Bull of the Day: Aspen Insurance (AHL)


April 15, 2013 |

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

Further by increasing share buybacks, this Zacks Rank #1 stock will further enhance shareholder value.

About the Company

Founded in 2002 and based in Hamilton, Bermuda, Aspen operates through wholly-owned subsidiaries and offices in Bermuda, France, Germany, Ireland, Singapore, Switzerland, the United Kingdom and the United States.

Solid Fourth Quarter Results and Improved Guidance

Aspen Insurance reported its Q4 results on February 7, 2013. The quarter resulted in a loss of $0.15 per share, significantly better than the Zack Consensus Estimate of a loss of $1.21 per share, mainly due to excellent underwriting results.

Gross written premiums were $576.2 million, up 25.6% from the previous year quarter, primarily due to a 40.2% rise in gross written premiums in the Insurance.

In 2012, the company grew its book value per share grew by 6% and delivered an operating ROE of 8.5%, which was very impressive considering the impact of Superstorm Sandy and low interest rate environment. Further, AHL expects the operating ROE to improve to 10% during 2013.

Positive Earnings Estimates Revisions

As a result of solid results and updated guidance, the Zacks Consensus Estimate for 2013 increased to $3.11 per share, from $2.86 per share, 90 days ago. Similarly, the consensus estimate for the Q1 increased to $0.96 per share, from $0.84 per share, 90 days ago.

The company will release its Q1 2013 results on April 24, 2013, after market close.

Aspen has delivered positive earnings surprises in all quarters of 2012—with an average surprise of 54.32%.

Returning Cash to Shareholders

Along with the results, the company announced a new $500 million share repurchase authorization of which, it expects to complete at least $300 million for share repurchases by the end of 2013, assuming normal loss experience.

During Q4, Aspen repurchased over 300,000 shares totaling $10 million.

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 7 out of 265 greatly increases the likelihood of short-to-mid term outperformance.

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