of Aspen Holdings comprise the management which were
previously involved in the management of Syndicate 2020. Between October 16,
2002 and November 29, 2002, following FSA approval, Wellington acquired a total
of 12,055,230 shares in Aspen Holdings, the holding company of Aspen U.K. This
holding was subsequently reduced in January 2003, to 11,262,680 (19.8%)
following a sale of shares to non-aligned Members of Syndicate 2020.

Aspen Holdings issued options to subscribe for up to 6,787,880 of its
ordinary shares of (pounds sterling)0.01 each to Wellington Holdings
(3,781,120 options) and the non-aligned Members of Syndicate 2020 (3,006,760
options). The subscription price payable under the options is initially
(pounds sterling)10 and increases by 5% per annum, less any dividends paid.
Option holders are not entitled to participate in any dividends and would not
rank as creditors in the event of liquidation. The options are exercisable on
the first registered public offering of the ordinary shares in the United
States or the first listing of the ordinary shares on a stock exchange (a
"Listing") or a sale of all or substantially all of the business, assets or
undertakings of Aspen Holdings and its subsidiaries or a sale of 50% or more of
the ordinary shares of Aspen Holdings (a "Sale") or, if no Listing or Sale has
occurred prior to June 21, 2007, at any time within the five business days
following June 21, 2007. If not exercised, the options will expire after five
years but if a Listing occurs within those five years the term is automatically
extended to a period of ten years.

REINSURANCE ARRANGEMENTS BETWEEN SYNDICATE 2020 AND SYNDICATE 3030 AND ASPEN
U.K.

Prior to the formation of Aspen Holdings in May 2002, Syndicate 2020
entered into two arrangements with Berkshire Hathaway Inc. group companies that
increased the premium income capacity of Syndicate 2020 for the 2002 year of
account, to enable Syndicate 2020 to meet its premium income target for the
year. Those arrangements comprised:

o A quota share reinsurance contract with National Indemnity
Corporation of Omaha ("NICO"), a Berkshire Hathaway Inc. group
company, under which Syndicate 2020 ceded 35.7% of all business, other
than U.S. Surplus Lines Business, incepting between January 1, 2002
and May 31, 2002, plus all U.S. Surplus Lines business written between
June 1, 2002 and June 30, 2002. NICO subsequently ceded 34% of these
risks to Aspen U.K.

o A consortium underwriting arrangement with Syndicate 3030. Syndicate
3030 was formed in May 2002 and, like Syndicate 2020, is managed by
WUAL. All of its capital is provided by Tonicstar Limited, a wholly
owned subsidiary of Berkshire Hathaway Inc. Under the terms of the
consortium agreement, Syndicates 2020 and 3030 shared all business
written by Syndicate 2020 between June 1, 2002 and December 31, 2002,
other than US Surplus Lines Business written between June 1 and June
30, 2002 in the proportion of 64.3% to Syndicate 2020 and 35.7% to
Syndicate 3030. The consortium arrangement was Syndicate 3030's sole
source of income in 2002. Syndicate 3030 entered into a quota share
reinsurance contract to cede 70% of these risks to Aspen U.K.

P-19

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

The total net earned premium ceded by the Syndicates to Aspen U.K. under
the quota share arrangements outlined above was $74.3 million for the year
ended December 31, 2002. Policy acquisition expenses for the year ended
December 31, 2002 included $14.1 million of ceded commissions received from
Aspen U.K. in respect of the quota share arrangements.

At December 31, 2002 the net amounts receivable from NICO and payable to
Aspen U.K. under these contracts were $22.0 million and $1.0 million
respectively analyzed as follows:

NICO ASPEN U.K. TOTAL
--------- ------------ ---------
($ IN MILLIONS)

Assets:
Reinsurance recoverable ..................... $ 19 $ 4 $ 23
Ceded unearned premiums ..................... 7 10 17
Underwriting premium receivables ............ 289 118 407
Other receivables ........................... -- -- --
------ ----- ------
Total Assets ................................ 315 132 447
------ ----- ------
Liabilities:
Losses and loss adjustment expenses ......... (110) (25) (135)
Unearned premiums ........................... (88) (75) (163)
Reinsurance premiums payables ............... (72) (26) (98)
Accrued expenses and other payables ......... (23) (7) (30)
------ -------- ------
Total Liabilities ........................... (293) (133) (426)
------ ------- ------
$ 22 $ (1) $ 21
====== ======= ======

ARRANGEMENTS BETWEEN ASPEN HOLDINGS AND WELLINGTON

Under the framework agreement entered into by and among Aspen Holdings,
Aspen Insurance U.K. Services Limited ("Aspen U.K. Services"), Wellington,
WUAL, WUSL and WU Inc. on May 28, 2002, Aspen Holdings agreed to cause Aspen
U.K. to offer Syndicate 2020, for 2003 and each subsequent year of account, a
20% quota share of Aspen U.K.'s business (comprising the lines of business
previously underwritten by Syndicate 2020) during such year. WUAL agreed, on
behalf of Syndicate 2020, to offer to Aspen U.K. for 2003 and each subsequent
year of account, a 20% quota share of all business (other than Aspen U.K.
lines) allocated to that year of account of Syndicate 2020's business. For
2003, Aspen U.K. has elected to take up a 7.5% quota share of Syndicate 2020
lines, and WUAL, on behalf of Syndicate 2020, has elected not to accept any
quota share reinsurance of Aspen U.K. Neither Aspen U.K. nor WUAL on behalf of
Syndicate 2020 will be obligated to offer a quota share to the other after the
2005 year of account should an initial public offering by Aspen Holdings be
completed prior to December 21, 2005.

Under the framework agreement, Wellington, WUAL, WUSL and WU Inc. also
agree, until March 31, 2004, not to, subject to exceptions, compete with Aspen
U.K. or engage in activities that will directly or indirectly foster
competition with Aspen U.K. in the property reinsurance, U.S. and non-U.S.
casualty reinsurance and U.K. commercial insurance lines of business that were
previously written by Syndicate 2020 and currently written by Aspen U.K.

Aspen U.K. Services has entered into a run-off services agreement with
WUAL as of May 20, 2003 to handle the run-off of the claims for Syndicate 2020,
Syndicate 3030 and their predecessors for

P-20

SYNDICATES 2020 AND 3030

NOTES TO SYNDICATES FINANCIAL STATEMENTS -- (CONTINUED)

the lines of business that were written by Aspen Holdings. Under the agreement,
Aspen Holdings acts as guarantor of the services to be performed by Aspen U.K.
Services. The commencement period is as of June 21, 2002, and the agreement may
be terminated by either party on 3 months' notice. Under certain circumstances,
including regulatory requirements and change of control, the agreement may be
terminated immediately by either party. Services are charged on an at-cost
basis.

Aspen Holdings and its subsidiaries (collectively, the "Company") entered
into a contract for the provision of services by a subsidiary company of
Wellington. These services include accounting, actuarial, operations and
technical support. This agreement is for an indefinite period but may be
terminated by either party upon the occurrence of certain specified
circumstances, such as the inability to pay debts, on an initial public
offering, and, after an initial period of 3 years, may be terminated by either
party on 18 months' prior notice. The Company may also terminate specific
services if it undertakes those services itself and does not contract those
services to a third party. The provision of these services is covered by a
detailed service level agreement and is priced on an actual cost basis. The
cost of these services in 2002 was $2.6 million, and the amount due to
Wellington at December 31, 2002 was $1.5 million.

P-21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND UNDERWRITING
RESULTS OF SYNDICATES 2020 AND 3030

The following discussion and analysis should be read in conjunction with
the audited Syndicates Financial Statements and accompanying notes which appear
elsewhere in this prospectus.

For the purpose of this prospectus, we have prepared the audited financial
statements of Syndicate 2020 and Syndicate 3030 (the "Syndicates") due to the
following:

o a substantial part of the underwriting team of Syndicate 2020 joined
the Company between June 21, 2002 and December 31, 2002;

o the Company participated by way of quota share arrangements in the
business written by Syndicate 2020 during 2002, continues to
participate as quota share reinsurer, to a lesser extent, during 2003
and may continue to participate in future years under the arrangements
set out on page F-12;

o although the Company did not acquire the renewal rights to any of the
business written by Syndicate 2020, it has since January 1, 2003 been
able to renew the majority of the risks within those classes of
business that Syndicate 2020 had agreed would be underwritten by the
Company; and

o Wellington agreed that it would not compete with the Company in
respect of those classes from January 1, 2003 through March 31, 2004
and that in the period from June 21, 2002 through December 31, 2002 it
would only seek to write risks within those classes to the extent
needed to complete its 2002 business plan.

