Aspen to Sell Preferred Shares, Buy-back Common; Best Ratings; CEO Comments

November 9, 2006

Bermuda-based Aspen Insurance Holdings Limited announced the commencement of a public offering of $200 million of a new series of its perpetual non-cumulative preference shares to be listed on the NYSE. It also announced that its board of directors has approved a share repurchase program of up to $300 million of its ordinary shares within the next two years.

Aspen said it “currently intends to use the net proceeds from the sale of its perpetual non-cumulative preference shares for general corporate purposes, including the repurchase of its outstanding ordinary shares. The amount of ordinary shares that Aspen initially intends to repurchase is expected to be limited to the net proceeds from the perpetual non-cumulative preference shares offering. Any other repurchases up to the authorized amount of $300 million will be subject to rating agency, corporate and other considerations.”

A.M. Best Co. assigned an indicative rating of “bb” to Aspen’s (AHL’s) $200 million perpetual non-cumulative preference shares, but gave the issue a negative outlook, which it said “is in line with the outlook on AHL’s issuer credit rating.

“AHL’s financial leverage ratios remain within A.M. Best tolerance levels. The proceeds of this issue are likely to be used to repurchase outstanding ordinary shares,” the rating agency added.

In a separate bulletin, Aspen’s Group CEO Chris O’Kane, commented on the Group’s initial outlook for 2007 in advance of his appearance at the Credit Suisse Insurance Conference on November 16, 2006, where he is expected to address the topic during the presentation.

After the bulletin had duly noting the usual cautionary statements, O’Kane, stated: “While we expect market conditions to remain generally attractive in 2007 we anticipate that rates will decline in certain of our product lines. We therefore expect gross written premiums to be approximately $1.9 billion plus or minus 5 percent. We are also planning to reduce significantly the amount of retrocession we purchase and therefore currently expect to cede only between 6 percent-10 percent of our gross written premiums.

“We expect the reduction in our retrocessional expense and a number of other changes in our underwriting portfolio to result in an improvement in our net underwriting margins. We currently expect that our combined ratio will be in the range of 83 percent to 88 percent assuming no major losses or prior year reserve movements.

“Investment income should continue to rise and, in a somewhat uncertain interest rate environment, we currently expect it to be within the range of $230 million to $250 million.

“Interest charges and preference dividend payments will increase as a result of the current proposed offering of perpetual preference shares but the proposed use of proceeds to repurchase ordinary shares will result in higher pro forma return on equity and earnings per share.

“Based on the expected distribution of income between our operating companies our tax rate for 2007 should be within the range of 16 percent to 19 percent.

“Based on the above outlook and assumptions for 2007, the implied return on equity for 2007 would be between 16 percent-20 percent.”

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