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Aspen Insurance: A Strong Buy

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Zacks Investment Research upgraded Aspen Insurance Holdings Ltd. (AHL - Free Report) to a Zacks Rank #1 (Strong Buy) on Dec 31, 2013.

Why the Upgrade?

Aspen Insurance witnessed upward estimate on the back of solid results. This property and casualty insurer delivered positive earnings surprises in 3 out of the last 4 quarters with an average beat of 28.5%.

Over the last 30 days, estimates moved up to increase the Zacks Consensus Estimate by 2% to $3.65 per share (representing a year-over-year improvement of 8.3%). Over the same period the Zacks Consensus Estimate for 2014 also increased 7.6% to $3.53.

Although the company’s operating earnings per share of $1.05 in the last reported quarter declined year over year, it exceeded the Zacks Consensus Estimate by 31.3%. Higher-than expected net earned premiums in the insurance segment contributed largely to earnings in the quarter.

In Dec 2013, Aspen Capital Markets, a division of Aspen Reinsurance (the reinsurance segment of Aspen Insurance), established Silverton Re to provide more collateralized capacity for strengthening the company’s global reinsurance business. We expect this endeavor to invite opportunities in alternative reinsurance market for Aspen Insurance and also strengthen its operational activities in capital markets.

To enhance shareholders’ return, the company has also been regular in its dividend payouts and share repurchase activities. Aspen Insurance also scores strongly with the credit rating agencies.

Aspen Insurance is scheduled to release its fourth-quarter 2013 results on Feb 6, 2014. The Zacks Consensus Estimate for the fourth quarter is pegged at 95 cents per share, representing an enormous year-over-year improvement of 734.7%. Our proven model also shows that Aspen Insurance is likely to beat earnings because it has the right combination of positive Earnings ESP (+7.37%) and a favorable Zacks Rank.  

Other Stocks to Consider

Other players in the property and casualty insurance space, which look attractive at current levels, include Allied World Assurance Co. , Cincinnati Financial Corp. (CINF - Free Report) and Fidelity National Financial, Inc. (FNF - Free Report) . All these stocks carry the same Zacks Rank as Aspen Insurance.

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