Management believes that the financial results of our business will be
materially different from financial results of the Syndicates for the following
reasons:

o The following discussion and analysis relate to the results of
Syndicate 2020 for the years ended December 31, 2002, 2001 and 2000.
The financial statements of Syndicate 2020 for 2002 include the
transactions of Syndicate 3030 which wrote on a co-insurance basis
with Syndicate 2020 for that year only; and

o The Company did not acquire any rights to the assets of the
Syndicates or assume any obligations in respect of the liabilities of
the Syndicates and consequently is not exposed to any risks relating
to any diminution in value of the assets of the Syndicates or
increases in their liabilities and would not benefit from any
increases in value of these assets or decreases in these liabilities.

BASIS OF PREPARATION

We have prepared the financial statements of the Syndicates from the
Annual Accounting Returns of the Syndicates and made such adjustments as were
required to present the financial statements on a U.S. GAAP basis. The Annual
Accounting Returns are financial statements in a prescribed form filed with
Lloyd's by WUAL as managing agent of the Syndicates and which are used by
Lloyd's to prepare consolidated financial statements for the Lloyd's market as
if it were a single insurance operation. They include insurance and reinsurance
transactions reported under U.K. GAAP except that there is no requirement for
the establishment of equalization reserves (a normal requirement of U.K. GAAP
for general insurers). The basis on which insurance reserves are assessed and
premiums reported within these returns is similar to the basis required under
U.S. GAAP.

The principal adjustments required to restate the financial statements
under U.S. GAAP are the conversion of transactions and balances in British
Pounds into U.S. dollars and the transfer of unrealized gains and losses on
investments from operating income to other comprehensive income.

The financial statements do not deal with the capital underlying the
business or with taxation for the reasons set out in the "Basis of Preparation
and Summary of Significant Accounting Policies" beginning on page P-7.

M-1

CRITICAL ACCOUNTING POLICIES

We consider that the critical accounting policies relevant to the
Syndicate Financial Statements are those related to premium recognition and the
establishment of loss reserves as set out in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the Company's
results earlier in this Prospectus. This should be read in conjunction with the
"Basis of Preparation and Summary of Significant Accounting Policies" beginning
on page P-7.

RESULTS OF OPERATIONS

The following is a discussion and analysis of the results of operations of
the Syndicates for the years 2000, 2001 and 2002.

Overview. This period was a time of major change in the property and
casualty market following a period of very poor results at the end of the
1990s. Rates were beginning to improve from their low point in 1999 during 2000
and the first part of 2001. The industry then suffered a massive upheaval
following the events of September 11, 2001 and the pace of rate hardening
accelerated rapidly. During this period the capacity of Syndicate 2020 was
increased from $641 million ( (pounds sterling)430 million) in 2000 to $730
million ( (pounds sterling)500 million) in 2001 and $1,006 million ( (pounds
sterling)625 million) in 2002. In accordance with the regulatory arrangements
at Lloyd's each $1 million of capacity was supported by approximately $0.5
million of capital pledged by members of the Syndicates. Consistent with this
relatively high level of operating leverage it was the practice of the
management of Syndicate 2020 to purchase significant levels of reinsurance
protection. This proved materially beneficial during 2001 although it was not
sufficient to avoid an overall underwriting loss for that year.

Provisions net of reinsurance totaling $239 million for claims arising
from the destruction of the World Trade Center and related losses were
established at the end of 2001 and maintained at around that level (subject to
reductions for payments) through 2002. Significant uncertainties continue to
exist as to the final amounts payable by Syndicate 2020 (and many other
insurers and reinsurers) and the estimate of ultimate losses will be revised as
more information becomes available. Our company does not have any exposure to
claims arising from business written before January 1, 2002 and will therefore
not be affected by any change in the ultimate cost to Syndicate 2020 of these
events.

The combined ratios for the three years 2000, 2001 and 2002 for the
Syndicates were 96%, 146% and 94% respectively. These combined ratios include
those lines of business that are not currently written by the Company.
Excluding the World Trade Center and related claims, the combined ratio for
2001 would have been 104% and the simple average for the three years would have
been 98%.

YEAR ENDED DECEMBER 31, 2002 VS. YEAR ENDED DECEMBER 31, 2001

Gross premiums written. Gross premiums written increased by 46.5% from
$1,262 million to $1,849 million. This increase was mainly attributable to
increases in premium rates which were estimated by Wellington Underwriting plc
to have increased by an average of 42%. Capital support for the increase came
from an increase in capacity and capital pledged by the Members of Syndicate
2020, a quota share reinsurance of Syndicate 2020 by the National Indemnity
Company (a subsidiary of Berkshire Hathaway) and the establishment of Syndicate
3030 to write in parallel with Syndicate 2020 with capital provided by another
subsidiary of Berkshire Hathaway.

Reinsurance ceded. Premiums payable to reinsurers increased by 50.7% from
$574 million to $865 million. In the aftermath of the terrorist attack on the
World Trade Center, placing reinsurance proved extremely difficult and this was
reflected in rising reinsurance costs. The management of the Syndicates
considered that the most prudent move was to complete a full reinsurance
program, with financially sound reinsurers, notwithstanding significant rate
increases.

Gross premiums earned. Gross premiums earned were 87% and 83% of gross
premiums written for 2002 and 2001, respectively. This is higher than for our
initial trading period because there was relatively little change in business
volumes between 2001 and 2002 whereas our business volume is increasing rapidly
as it becomes established.

M-2

Net premiums earned. Net premiums earned increased by 53.6% from $562
million to $863 million.

Insurance losses and loss adjustment expenses. Loss and loss adjustment
expenses dropped from 107.7% of "Net premiums earned" to 60.6% of "Net premiums
earned", the ratio for 2001 being stated inclusive of the impact of the
terrorist attack on the World Trade Center. Calendar year 2002 benefited from a
low level of major catastrophe and property risk losses.

Policy acquisition costs. Policy acquisition costs increased from $189
million to $254 million but fell as a percentage of gross earned premiums from
18% to 15%.

Operating and administrative expenses. Operating and administration
expenses increased from $27 million to $36 million which, together with policy
acquisition costs and the increase in earned premiums, resulted in a fall in
the expense ratio (based on net earned premiums) from 38.4% to 33.6%.

YEAR ENDED DECEMBER 31, 2001 VS. YEAR ENDED DECEMBER 31, 2000

Gross premiums written. Gross premiums written increased by 66.7% from
$757 million to $1,262 million. This very significant increase includes the
impact of rate increases (estimated at 31% overall). Capital support for the
increase in business came from a 16% increase in the capacity of Syndicate 2020
and a quota share with a premium limit of (pounds sterling)100 million placed
by Syndicate 2020 with a subsidiary of Swiss Re.

Reinsurance ceded. Reinsurance ceded increased from $262 million (34.6% of
gross premiums written) to $574 million (45.5% of gross premiums written). Most
of the increase in the ceded percentage is attributable to the quota share
referred to above. The amount reported for 2001 also includes $100 million in
respect of reinstatement premiums payable following the losses of September 11,
2001.

Net premiums earned. Net premiums earned increased by 20.6% from $466
million to $562 million. This is lower than the reported 39.0% increase in net
premiums written which reflects a disproportionate increase in the unearned
premium reserve which is attributable mainly to the quickening pace of rate
increases and new business written in the fourth quarter of 2001.

Insurance losses and loss adjustment expenses. Losses and loss adjustment
expenses of $605 million for 2001 increased 120% from loss and loss adjustment
expense of $275 million for 2000. Loss and loss adjustment expenses for 2001
include $172 million, net of reinsurance, arising from the events of September
11, 2001. Excluding these claims, the increase in losses and loss adjustment
expenses from 2000 to 2001 would have been 57.5%. The Syndicates also reported
net losses of $8.0 million in 2001 from Tropical Storm Allison whereas in 2000
there were no individually significant impacts from catastrophe losses. The
loss ratio (based on net earned premiums) was 59% in 2000 and 108% in 2001.
Excluding the impact of the World Trade Center loss the claims ratio in 2001
would have been 68.8%. Both years were adversely affected by losses in the
non-marine energy and professional indemnity classes of business written by
Syndicate 2020 including reserve strengthening in respect of prior years
exposures in these classes. The losses in the non-marine energy account arose
from an increase in the frequency of fire and explosion losses in power plants
and other on-shore energy installations combined with a poor underwriting
environment. In the case of professional indemnity, a significant proportion of
the losses arose from an unanticipated frequency and severity of claims from
U.S. law firms.

