Aspen Insurance (NYSE:AHL)
continues to look like an opportunity within the insurance sector for a
management team to drive better-than-expected results and positive
re-ratings on the shares. More than a few sell-side analysts remain
convinced that Aspen is going to see slower-than-expected premium growth
(due largely to price pressure), higher losses, and lower than expected
investment income. For its part, Aspen management believes that it is
approaching a point of significant operating leverage for the insurance
business and that a focus on more specialized segments within
reinsurance can preserve pricing.
These shares are up about 10% from my last update on the company,
and I believe they can go higher from here. I'm still not quite as
bullish as management on its long-term ROE potential, but I don't think a
low-to-mid $50's fair value is unreasonable today and if management can
outperform the ultimate value will be higher. I'd also note that while
Aspen management has been consistent regarding its views of Aspen's
ability to gain share in the market and generate stronger than expected
ROEs, the current move toward more M&A in the insurance sector could
have suitors approaching the company once again.
Click this link for the full article:
Skepticism Can Still Benefit Aspen Insurance Shareholders
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