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TheStreet Open House

Aspen Insurance (AHL) Rejects Endurance (ENH) Offer

NEW YORK (TheStreet) -- Aspen Insurance Holdings (AHL) has announced its board has rejected an unsolicited offer from Endurance Specialty Holdings (ENH) for the latter to acquire the former for $47.50 a share.

"Endurance's ill-conceived proposal undervalues our company, represents a strategic mismatch, carries significant execution risk, and would result in substantial dis-synergies," said Aspen chairman Glyn Jones in a statement. "Most of the consideration to Aspen shareholders would be in a stock that would reflect these problems."

By late morning, shares of Aspen had climbed 11% to $43.70, while Endurance had fallen 1.6% to $52.97.

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TheStreet Ratings team rates ENDURANCE SPECIALTY HOLDINGS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENDURANCE SPECIALTY HOLDINGS (ENH) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ENH's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Net operating cash flow has significantly increased by 184.26% to $174.50 million when compared to the same quarter last year. In addition, ENDURANCE SPECIALTY HOLDINGS has also vastly surpassed the industry average cash flow growth rate of 22.39%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, ENDURANCE SPECIALTY HOLDINGS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.8%. Since the same quarter one year prior, revenues fell by 12.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
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