Policy acquisition costs. Policy acquisition expenses, mainly comprising
brokerage, increased by 29.5% from $146 million to $189 million, representing a
reduction from 20% of gross earned premiums in 2000 to 18% of gross earned
premiums in 2001 as a result of changes in the mix of business towards lines of
business such as treaty reinsurance, which carries lower levels of broker
commission.

Operating and administrative expenses. Operating and administrative
expenses increased marginally from $26 million to $27 million, which, taken
together with the increase in policy

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acquisition costs, resulted in an increase in the expense ratio (based on net
earned premiums) from 36.9% to 38.4%. Syndicate 2020 was able to support the
increased level of business in 2001 compared to 2000 because although volumes
of business had been reduced in 1999 and 2000 compared to previous years as the
market softened, the Syndicate had not reduced its staffing levels and was
therefore able to respond to the improving market opportunities in 2001 without
needing to significantly increase operating expenditure.

MATERIAL CASH FLOW MOVEMENTS

Losses and loss adjustment expenses. The change in loss adjustment
expenses between 2000 and 2001 was a direct result of the events of September
11. The losses from the terrorist attacks contributed $918 million during 2001
to the overall figure of $993 million. The reduction in loss provisions in 2002
resulted from the favorable underwriting conditions in 2002 giving rise to new
incurred claims at a similar level to the value of claims paid in the year.

Unearned premiums. The movement in the unearned premium reserves in 2002
and 2001 was a direct result of the 46.5% and 66.7% increase in gross written
premiums reported in 2002 and 2001 respectively. The small movement in 2000 was
consistent with the 7.8% increase in syndicate capacity between 1999 and 2000.

Reinsurance recoverables. The movement in reinsurance recoverables between
the 2001 and 2000 years was due to the $679 million of additional recoveries
due following the events of September 11. The reduction in recoverables
recorded in 2002 was due to the receipt of recoveries associated with September
11 losses.

Ceded unearned premium. The movement in ceded unearned premium reserves
was consistent with increases in reinsurance premiums ceded following the
growth in the Syndicates and due to increased reinsurance rates.

Changes in accrued expenses and other payables. The significant increase
in accrued expenses in 2001 was due to the recognition of $96 million on
account payments which were made by the Syndicate 2020's reinsurers to assist
in meeting U.S. funding requirements post September 11.

RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES FOR THE SYNDICATES BUSINESS

Historically the Syndicates prepared their financial statements in
accordance with the requirements of Lloyd's of London under which the financial
statements are required to include separate underwriting accounts for each
successive underwriting year of account until such time (normally at the end of
three years) when the account is closed and the profit or loss for that year of
account determined. This reporting arrangement had the following implications
for the setting of reserves:

o Reserves for a new year of account were not included in the audited
financial statements until the end of three years (for example at
December 31, 2000 in respect of the 1998 year of account);

o At that point, the reserves set related to all outstanding claims and
LAE (including IBNR) attributable to business incepting in the year of
account irrespective of the date of occurrence of the events giving
rise to claims (such reserves together with paid claims referred to as
"ultimate claims"). Thus, for example, the ultimate claims at December
31 2000 in respect of the 1998 year of account would have included
unpaid claims in respect of business incepting in 1998 including
claims arising from events in calendar years 1998, 1999 and 2000;

o It was the practice of management to issue regular forecasts of the
results of each year of account between the end of that year and the
date two years later when it was closed. This led to management
deploying its actuarial resources to estimate ultimate claims for

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each year of account as at the end of each calendar year. For example,
management estimated the ultimate claims for the 1998 year of account
at the end of 1998 and again at the end of 1999 even though those
estimates were not included in the audited financial statements of
Syndicate 2020;

o Management monitored the effectiveness of the reserving process by
comparing successive estimates of ultimate claims for each year of
account;

o The outstanding liabilities of each year of account were normally
assumed by the following year of account at the point at which the
account was closed. Thus at December 31, 2000 the outstanding
liabilities of the 1998 account were assumed by the 1999 year of
account;

o Any change in the assessment of the ultimate claims for a year of
account after it was closed was included in the financial statements
of the following year of account; management continued to monitor the
ultimate claims for each original year of account until run-off or
reinsured to a third party;

o Although the reserves at the end of the first and second year of each
year of account were not included in the audited financial statements
of Syndicate 2020, they were reflected, subject to statutory
adjustments, in the solvency returns made to the regulator and in this
context, the reserves were subject to audit; and

o As a result of these arrangements, reserves at the end of each year
could be analyzed by year of account but would normally include
estimates in respect of future claims arising from unexpired policies
at that date irrespective of whether a deficit or surplus was
projected in respect of unearned premium. This is in contrast to a
calendar year-basis in which no provision is made for future claims
unless such estimates exceed the unearned premium reserves.

o Reserves have been established by the selection of a "best estimate"
from within a range of estimates.

The loss and LAE reserve development table in Table 1 illustrates the
change over time of the loss and LAE reserves of Syndicate 2020 at the end of
the years indicated. The reserves represent the estimated amount of gross loss
and LAE for claims arising in the current and all prior accident years that are
unpaid at the balance sheet date, including IBNR. Since Wellington Underwriting
plc adopted annual accounting for the results of Syndicate 2020 in 1999,
historical loss development data is available on an annual basis of accounting
for the four years from 1999 to 2002 only.

The first section of each table shows gross reserves for loss and LAE as
initially established at the end of each stated year. The second section,
reading down, shows the cumulative amounts paid, gross, as of the end of the
successive years with respect to the reserve initially established. The third
section shows the retroactive re-estimation of the initially established gross
reserves for loss and LAE as of the end of each successive year, which results
primarily from expanded awareness of additional facts and circumstances that
pertain to open claims. The last section compares the latest re-estimated gross
reserves for loss and LAE to the gross reserves as initially established and
indicates the cumulative development of the liability established gross
reserves through December 31, 2002. For instance, the surplus (deficiency)
shown in the table for each year represents the aggregate amount by which the
original estimates of reserves at that year-end have changed in subsequent
years. Accordingly, the cumulative surplus/(deficiency) for a year-end relates
only to reserves at that year-end and such amounts are not additive.

Caution should be exercised in evaluating the information shown on Table
2, as each amount includes the effects of all changes in amounts for prior
periods. Conditions and trends that have affected development of liability in
the past may or may not necessarily indicative of development of such liability
in the future.

In view of the fact that Aspen Holdings is unable to present a loss
development table on an accident year basis for years prior to 1999, a
supplementary underwriting year loss development table

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has been prepared. Table 2 shows the loss development table for Syndicate 2020
on an underwriting year basis. This table has been prepared for the 1993 to
2002 underwriting years of account. Loss reserves presented on an "underwriting
year" basis represent claims related to all policies incepting in a given year.
In contrast, "accident year" loss reserves represent claims for events that
occurred during a given calendar year, regardless of when the policy was
written. Loss reserves on an underwriting year basis may include claims from
different accident years. For example, a policy written during 1999 may have
losses in accident year 1999 and in accident year 2000. Therefore, underwriting
year data as of a particular evaluation date is less mature than accident year
data.

The first section of each table shows gross reserves for loss and LAE for
each underwriting year as initially estimated at the end of each stated
underwriting year. The second section, reading down, shows the cumulative
amounts paid, gross, as of the end of the successive years with respect to the
reserve initially estimated. The third section shows the retroactive
re-estimation of the initially estimated gross reserves for loss and LAE as of
the end of each successive year, which results primarily from expanded
awareness of additional facts and circumstances that pertain to open claims.
The last section compares the latest re-estimated gross reserves for loss and
LAE to the gross reserves as initially estimated and indicates the cumulative
development of the liability established for gross reserves through December
31, 2002. For instance, the surplus/(deficiency) shown in the table for each
underwriting year represents the aggregate amount by which the original
estimates of reserves for each underwriting year have changed in subsequent
years. Accordingly, the cumulative surplus/(deficiency) for each underwriting
year relates only to reserves for that underwriting year.

It should be noted that WUAL purchased reinsurance protection consisting
of quota shares, excess of loss and facultative reinsurance during the years
from 1993 through 2002. During softer market conditions in the late 1990s, WUAL
actively managed the Syndicates' retentions to take advantage of lower
reinsurance pricing and to protect its members from poor pricing conditions.
Therefore, the results shown on a gross basis do not represent the ultimate net
losses or gains the members of the Syndicates would have incurred during those
years. Moreover, the net effect of the reinsurance protection was to cover
entirely the cumulative deficiency for the 1998, 1999, 2000 and 2001
underwriting years.

