Aspen Insurance Upped to Strong Buy
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.
Read the Full Research Report on AHL
Read the Full Research Report on CINF
Read the Full Research Report on GS
Read the Full Research Report on MRH
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