Piper Sandler analyst Paul Newsome initiated coverage on Aspen Insurance Holdings Limited (NYSE:AHL) with an Overweight rating and price target of $40.
The company’s IPO took place on May 8 on the NYSE exchange and it offered shares at a price of $30 per share with an insider lock-up period of 180 days that ends on November 04, 2025.
The analyst writes that AHL is a reasonably profitable specialty insurer and reinsurer and he anticipates a recently completed business transformation to facilitate future growth and improved profitability.
Newsome notes that the company underwent a significant restructuring following its acquisition by Apollo in 2019.
The analyst adds that despite divesting approximately 17 business lines across its insurance and reinsurance segments, the company has reported notable improvements in its underwriting profitability and Gross Written Premium (GWP) growth.
The analyst highlights that this transformation has reduced volatility in its underwriting performance. Also, operating Return on Equity (ROE) reached 19.4% in 2024, with a three-year average of 17.1%.
Moreover, the company has seen substantial gains in underwriting profitability, and the combined ratio improved from 98.8% in 2021 to 88.0% in 2024, according to the analyst.
Newsome says that this enhanced underwriting performance is primarily attributed to a reduction in the expense ratio, an improving underlying loss ratio, and better management of catastrophe loss risks.
Overall, the analyst believes that the company warrants a slight premium valuation compared to its reinsurance peer group, given that its specialty business accounts for approximately 60% of its gross written premiums.
The analyst estimates the EPS of $3.61 for FY25 and $4.97 for FY26.
Price Action: AHL shares are up 0.81% at $34.69 at the last check on Monday.
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