Caution should be exercised in evaluating the information shown on Table
2, as each amount includes the effects of all changes in amounts for prior
periods. Conditions and trends that have affected development of liability in
the past may or may not necessarily be indicative of development of such
liability in the future.

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Table 1: FOUR YEAR CLAIMS DEVELOPMENT TABLE ON CALENDAR YEAR BASIS

($ in millions) 1999 AND PRIOR 2000 2001 2002
- ----------------------------------------------- ---------------- ---------- ------- -------

Gross liability for unpaid claims and claims
expenses ..................................... 1,289 1,501 2,509 2,555
Gross re-estimated liability
One year later ............................... 1,359 1,521 2,557
Two years later .............................. 1,346 1,527
Three years later ............................ 1,348
Gross cumulative surplus/(deficiency) ......... (59) (26) (48)
Gross cumulative surplus/(deficiency) -
excluding foreign exchange ................... (69) (1) 3
Cumulative amount of gross liability paid:
One year later ............................... 351 396 656
Two years later .............................. 592 641
Three years later ............................ 763

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Table 2: TEN-YEAR CLAIMS DEVELOPMENT TABLE ON UNDERWRITING YEAR BASIS(1)(2)

($ in millions) 1993 1994 1995 1996 1997 1998(3) 1999(4) 2000(5) 2001(6) 2002
- ------------------------------------- ------ ------ ------ ------ --------- --------- --------- --------- --------- -------

Gross liability for unpaid claims
and claims expenses ................ 428 600 596 538 407 418 654 616 1,524 714
Gross re-estimated liability
One year later ..................... 345 486 517 403 443 576 747 704 1,568
Two years later .................... 307 448 480 390 467 616 815 755
Three years later .................. 303 449 471 383 456 655 844
Four years later ................... 292 435 454 378 401 660
Five years later ................... 277 417 433 389 411
Six years later .................... 272 399 430 386
Seven years later .................. 269 386 425
Eight years later .................. 263 384
Nine years later ................... 260
Gross cumulative
surplus/(deficiency) ............... 168 216 171 152 (4) (242) (190) (139) (44)
Gross cumulative
surplus/(deficiency) -
excluding foreign exchange ......... 175 220 171 147 (6) (246) (199) (132) (20)
Cumulative amount of gross
liability paid:
One year later ..................... 96 167 181 124 156 218 283 201 540
Two years later .................... 138 223 257 188 253 358 449 341
Three years later .................. 169 264 285 226 307 456 548
Four years later ................... 189 290 317 254 304 513
Five years later ................... 202 309 331 286 320
Six years later .................... 218 321 350 317
Seven years later .................. 229 333 360
Eight years later .................. 235 343
Nine years later ................... 237

- ----------
(1) Table 2 has been prepared for the 1993 to 2002 underwriting years of
account. Loss reserves presented on an "underwriting year" basis
represent claims related to all policies incepting in a given year. In
contrast, "calendar year" loss reserves represent claims for events that
occurred during a given calendar year, regardless of when the policy was
written. Loss reserves on an underwriting year basis may include claims
from different calendar years. For example, a policy written during 1999
may have losses in 1999 and 2000. Therefore, underwriting year data as of
a particular evaluation date is less mature than calendar year data.

(2) The net effect of the reinsurance protections was to cover entirely the
gross deterioration for the 1998, 1999, 2000 and 2001 underwriting years.

(3) The 1998 underwriting year was protected by reinsurance consisting of
quota share, excess of loss and facultative reinsurance. In addition
Syndicate 2020 purchased two stop loss policies which

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provided cover for 80% of applicable losses in excess of a 92.5% loss ratio
and 100% of applicable losses in excess of a 90% loss ratio. Cumulative
recoveries under the stop loss policies were:

December 31, 1998 $0
December 31, 1999 $5.6 million
December 31, 2000 $16.3 million

(4) The 1999 underwriting year was protected by an extensive reinsurance
program. In addition to specific protections, the year was protected by a
whole account excess of loss program, excess $10 million, which provided
significant recoveries. The final element of the reinsurance program was a
whole account stop loss, the first layer of which provided cover for losses
in excess of a 78% loss ratio and the second layer, for losses above an 80%
loss ratio. Cumulative recoveries under the stop loss policy were:

December 31, 1999 $37.0 million
December 31, 2000 $96.7 million
December 31, 2001 $98.6 million
December 31, 2002 $90.4 million

(5) The 2000 underwriting year was protected by a similar program to that used
in 1999. Specific protections were purchased and the whole account excess of
loss program, excess $10 million, which was purchased in 1999 was renewed.
The 1999 account stop loss was also renewed on the same terms and provided
cumulative recoveries of:

December 31, 2000 $60.7 million
December 31, 2001 $75.6 million
December 31, 2002 $93.2 million

(6) The 2001 underwriting year was protected by a similar program to the 1999
and 2000 years, including a large non-marine surplus treaty, two whole
account excess of loss program and a variety of specific protections.
Additionally, a qualifying quota share with a premium limit of (pounds
sterling)100m was placed which absorbed a significant proportion of the
gross deterioration.

M-9

GLOSSARY OF SELECTED REINSURANCE, INSURANCE, INVESTMENT AND OTHER TERMS

Acquisition expenses ........ The aggregate of policy acquisition expenses, including commissions and
the portion of administrative, general and other expenses attributable to
underwriting operations.
Broker ...................... An intermediary who negotiates contracts of insurance or reinsurance on
behalf of an insured party, receiving a commission from the insurer or
reinsurer for placement and other services rendered.
Capacity .................... The percentage of surplus, or the dollar amount of exposure, that an
insurer or reinsurer is willing or able to place at risk. Capacity may
apply to a single risk, a program, a line of business or an entire book of
business. Capacity may be constrained by legal restrictions, corporate
restrictions or indirect restrictions.
Captive insurance ........... Insurance provided by an insurance company formed to insure the risks
of its parent entity or entities.
Case reserves ............... Loss reserves, established with respect to specific, individual reported
claims.
Casualty insurance or
reinsurance ................ Insurance or reinsurance which is primarily concerned with the losses
caused by injuries to third persons, i.e., not the insured, or to property
owned by third persons and the legal liability imposed on the insured
resulting therefrom. It includes, but is not limited to, employers' liability,
workers' compensation, public liability, automobile liability, personal
liability and aviation liability insurance. It excludes certain types of
losses that by law or custom are considered as being exclusively within
the scope of other types of insurance or reinsurance, such as fire or
marine.
Catastrophe ................. A severe loss, typically involving multiple claimants. Common perils
include earthquakes, hurricanes, hailstorms, severe winter weather,
floods, fires, tornadoes, explosions and other natural or man-made
disasters. Catastrophe losses may also arise from acts of war, acts of
terrorism and political instability.
Catastrophe loss ............ Loss and directly identified loss adjustment expenses from catastrophes.
Catastrophe reinsurance ..... A form of excess of loss reinsurance which, subject to a specified limit,
indemnifies the ceding company for the amount of loss in excess of a
specified retention with respect to an accumulation of losses resulting
from a catastrophic event. The actual reinsurance document is called a
"catastrophe cover." These reinsurance contracts are typically designed
to cover property insurance losses but can be written to cover other
types of insurance losses such as from workers' compensation policies.
Cedent; ceding company ...... When an insurer reinsures some or all of its liability with another
insurer, it "cedes" business and is referred to as the "ceding company."
Claim ....................... Request by an insured or reinsured for indemnification by an insurance
company or a reinsurance company for loss incurred from an insured
peril or event.

