Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2009 and 2008. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes contained in this Form 10-Q and the audited consolidated financial statements and related notes for the fiscal year ended December 31, 2008, as well as the discussions of critical accounting policies, contained in our Financial Statements in our 2008 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to our plans and strategy for our business and in "Outlook and Trends" below, includes forward-looking statements that involve risk and uncertainties. Please see the section captioned "Cautionary Statement Regarding Forward-Looking Statements" in this report and the "Risk Factors" in Item 1A of our 2008 Annual Report on Form 10-K for more information on factors that could cause actual results to differ materially from the results described in or implied by any forward-looking statements contained in this discussion and analysis.

Recent Developments

On October 6, 2009, Aspen U.K. and Aspen Bermuda entered into a $200 million secured letter of credit facility with Barclays Bank plc. All letters of credit issued under the facility will be used to support reinsurance obligations of the parties to the agreement and their respective subsidiaries.

Overview

We are a Bermuda holding company. We write insurance and reinsurance business through our wholly-owned subsidiaries in three major jurisdictions: Aspen U.K. and AUL, corporate member of Syndicate 4711 at Lloyd's of London (United Kingdom), Aspen Bermuda (Bermuda) and Aspen Specialty (United States). Aspen U.K. also has branches in Paris, France; Zurich, Switzerland; Dublin, Ireland; Singapore; Australia; and Canada. We operate in global markets for property and casualty insurance and reinsurance.

The most significant features of our results for the three and nine months ended September 30, 2009 were:

• Net income after tax for the three months ended September 30, 2009 of $145.8 million, compared with a net loss after tax of $126.1 million for the third quarter of 2008. For the nine months ended September 30, 2009, net income after tax was $347.6 million compared to $82.0 million for the same period last year.

• A combined ratio of 80.3% for the three months ended September 30, 2009 versus 123.3% for the three months ended September 30, 2008;

• Third quarter net investment income of $58.9 million, up 205.2% over the same quarter last year and down 18.4% over the second quarter of 2009;

• Diluted earnings per ordinary share after preference share dividends of $1.63 for the three months ended September 30, 2009 increased by $3.26 over the comparative period in 2008. Diluted earnings per ordinary share after preference share dividends was $4.25 for the nine months ended September 30, 2009, an increase of 498.6% compared to the same period last year; and

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• Tangible book value per ordinary share at September 30, 2009 was $34.30, an increase of 26.4% compared to $27.14 at September 30, 2008.

Tangible book value per ordinary share is based on total shareholders' equity, less intangible assets and preference shares (liquidation preference less issue expenses), divided by the number of ordinary shares in issue at the end of the period.

Shareholders' equity and ordinary shares in issue as at September 30, 2009 and September 30, 2008 were: