Rising estimates and five straight quarters of positive earnings
surprises with an average beat of 49.1% helped
Aspen Insurance Holdings Ltd.
) achieve a Zacks #1 Rank (Strong Buy) on October 2.
Moreover, the stock surged to hit its 52-week high of $31.11 on
October 2. With a year-to-date return of 16.8% and long-term
earnings growth projection of 15%, the reinsurance and insurance
coverage provider offers an attractive investment opportunity.
Solid Second Quarter Results
On July 25, Aspen reported its second quarter results with
operating earnings of $1.32, outperforming the Zacks Consensus
Estimate by 51.7%. It was way ahead of 35 cents earned in the
Top line was $566 million, down 5% from the Zacks Consensus
Gross written premiums improved 15% year over year on the heels of
a 25% increase in insurance segment.
Underwriting income was $65.8 million, rebounding from a loss of
Combined ratio improved substantially to 87.3% in the second
quarter of 2012 from 105.3% in the year-ago period.
Aspen spent $25.0 million to buyback 0.9 million shares in the
second quarter and is left with $167 million under its
Operating return on average equity was 13.6% in the second quarter,
comparing favorably with 3.6% in the year-ago quarter.
For 2012, Aspen expects gross written premiums to be $2.4 billion
(with a 5% variance) and premiums ceded to be between 10% and 12%
of gross earned premiums.
Combined ratio is projected in a range of 93% to 98%, including a
catastrophe loss of $135 million for the remainder of the year,
Earnings Estimate Revisions
The Zacks Consensus Estimate for third quarter is currently pegged
at 42 cents, representing an elevation of 31.2% over the last 30
days as one of the eight estimates was raised. The company is
scheduled to release its third quarter results on October 24 after
The Zacks Consensus Estimate for 2012 augmented nearly 4.6% to
$3.39 per share over the same time frame as two of eight estimates
was pulled up. Also, this represents a year-over-year increase of
Aspen currently trades at a forward P/E of 7.0x, a 10.3% premium to
the peer group average of 6.3x. On a price-to-book basis, the
shares are trading at 0.6x, compared to the peer group average of
Aspen has a trailing 12-month return on equity (ROE) of 7.4%,
slightly higher than the peer group average of 7.3%.
About the Company
Based in Hamilton, Bermuda and founded in 2002, Aspen provides
reinsurance and insurance coverage. With a market capitalization of
$2.21 billion, the company operates through wholly-owned
subsidiaries and offices in Bermuda, France, Germany, Ireland,
Singapore, Switzerland, the United Kingdom and the United States.
Other Zacks #1 Rank insurance provider includes
Assured Guaranty Ltd.
ASSURED GUARNTY (AGO): Free Stock Analysis
ASPEN INS HLDGS (AHL): Free Stock Analysis
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