G-1

Combined ratio ................. The sum of the loss ratio and the expense ratio. A combined ratio under
100% generally indicates an underwriting profit. A combined ratio over
100% generally indicates an underwriting loss.
Contingency reinsurance ........ Reinsurance of a contract of contingency insurance, such as insurance
that covers loss due to the cancellation of an event.
Correlation .................... The degree to which events or financial results tend to correspond to
each other.
Direct insurance ............... Insurance sold by an insurer that contracts with the insured, as
distinguished from reinsurance.
Distributable reserves ......... Under the Bermuda Companies Act 1981, a company may declare or
pay a dividend out of contributed surplus only if it has reasonable
grounds for believing that it is, and would after the payment be, able to
pay its liabilities as they become due and if the realizable value of its
assets would thereby not be less than the aggregate of its liabilities and
issued share capital and share premium accounts. Such amounts
permissible for distribution under the Companies Act are called
"distributable reserves."
Earned premiums or premiums
earned ....................... That portion of property and casualty premiums written that applies to
the expired portion of the policy term. Earned premiums are recognized
as revenues under U.S. GAAP.
Employers' liability ........... Insurance of employers pursuant to their obligations under the U.K.'s
Employers' Liability (Compulsory Insurance) Act 1969 to obtain
insurance in respect of their liability to their employees for bodily injury
or disease arising out of and in the course of their employment.
European Economic Area ......... The European Economic Area comprises each of the countries of the
E.U. (being, as at January 2003, Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands,
Portugal, Spain, Sweden and The United Kingdom) and Iceland,
Liechtenstein and Norway.
Excess of loss ................. Reinsurance or insurance that indemnifies the reinsured or insured
against all or a specified portion of losses over a specified currency
amount or "retention."
Exclusions ..................... Provisions in an insurance or reinsurance policy excluding certain risks
or otherwise limiting the scope of coverage.
Expense Ratio .................. Financial ratio calculated by dividing acquisition expenses and general
and administrative expenses by net premiums earned.
Exposure ....................... The possibility of loss. A unit of measure of the amount of risk a
company assumes.
Facultative reinsurance ........ The reinsurance of all or a portion of the insurance provided by a single
policy. Each policy reinsured is separately negotiated.
Fidelity business .............. A type of insurance in which an employer is insured against loss arising
from the dishonest acts of his employees.
Frequency ...................... The number of claims occurring during a given coverage period.
Gross premiums earned .......... The portion of gross premiums written during or prior to a given period
that was actually recognized as income during such period.

G-2

Gross premiums written ......... Total premiums for insurance written and reinsurance assumed during a
given period. See also "Premiums."
Incurred but not reported
("IBNR") reserves ............. Reserves for estimated losses and loss expenses that have been incurred
but not yet reported to the insurer or reinsurers.
Lead ........................... In an insurance market, the brokers find takers for insurance risks on
the market and establish the policy terms with a leading underwriter,
who also takes on a substantial share of the risk. The broker then looks
for further cover providers, known as following underwriters, who
accede to the terms established and accept a share of the risk. When a
leading underwriter establishes the policy terms, it is called to "lead."
Liability insurance ............ Term commonly used in the United Kingdom for casualty insurance.
Limits ......................... The maximum amounts that an insurer or reinsurer will insure or
reinsure in a given area of coverage. The term also refers to the
maximum amount of benefit payable for a given situation or occurrence.
Listing ........................ The first registered public offering of the ordinary shares in the United
States or the first listing of the ordinary shares on a stock exchange.
Long tail ...................... A term used to describe certain types of third-party liability exposures
(e.g., malpractice, products, errors and omissions) where the incidence of
loss and the determination of damages are frequently subject to delays
which extend beyond the term the insurance or reinsurance was in force.
An example would be asbestos liability, where the manifestation of the
disease and determination of liability does not occur until years later.
Loss; losses ................... An occurrence that is the basis for submission and/or payment of a
claim. Losses may be covered, limited or excluded from coverage,
depending on the terms of the policy.
Losses and loss adjustment
expenses ...................... The expenses of settling claims, including legal and other fees and the
portion of general expenses allocated to claim settlement costs.
Loss ratio ..................... Financial ratio calculated by dividing net losses and loss expenses by net
premiums earned.
Loss reserves .................. Liabilities established by insurers and reinsurers to reflect the estimated
cost of claims incurred that the insurer or reinsurer will ultimately be
required to pay in respect of insurance or reinsurance it has written.
Reserves are established for losses and for loss expenses, and consist of
case reserves and IBNR reserves. As the term is used in this prospectus,
"loss reserves" is meant to include reserves for both losses and for loss
expenses.
Net premiums earned ............ The portion of net premiums written during or prior to a given period
that was actually recognized as income during such period.
Net premiums written ........... Direct written premiums plus assumed reinsurance premiums less
premiums ceded to reinsurers.
Occurrence ..................... An event that results in bodily injury and/or property damage to a third
party and triggers coverage under an insurance policy.
Per occurrence limitations ..... The maximum amount recoverable under an insurance or reinsurance
policy as a result of any one event, regardless of the number of claims.

G-3

Premiums ....................... The amount charged during the term on policies and contracts issued,
renewed or reinsured by an insurance company or reinsurance company.
Premiums ceded ................. When an insurer reinsures some or all of its liability with another
reinsurer, the premiums that it "cedes" or pays to the reinsurer is called
the premiums ceded.
Product liability .............. Coverage of a manufacturer's or seller's liability for losses or injuries to
a buyer, user or bystander caused by a defect or malfunction of the
product. When it is part of a commercial general liability policy, the
coverage is often called products-completed operations insurance.
Professional indemnity or
professional liability ........ Coverage of a person or organization for injury or loss to third parties
arising from negligence or malfeasance in rendering professional
services. Professional negligence is the failure to exercise the degree of
care, knowledge or skill of the average person in good professional
standing under circumstances similar to those in which the injury
occurred. The term malpractice insurance means professional liability
coverage of medical malpractice. Professional liability insurance is also
sometimes used instead of errors and omissions insurance.
Property insurance or
reinsurance ................... Insurance or reinsurance that provides coverage to a person with an
insurable interest in tangible property for that person's property loss,
damage or loss of use.
Proportional or pro rata
reinsurance ................... Reinsurance whereby the reinsurer shares losses in the same proportion
as its shares of premiums and policy amounts.
Public Liability ............... The insurance of liability for accidental bodily injury or for damage to
the property of third parties.
Qualifying quota share ......... A reinsurance arrangement under which premiums paid by a Lloyd's
syndicate to a reinsurer qualify under the Lloyd's Bye-laws to be set-off
against the syndicate's aggregate premiums received, thereby increasing
the syndicate's underwriting capacity.
Quota share .................... Reinsurance arrangement in which the insurer, or cedent, automatically
transfers, and the reinsurer accepts, a stated proportion of every risk
within a defined type of business written by the insurer. For this, the
reinsurer receives an equal proportion of the premiums. The ceding
insurer receives a commission, based on the amount of the premiums
ceded, which is intended to reimburse the insurer for the costs of writing
and administering the business. The reinsurer is dependent on the
ceding company's ability in underwriting, pricing and claims
administration.
Rate ........................... Amount charged per unit of insurance and reinsurance.
Reconstruction and Renewal ..... Plan through which Lloyd's created Equitas Reinsurance Company
which reinsures all policies written during 1992 and prior underwriting
years.
Reinstatement .................. A ceding company's right and, typically, obligation to reinstate the
portion of coverage exhausted by prior claims. Reinstatement provisions
typically limit the amount of aggregate coverage for all claims during the
contract period and often require additional premium payments.

G-4

Reinsurance ..................... The practice whereby one insurer, called the reinsurer, in consideration
of a premium paid to that reinsurer, agrees to indemnify another insurer,
called the ceding company, for part or all of the liability of the ceding
company under one or more policies or contracts of insurance which it
has issued.
Reinsurance agreement ........... A contract specifying the terms of a reinsurance transaction.
Reserves ........................ Liabilities established by insurers and reinsurers to reflect the estimated
costs of claim payments and the related expenses that the insurer or
reinsurer will ultimately be required to pay in respect of insurance or
reinsurance it has written. Reserves are established for losses, for loss
adjustment expenses and for unearned premiums. Loss reserves consist
of "case reserves," or reserves established with respect to individual
reported claims, and "IBNR reserves." Unearned premium reserves
constitute the portion of premium paid in advance for insurance or
reinsurance that has not yet been provided. See also "Loss Reserves."
Retention ....................... The amount of exposure a policyholder retains on any one risk or group
of risks. The term may apply to an insurance policy, where the
policyholder is an individual, family or business, or a reinsurance policy,
where the policyholder is an insurance company.
Retrocedent ..................... When a reinsurer reinsures some or all of its liability with another
reinsurer, the retrocessionaire, it is referred to as the "retrocedent."
Retrocessional coverage ......... A transaction whereby a reinsurer cedes to another reinsurer, the
retrocessionaire, all or part of the reinsurance that the first reinsurer has
assumed. Retrocessional coverage does not legally discharge the ceding
reinsurer from its liability with respect to its obligations to the reinsured.
Reinsurance companies cede risks to retrocessionaires for reasons
similar to those that cause primary insurers to purchase reinsurance: to
reduce net liability on individual risks, to protect against catastrophic
losses, to stabilize financial ratios and to obtain additional underwriting
capacity.
Risk excess of loss property
treaty reinsurance ............. Reinsurance on a treaty basis of individual property risks insured by a
ceding company.
Sale ............................ A sale of all or substantially all of the business, assets or undertakings of
Aspen Holdings and its subsidiaries or a sale of 50% or more of the
ordinary shares of Aspen Holdings.
Solvency ratio .................. One of many financial ratios, expressed as a percentage, used to gauge a
company's ability to meet its long-term obligations. Specifically, with
respect to the Company on a consolidated basis, it is calculated on the
last day of any period of four consecutive fiscal quarters (or, if there are
less than four full quarters in a fiscal year, the number of full fiscal
quarters subsequent to the closing date of the Credit Facilities) as net
premiums written of all Insurance Subsidiaries during such period,
divided by the consolidated shareholders' equity of the Company less its
consolidated intangible assets on such day. With respect to any Insurance
Subsidiary which is a Material Subsidiary, net premiums written of such
Insurance Subsidiary during such period, divided by consolidated
shareholders' equity of such Insurance Subsidiary and its subsidiaries
less their consolidated intangible assets of such Insurance Subsidiary on
such day.

