Aspen Insurance Holdings Ltd. (AHL) has been on an uptrend since the onset of the fourth quarter, reflecting investors’ enthusiasm regarding developments so far. Share price has escalated 11.2% from Oct 1, 2013 to close at $40.19 yesterday.
Recently Aspen Capital Markets, a division of Aspen Reinsurance, has established Silverton Re. Aspen Reinsurance (Aspen Re) is a reinsurance segment of Aspen Insurance.
Bermuda-based Silverton Re was formed to provide more collateralized capacity for strengthening Aspen Re’s global reinsurance business. Silverton Re will be initially capitalized with $65 million, out of which $15 million will be funded by Aspen Re and the rest by third-party investors. Formation of Silverton Re is expected to bring opportunities in alternative reinsurance market for Aspen Re and also strengthen its operational activities in capital markets.
With respect to earnings performances, Aspen Insurance posted strong third-quarter earnings of $1.05 per share, substantially beating the Zacks Consensus Estimate by 31.2%. The outperformance came on the back of higher-than-expected net earned premiums at the Insurance segment. The company delivered positive surprise in 3 of last 4 quarters with an average of 9.2%.
In a bid to return value to its shareholders, Aspen Insurance has been consistently paying cash dividend and engaging share repurchase activities. These in turm retain investor confidence as well as attract new investors. Earlier this year, the board of directors raised the quarterly cash dividend by 5.9%. Aspen Insurance’s current dividend of 18 cents per share yields 1.78%.
Into the fourth quarter, Aspen Insurance already spent $2.8 million for buying back shares. Year–to–date, the company bought back 8.1 million shares for $295.8 million, reflecting its strong capital position. These share repurchase activities are expected to benefit the company’s earnings per share, book value as well as shareholder equity in the coming quarters.
All these positives have fueled rising estimates for Aspen Insurance. The Zacks Consensus Estimate moved north by 15.3% to $3.62 per share over the last 60 days, as most of the estimates were revised upward. For 2014, the Zacks Consensus Estimate went up 7.3% to $3.51 per share over the same period.
Aspen Insurance presently carries a Zacks Rank #2 (Buy). Other stocks in the Property and Casualty industry that are also worth considering include Alleghany Corp. (Y), Hallmark Financial Services Inc. (HALL) and Cincinnati Financial Corp. (CINF). All these stocks sport a Zacks Rank #1 (Strong Buy).