Few bargains remain in the insurance sector, what with these
companies having recovered significantly from the post-credit crisis
lows. Valuations have moved up in conjunction with higher pricing across
multiple sectors, but it is now starting to look like pricing is
topping out in many (if not most) markets. Couple that with a still-weak
investment environment and growing loss severity and I'm not surprised
that many sell-side analysts are pulling back a bit from their bullish
calls on the sector.
Aspen Insurance (AHL)
finds itself in an interesting position amidst these changes. The
company has followed a clear and stepwise transition towards becoming
more of a primary insurance underwriter (versus a balanced
insurance/reinsurance company), and the management believes that the
insurance platform has matured to a point where it can retain more risk.
Margins and returns have taken a hit in the course of building out the
primary insurance business, and the Street is quite skeptical about
Aspen's near-term ROE prospects, but the shares do seem modestly
undervalued and could offer growth-driven upside.
Please follow this link for the full article:
Aspen Insurance Building Tomorrow's Growth At The Cost Of Today's Margins
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