G-5

Submission ....................... An unprocessed application for (i) insurance coverage forwarded to a
primary insurer by a prospective policyholder or by a broker on behalf
of such prospective policyholder, (ii) reinsurance coverage forwarded to
a reinsurer by a prospective ceding insurer or (iii) retrocessional
coverage forwarded to a retrocessionaire by a prospective ceding
reinsurer or by a broker or intermediary on behalf of such prospective
ceding reinsurer.
Surplus or statutory surplus ..... As determined under the statutory or regulatory accounting practice
required by the relevant jurisdictions, the amount remaining after all
liabilities, including loss reserves, are subtracted from all admitted assets.
Admitted assets are assets of an insurer prescribed or permitted by the
respective regulators to be recognized on the statutory balance sheet or
regulatory returns for purposes of calculating solvency margins and
statutory ratios, as applicable. Statutory surplus is also referred to as
"surplus" or "surplus as regards policyholders" for statutory accounting
purposes.
Treaty or treaty reinsurance ..... The reinsurance of a specified type or category of risks defined in a
reinsurance agreement (a "treaty") between a primary insurer or other
reinsured and a reinsurer. Typically, in treaty reinsurance, the primary
insurer or reinsured is obligated to offer and the reinsurer is obligated to
accept a specified portion of all of that type or category of risks
originally written by the primary insurer or reinsured.
U.S. GAAP ........................ United States generally accepted accounting principles as defined by the
American Institute of Certified Public Accountants or statements of the
Financial Accounting Standards Board. U.S. GAAP is the method of
accounting to be used by the Company for reporting to shareholders.
U.S. Person ...................... For U.S. federal income tax purposes, (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in the United States or under the laws of the United States or
of any of its political subdivisions, (iii) an estate the income of which is
subject to U.S. federal income tax without regard to its source or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the
trust.
Underwriter ...................... An employee of an insurance or reinsurance company who examines,
accepts or rejects risks and classifies accepted risks in order to charge an
appropriate premium for each accepted risk. The underwriter is
expected to select business that will produce an average risk of loss no
greater than that anticipated for the class of business.
Underwriting ..................... The insurer's or reinsurer's process of reviewing applications for
insurance coverage, and the decision whether to accept all or part of the
coverage and determination of the applicable premiums; also refers to
the acceptance of that coverage.
Unearned premium ................. The portion of premiums written that is allocable to the unexpired
portion of the policy term.
Workers' compensation ............ A system (established under state and federal laws) under which
employers provide insurance for benefit payments to their employees for
work-related injuries, deaths and diseases, regardless of fault.

G-6

9,524,000 Shares

Aspen Insurance Holdings Limited

Ordinary Shares

---------------------

[GRAPHIC OMITTED]

---------------------
PROSPECTUS

, 2003

Joint Book-Running Managers

CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.

DEUTSCHE BANK SECURITIES

UBS INVESTMENT BANK
DOWLING & PARTNERS SECURITIES, LLC
FOX-PITT, KELTON
KEEFE, BRUYETTE & WOODS, INC.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses payable by the Registrant in
connection with the issuance and distribution of the ordinary shares being
registered hereby. All of such expenses are estimates, other than the filing
and quotation fees payable to the Securities and Exchange Commission ("SEC" or
"Commission"), the National Association of Securities Dealers, Inc. and the New
York Stock Exchange.

Securities and Exchange Commission Filing Fee ..................... $ 20,225
National Association of Securities Dealers, Inc. Filing Fee ....... 25,500
New York Stock Exchange Listing Fee ............................... 150,000
Fees and Expenses of Company and Shareholders' Counsels ........... 3,400,000
Printing Expenses ................................................. 250,000
Fees and Expenses of Accountants .................................. 2,900,000
Blue Sky Fees and Expenses ........................................ 5,000
Transfer Agent and Registrar Fees ................................. 5,000
Miscellaneous Expenses ............................................ 700,000
----------
Total ............................................................. $7,455,725
==========

- ----------
* To be provided by amendment.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Bye-Law 145 of the Registrant's bye-laws provides, among other things,
that, subject to certain provisos, the Registrant's directors, officers or any
other person appointed to a committee of the board of directors and any
resident representative (and their respective heirs, executors or
administrators; collectively, the "Indemnified Persons") shall be indemnified
and held harmless out of the assets of the Registrant against all liabilities,
loss, damage or expense (including but not limited to liabilities under
contract, tort and statute or any applicable foreign law or regulation and all
reasonable legal and other costs and expenses properly payable) incurred or
suffered by him by or by reason of any act done, conceived in or omitted in the
conduct of the Registrant's business or in the discharge of his duties and the
indemnity contained in Bye-Law 145 shall extend to the Indemnified Persons of
the Registrant acting in any office or trust in the reasonable belief that he
has been appointed or elected to such office or trust notwithstanding any
defect in such appointment or election provided always that the indemnity
contained in this Bye-Law 145 shall not extend to any matter which would render
it void under the Companies Acts.

Bye-Law 149 of the Registrant's bye-laws provides that each shareholder
and the Registrant agree to waive any claim or right of action he or it may at
any time have, whether individually or by or in the right of the Registrant,
against any director or officer of the Registrant on account of any action
taken by such director or officer or the failure of such director or officer to
take any action in the performance of his duties with or for the Registrant,
provided, however, that such waiver shall not apply to any claims or rights of
action arising out of the fraud of such director or officer or to recover any
gain, personal profit or advantage to which such director or officer is not
legally entitled.

The Companies Act provides that a Bermuda company may indemnify its
directors in respect of any loss arising or liability attaching to them as a
result of any negligence, default, breach of duty or breach of trust of which
they may be guilty. However, the Companies Act also provides that any
provision, whether contained in the Company's bye-laws or in a contract or
arrangement between the

II-1

Company and the director, indemnifying such director against any liability
which would attach to him in respect of his fraud or dishonesty will be void.

The Registrant has purchased directors and officers liability insurance
policies. Such insurance will be available to the Registrant's directors and
officers in accordance with its terms. In addition, certain directors may be
covered by directors and officers liability insurance policies purchased by
their respective employers, subject to the limitation of the policy terms.

Reference is made to the form of Underwriting Agreement to be filed as
Exhibit 1.1 hereto for provisions providing that the Underwriters are
obligated, under certain circumstances, to indemnify the directors, certain
officers and the controlling persons of the Registrant against certain
liabilities under the Securities Act of 1933, as amended (the "Securities
Act").

ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES

Since its formation, the Registrant has issued unregistered securities as
described below. None of the transactions involved any underwriters,
underwriting discounts or commissions, or any public offering and the
Registrant believes that each transaction, if deemed to be a sale of a
security, was exempt from the registration requirements of the Securities Act
by virtue of Section 4(2) thereof, Regulation D promulgated thereunder, Rule
701 pursuant to compensatory benefit plans and contracts relating to
compensation as provided under Rule 701 or Regulation S for offerings of
securities outside of the United States. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, such securities were restricted as to transfers and
appropriate legends were affixed to the share certificates and instruments
issued in such transactions.

o On June 21, 2002, the Registrant sold 24,859,590 ordinary shares to
certain accredited investors and members of management of the
Registrant for an aggregate price of $372,893,850 (based on the
British Pound/U.S. Dollar exchange rate on such date at (pounds
sterling)1 to $1.5000). The sale of ordinary shares was made in
reliance on Section 4(2) of the Securities Act.

o On October 16, 2002, the Registrant sold 4,625,070 ordinary shares to
Wellington for an aggregate price of $73,052,040 (based on the British
Pound/U.S. Dollar exchange rate on such date at (pounds sterling)1 to
$1.5543). The sale of ordinary shares was made in reliance on Section
4(2) of the Securities Act.

o On November 19, 2002, the Registrant sold 4,874,930 ordinary shares
to Wellington for an aggregate price of $79,044,003 (based on the
British Pound/U.S. Dollar exchange rate on such date at (pounds
sterling)1 to $1.5884). The sale of ordinary shares was made in
reliance on Section 4(2) of the Securities Act.

o On November 29, 2002, the Registrant sold 2,555,230 ordinary shares
to Wellington for an aggregate price of $40,497,797 (based on the
British Pound/U.S. Dollar exchange rate on such date at (pounds
sterling)1 to $1.5523). The sale of ordinary shares was made in
reliance on Section 4(2) of the Securities Act.

o On November 29, 2002, the Registrant sold 19,951,320 ordinary shares
to certain accredited investors and members of management of the
Registrant for an aggregate price of $299,269,800 (based on the
British Pound/U.S. Dollar exchange rate on June 21, 2002 at (pounds
sterling)1 to $1.5000 since this subscription was the second part of
the June 21, 2002 subscription). The sale of ordinary shares was made
in reliance on Section 4(2) of the Securities Act.

II-2

o The Registrant issued 10,220 ordinary shares to employees and
directors of the Registrant and its subsidiaries during the period of
May 23, 2002 to December 31, 2002 for a total consideration of
$164,542 (based on the British Pound/U.S. Dollar exchange rate at
(pounds sterling)1 to $1.6100). The sale of ordinary shares was made
in reliance on Section 4(2) of the Securities Act.

o On February 11, 2003, the Registrant issued 43,420 ordinary shares to
employees of the Registrant and its subsidiaries for a total
consideration of $707,746 (based on the British Pound/U.S. Dollar
exchange rate on such date at (pounds sterling)1 to $1.6300). The
sale of ordinary shares was made in reliance on Section 4(2) of the
Securities Act.

o On August 13, 2003, the Registrant issued 4,340 ordinary shares to
employees of the Registrant and its subsidiaries for a total
consideration of $67,461 (based on the British Pound/U.S. Dollar
exchange rate on such date at (pounds sterling)1 to $1.5544). The
sale of ordinary shares was made in reliance on Section 4(2) of the
Securities Act.

ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ------------------------------------------------------------------------------------

II-3

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------ -------------------------------------------------------------------------------------

10.12 Qualifying Quota Share Agreement between Wellington Underwriting, Syndicate 2020
and Aspen Insurance UK Limited dated April 15, 2003
10.13 Slip Agreement for Property Risk Excess of Loss Reinsurance Quota Share Treaty
between Aspen Insurance UK Limited and Montpelier Reinsurance Ltd., dated June
20, 2002*
10.14 Slip Agreement for Quota Share Treaty of Wellington Underwriting Inc. Property
Business between Aspen Insurance UK Limited and Montpelier Reinsurance Ltd.,
dated June 20, 2002*
10.15 Slip Agreement for Quota Share Treaty of Wellington Underwriting Inc. Auto Liability
Business between Aspen Insurance UK Limited and Montpelier Reinsurance Ltd.,
dated June 20, 2002*
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG Audit Plc
23.2 Consent of Appleby, Spurling & Kempe*
23.3 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P.*
24.1 Power of Attorney by Paul Myners
24.2 Power of Attorney by Julian Avery
24.3 Power of Attorney by Ian Cormack
24.4 Power of Attorney by Heidi Hutter
24.5 Power of Attorney by Prakash Melwani
24.6 Power of Attorney by Bret Pearlman
24.7 Power of Attorney by Norman Rosenthal
24.8 Power of Attorney by Kamil M. Salame
24.9 Power of Attorney by Anthony Taylor
99.1 Form F-N*

- ----------
* To be filed by amendment.

(b) Financial Statement Schedules

(1) Aspen Insurance Holdings Limited

Report of Independent Auditors on Financial Statement Schedules

Schedule II -- Condensed Financial Information of Registrant
Schedule III -- Supplementary Insurance Information
Schedule IV -- Reinsurance
Schedule V -- Valuation and Qualifying Accounts

(2) Syndicates 2020 and 3030

Report of Independent Auditors on Financial Statement Schedules

Schedule IV -- Reinsurance
Schedule V -- Valuation and Qualifying Accounts

II-4

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of
Aspen Insurance Holdings Limited:

Under the date of September 15, 2003, we reported on the consolidated balance
sheet of Aspen Insurance Holdings Limited and its subsidiaries as of 31
December 2002, and the related consolidated statements of operations,
shareholders' equity, comprehensive income and cash flows for the period from
incorporation on 23 May 2002 to 31 December 2002, which are included in the
prospectus. In connection with our audits of the aforementioned consolidated
financials statements, we also audited the related consolidated financial
statement schedules in the registration statement. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.

In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.

/s/ KPMG Audit Plc

London, United Kingdom
September 15, 2003

II-5

ASPEN INSURANCE HOLDINGS LIMITED

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEET
AS AT DECEMBER 31, 2002

DECEMBER 31, 2002
------------------
($ IN MILLIONS
EXCEPT SHARE
AMOUNTS)

ASSETS
Short-term investments ................................................... $ 20.8
Cash and cash equivalents ................................................ 0.2
Investments in subsidiaries .............................................. 860.0
--------
Total Assets ............................................................ 881.0
========
LIABILITIES
Accrued expenses and other payables ...................................... 2.1
--------
Intercompany expenses payable ............................................ 0.8
--------
Total Liabilities ........................................................ 2.9
--------
SHAREHOLDERS' EQUITY
Ordinary shares: 56,876,360 ordinary shares of 0.15144558(cents) each .... 836.9
Retained earnings ........................................................ 28.6
--------
Accumulated other comprehensive income, net of taxes
Unrealized gains on investments ......................................... 0.6
Unrealized gains on foreign currency .................................... 12.0
--------
Total accumulated other comprehensive income ............................ 12.6
--------

Total Shareholders' Equity .............................................. 878.1
--------

Total Liabilities & Shareholders' Equity ................................ $ 881.0
========

II-6

ASPEN INSURANCE HOLDINGS LIMITED

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)

STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

MAY 23, 2002 TO
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

REVENUE
Equity in net earnings of subsidiaries ............................. $ 26.9
Net investment income .............................................. 0.2
Realized gains ..................................................... 2.2
--------
Total Revenues ..................................................... 29.3
--------

EXPENSES
Operating and administrative expenses .............................. (0.7)
--------

Income from operations before income tax ............................ 28.6
Income taxes ........................................................ --
--------
NET INCOME .......................................................... 28.6
--------

Other comprehensive income, net of taxes
Change in unrealized gains on investments .......................... 0.6
Change in unrealized gains on foreign currency translation ......... 12.0
--------
Other comprehensive income ......................................... 12.6
--------

COMPREHENSIVE INCOME ................................................ $ 41.2
========

II-7

ASPEN INSURANCE HOLDINGS LIMITED

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONT'D)

STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCORPORATION ON MAY 23, 2002 TO DECEMBER 31, 2002

MAY 23, 2002 TO
DECEMBER 31, 2002
------------------
($ IN MILLIONS)

OPERATING ACTIVITIES:
Net income (Parent Only) ............................................ $ 1.7
Adjustments
Change in accrued expenses and other payables ....................... 2.1
Change in intercompany payables ..................................... 0.8
---------
Net cash from operating activities .................................. 4.6
---------

INVESTING ACTIVITIES:
Investment in subsidiary ............................................ (820.5)
Purchase of short-term investments .................................. (20.8)
---------
Net cash used for investing activities .............................. (841.3)
---------

FINANCING ACTIVITIES:
Proceeds from the issuance of ordinary shares, net of issuance costs 836.9
---------
Net cash from financing activities .................................. 836.9
---------

Increase in cash and cash equivalents ............................... 0.2
Cash and cash equivalents - beginning of period ..................... --
---------

Cash and cash equivalents - end of period ........................... $ 0.2
=========

II-8

ASPEN INSURANCE HOLDINGS LIMITED

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION

GROSS LOSS AND LOSS
DEFERRED POLICY ADJUSTMENT UNEARNED
ACQUISITION COSTS EXPENSE RESERVES PREMIUMS
------------------- -------------------- ------------
($ IN MILLIONS)

