Bull of the Day: Aspen (AHL) - Bull of the Day

With excellent underwriting results and solid investment portfolio returns, this P&C insurer and reinsurer has been consistently delivering positive earnings surprises.

About the Company

Founded in 2002 and based in Hamilton, Bermuda, Aspen Insurance Holdings (AHL) is a global insurance and reinsurance company. It operates through wholly-owned subsidiaries and offices in Bermuda, France, Germany, Ireland, Singapore, Switzerland, the United Kingdom and the United States.

The company is rated ‘A (Strong)’ by S&P, ‘A (Excellent)’ by AM Best and ‘A2 (Good)’ by Moody’s.

Solid Third Quarter Results

Aspen reported its Q3 results on October 30, 2013. Net operating income for the quarter came in at $1.05 per share, handily beating the Zacks Consensus Estimate of $0.80 per share by 31.2%. However, the results fell short of the year-ago quarter number by 21.6%.
 
Insurance segment had an excellent performance with gross written premiums of $362.1 million, up 21.1% from the third quarter of 2012.

During the quarter, the insurer grew diluted book value per share by 4% to $40.43 and delivered an annualized operating return on equity of 10.8%. The management continues to expect to achieve an operating ROE of 10% in 2014.

Positive Earnings Estimates Revisions

As a result of continued solid performance, the Zacks Consensus Estimate for 2013 has increased has increased to $3.38 per share, from $2.98 per share, 60 days ago.

Aspen has delivered positive earnings surprises in three out of last four quarters of 2012—with an average quarterly surprise of 28.5%.

Returning Cash to Shareholders

During the third quarter Aspen repurchased $55 million of its shares bringing the year-to-date total share repurchases to $296 million. The company had $236.0 million remaining under its current share repurchase authorization as of October 30, 2013.
 
The Bottom Line
 
AHL is a Zacks Rank#1 (Strong Buy) stock. It also has a longer-term Zacks recommendation of “Outperform”. Further Zacks Industry rank of 6 out of 265 greatly increases the likelihood of short-to-mid term outperformance.
 
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