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Aspen Insurance Upped to Strong Buy - Analyst Blog

By: Zacks.com
Posted: 3/20/2013 11:45:00 AM
Referenced Stocks: AHL;CINF;GS;MRH

On Mar 19, Zacks Investment Research upgraded Aspen Insurance Holdings Ltd . ( AHL ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Aspen Insurance has been witnessing rising earnings estimates on the back of strong fourth-quarter 2012 results. Moreover, this property and casualty insurer delivered positive earnings surprises in all four quarters of 2012 with an average beat of 54.3%.

Additionally, Aspen Insurance and Goldman, Sachs & Co . ( GS ) entered into an Accelerated Share Repurchase agreement whereby Aspen will pay $150 million to Goldman in exchange of its shares. Further, from Jan 1, 2013 through Feb 26, 2013, Aspen bought back $47 million shares.  Aspen is left with $335 million under its $500 million share repurchase authorization.

Following a through review of businesses, management decided to lower its wind and earthquake exposure within the U.S. property insurance account. This would free up more than $200 million of capital that could be deployed to maximize shareholder value.

Aspen Insurance expects to generate operating return on equity of 10% in 2014. It delivered 8.5% in return on equity in 2012.

Aspen Insurance reported its fourth-quarter results on Feb 7. Non-GAAP loss per share came in at 15 cents, better than the Zack Consensus Estimate of a loss of $1.21 per share.

Gross written premiums improved 25.6% year over year to $576.2 million in the fourth quarter. A surge of 40.2% in gross written premiums at the Insurance segment fueled the improvement.

Combined ratio improved 1710 basis points year over year to 107.1% in the fourth quarter.

The Zacks Consensus Estimate for 2013 increased 6.8% to $2.97 per share as 3 of 6 estimates were revised higher over the last 60 days. Also for 2014, 3 of 6 estimates moved up, pushing the Zacks Consensus Estimate higher by 7.6% to $3.13 over the same time frame.

Other Stocks to Consider

Other property and casualty insurers like Cincinnati Financial Corp . ( CINF ) and Montpelier Re Holdings Ltd. ( MRH ) carry a Zacks Rank #1 (Strong Buy) and are worth noting.



ASPEN INS HLDGS (AHL): Free Stock Analysis Report

CINCINNATI FINL (CINF): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

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Zacks Investment Research