As of December 31, 2002
Reinsurance .................................................... $ 22.5 $ (76.2) $ (152.0)
Insurance ...................................................... 8.5 (17.7) ( 63.7)
Not allocated to segments ...................................... -- -- --
Total .......................................................... $ 31.0 $ (93.9) $ (215.7)
======== ======= ========

NET LOSSES AMORTIZATION
NET AND LOSS OF POLICY OTHER
PREMIUMS PREMIUM INVESTMENT ADJUSTMENT ACQUISITION OPERATING
WRITTEN REVENUE INCOME(1) EXPENSES COST EXPENSES
------------ ----------- ------------ ------------ ----------------- ----------
($ IN MILLIONS)

2002(2)
Reinsurance ....................... $ 234.0 $ 96.9 $ (60.9) $ (17.4) $ (7.0)
Insurance ......................... 78.6 23.4 -- (16.0) ( 3.7) (1.7)
Not allocated to segments ......... -- -- 8.5 -- -- --
Total ............................ $ 312.6 $ 120.3 $ 8.5 $ (76.9) $ (21.1) $ (8.7)
========= ======== ====== ======== ======= ======

(1) Investment income is not allocated to the Company's segments as the
invested assets are managed centrally.
(2) Period from May 23, 2002 to December 31, 2002

II-9

ASPEN INSURANCE HOLDINGS LIMITED

SCHEDULE IV - REINSURANCE

PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002
-----------------------------------------------------------------------
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED TO
AMOUNT COMPANIES COMPANIES AMOUNT NET
----------- ----------- ------------ ------------ -------------
($ IN MILLIONS)

Insurance premium earned
2002 .................. $ 28.0 $ (43.5) $ 135.8 $ 120.3 $ 112.9%

II-10

ASPEN INSURANCE HOLDINGS LIMITED

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS

PERIOD FROM MAY 23, 2002 TO DECEMBER 31, 2002
-------------------------------------------------------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
-------------- ------------ ----------- ------------ ------------
($ IN MILLIONS)

2002
Premiums receivable from
underwriting activities ......... -- -- -- -- --
Reinsurance ...................... -- -- $ 0.2 -- $ 0.2

II-11

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Wellington Underwriting Agencies Limited:

Under date of September 15, 2003, we reported on the combined balance sheets of
Syndicates 2020 and 3030 (the "Syndicates") as of December 31, 2002 and 2001,
and the related combined statements of operations and comprehensive
income/(loss), members' deficit, and cash flows for each of the years in the
three-year period ended 31 December 2002, which are included in the prospectus.
In connection with our audits of the aforementioned combined financials
statements, we also audited the related combined financial statement schedules
in the registration statement. These financial statement schedules are the
responsibility of Wellington Underwriting Agencies Limited. Our responsibility
is to express an opinion on these financial statement schedules based on our
audits.

In our opinion, such financial statement schedules, when considered in relation
to the basic combined financial statements taken as a whole, present fairly, in
all material respects, the information set forth therein.

/s/ KPMG Audit Plc

London, United Kingdom
September 15, 2003

II-12

SYNDICATES 2020 AND 3030

SCHEDULE IV - REINSURANCE

YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED TO
AMOUNT COMPANIES COMPANIES AMOUNT NET
-------- ----------- ------------ -------- -----------
($ IN MILLIONS)

Insurance premium earned 2002 ......... $ 926 $ (750) $ 687 $ 863 79.6%
Insurance premium earned 2001 ......... 430 (486) 618 562 110.0%
Insurance premium earned 2000 ......... 359 (263) 370 466 79.4%

II-13

SYNDICATES 2020 AND 3030

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
-------------- ------------ ----------------- ------------ ------------
($ IN MILLIONS)

2002
Premiums receivable from
underwriting activities ......... -- -- -- -- --
Reinsurance ...................... $ 32 $ 14 $ 4 -- $ 50
2001
Premiums receivable from
underwriting activities ......... -- -- -- -- --
Reinsurance ...................... 8 24 -- -- 32
2000
Premiums receivable from
underwriting activities ......... -- -- -- -- --
Reinsurance ...................... 3 5 -- -- 8

II-14

ITEM 9. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(3) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

II-15

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Hamilton, Bermuda, on
the 12th day of November, 2003.

Aspen Insurance Holdings Limited
By: /s/ Christopher O'Kane
------------------------
Name: Christopher O'Kane
Title: Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 12th day of November, 2003.

SIGNATURE TITLE

* Chairman and Director
- -----------------------------
Paul Myners

/s/ Christopher O'Kane Chief Executive Officer and Director
- ----------------------------- (Principal Executive Officer)
Christopher O'Kane

/s/ Julian Cusack Chief Financial Officer and Director
- ----------------------------- (Principal Financial Officer and
Julian Cusack Principal Accounting Officer)

* Director
- -----------------------------
Julian Avery
* Director
- -----------------------------
Ian Cormack
* Director
- -----------------------------
Heidi Hutter
* Director
- -----------------------------
Prakash Melwani
* Director
- -----------------------------
Bret Pearlman
* Director
- -----------------------------
Norman L. Rosenthal
* Director
- -----------------------------
Kamil M. Salame
* Director
- -----------------------------
Anthony Taylor

II-16

SIGNATURE TITLE
- ------------------------------------ ------

*
- -----------------------------
Bret Pearlman
(authorized representative in the
United States)

/s/ Julian Cusack
*By:
-------------------------
Attorney-in-fact

II-17

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- ---------------------------------------------------------------------------------------

1.1 Underwriting Agreement*
3.1 Certificate of Incorporation and Memorandum of Association of Registrant
3.2 Amended and Restated Bye-laws of Registrant
4.1 Specimen Ordinary Share Certificate*
4.2 Amended and Restated Instrument Constituting Options to Subscribe for Shares in
Aspen Insurance Holdings Limited*
5.1 Opinion of Appleby, Spurling & Kempe*
10.1 Amended and Restated Shareholders' Agreement, dated as of September 30, 2003
among the Registrant and each of the persons listed on Schedule A thereto*
10.2 Second Amended and Restated Registration Rights Agreement dated as of September
30, 2003 among the Registrant and each of the persons listed on Schedule 1 thereto*
10.3 Management Services Contract dated June 21, 2002 between Christopher O'Kane and
Aspen Insurance U.K. Services Limited*
10.4 Service Agreement dated June 21, 2002 between Julian Cusack and the Registrant*
10.5 Management Services Contract dated June 21, 2002 between Sarah Davies and Aspen
Insurance UK Services Limited*
10.6 Management Services Contract dated June 21, 2002 between David May and Aspen
Insurance UK Services Limited*
10.7 Aspen Insurance Holdings Limited 2003 Share Incentive Plan*
10.8 Three-Year Credit Agreement dated August 26, 2003 among the Registrant, Barclays
Bank plc and the Lenders named therein*
10.9 364-Day Credit Agreement dated August 26, 2003 among the Registrant, Barclays Bank
plc and the Lenders named therein*
10.10 Quota Share Agreement between Syndicate 3030 and Aspen Insurance UK Limited,
dated October 21, 2003 reflecting the slip agreement entered into on June 12, 2002
10.11 Slip agreement for quota share entered into June 6, 2002 between National Indemnity
Company and Aspen Insurance UK Limited*
10.12 Qualifying Quota Share Agreement between Wellington Underwriting, Syndicate 2020
and Aspen Insurance UK Limited dated April 15, 2003
10.13 Slip Agreement for Property Risk Excess of Loss Reinsurance Quota Share Treaty
between Aspen Insurance UK Limited and Montpelier Reinsurance Ltd., dated June 20,
2002*
10.14 Slip Agreement for Quota Share Treaty of Wellington Underwriting Inc. Property
Business between Aspen Insurance UK Limited and Montpelier Reinsurance Ltd., dated
June 20, 2002*
10.15 Slip Agreement for Quota Share Treaty of Wellington Underwriting Inc. Auto Liability
Business between Aspen Insurance UK Limited and Montpelier Reinsurance Ltd., dated
June 20, 2002*
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG Audit Plc
23.2 Consent of Appleby, Spurling & Kempe*
23.3 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P.*
24.1 Power of Attorney by Paul Myners
24.2 Power of Attorney by Julian Avery
24.3 Power of Attorney by Ian Cormack
24.4 Power of Attorney by Heidi Hutter
24.5 Power of Attorney by Prakash Melwani
24.6 Power of Attorney by Bret Pearlman
24.7 Power of Attorney by Norman Rosenthal
24.8 Power of Attorney by Kamil M. Salame
24.9 Power of Attorney by Anthony Taylor
99.1 Form F-N*

- ----------
* To be filed by amendment.

II-18