Seeking Alpha: Skepticism Can Still Benefit Aspen Insurance Shareholders

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.

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Skepticism Can Still Benefit Aspen Insurance Shareholders

Seeking Alpha: Is Renaissance Re Still A Safe Haven Among Reinsurance Companies?

I believe there are many standards by which RenaissanceRe Holdings (NYSE:RNR) (or "RenRe") can be called an excellent, if not one of the best, reinsurance companies in the business. Since its founding in 1993, RenRe has generated some of the best returns on equity within the space (a 20%-plus ROE since inception) due to very sophisticated risk analytics and modeling. RenRe has also been one of the pioneers in managed cat vehicles, an alternative capital option that generates significant returns on capital for the company.

The problem is that the property catastrophe market has too much capital today and pricing is getting undisciplined, with underwriters like RenRe and Validus (NYSE:VR) looking for double-digit declines in premiums. Although RenRe has been growing its specialty reinsurance and Lloyds businesses, it's going to be difficult to withstand the pressures in a business that makes up close to 70% of premiums. Although RenRe's shares are still a little undervalued relative to my long-term ROE assumptions, I see better overall opportunities in life insurance.

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Is Renaissance Re Still A Safe Haven Among Reinsurance Companies?

Seeking Alpha: ACE Still The Place For Reasonable Insurance Returns

Despite worries to the contrary, this earnings cycle has shown that well-run P&C insurance companies are still finding opportunities to grow their business and generate respectable returns. One of the large commercial insurers, ACE Ltd (ACE) has used its significant global footprint and its relatively low property exposure to continue generating good premium growth and underwriting profits. The P&C market is likely to soften further, likely shrinking management's ability to generate such favorable reserve developments down the line, but ACE shares still appear to offer some upside at these levels.

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ACE Still The Place For Reasonable Insurance Returns