BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUSINESS DESCRIPTION Aspen Insurance Holdings Limited, through its subsidiaries, engages in insurance and reinsurance businesses in the United States and internationally. The company's Insurance segment offers property and casualty insurance products, including U.S. and U.K. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change -13.63-19.97-1.44 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues -4.31-1 0.67 Net Income -365.55-139.18 NA EPS -420.00-160.48 NA RETURN ON EQUITY (%) Ind Avg S&P 500 Q3 2017-6.45 7.01 13.41 Q3 2016 9.09 8.70 11.79 Q3 2015 6.91 9.74 12.91 HOLD Sector: Financial Services Sub-Industry: Property & Casualty Insurance Source: S&P HOLD RATING SINCE 07/28/2017 Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY Volume in Millions 2015 2016 2017 COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History HOLD 58 56 54 52 50 48 46 44 42 40 38 10 5 0 P/E COMPARISON RECOMMENDATION We rate () a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing nesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find nesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity. n/m 26.10 Ind Avg 24.86 S&P 500 HIGHLIGHTS Although 's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. EPS ANALYSIS¹ ($) Net operating cash flow has increased to $152.30 million or 10.68% when compared to the same quarter last year. In addition, has also modestly surpassed the industry average cash flow growth rate of 9.51%. Q1 1.87 Q2 0.62 Q3 0.30 2015 Q4 1.75 Q1 1.68 Q2 0.89 Q3 1.40 2016 NA = not available NM = not meaningful Q4-1.41 Q1 1.36 Q2 1.07 Q3-4.48 2017 1 Compustat fiscal year convention is used for all fundamental data items., with its decline in revenue, underperformed when compared the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 365.6% when compared to the same quarter one year ago, falling from $95.80 million to -$254.40 million. Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major ness within the corporation. Compared to other companies in the Insurance industry and the overall market, 's return on equity significantly trails that of both the industry average and the S&P 500. Report Date: PAGE 1
PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -15% 15% UNFAVORABLE -40% EBITDA Margin (TTM) NAVG SIGI PRA EIG MCY FAVORABLE WTM AGO 60% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $1.5 Billion and $4.2 Billion. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -15% 15% UNFAVORABLE -10% AFSI WTM Earnings Yield (TTM) AGII NAVG PRA SIGI RLI EIG MCY FAVORABLE AGO 20% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -10.8% and 13.3%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The US insurance industry provides a broad range of financial security products for individuals and businesses. The industry includes primary insurers, reinsurers and agency and brokerage firms. Insurance companies can be categorized into life and health, property and casualty and reinsurance. Premiums and investment income are the primary component of overall revenue. The industry is mature and dominated by large companies with intense price competition. The US insurance industry has witnessed a great deal of merger and acquisition activity in recent years. The life insurance industry remains highly competitive due to rapid product development and shortened product life-cycles. In recent years, the L&H segment has been characterized by a dramatic product shift from traditional life insurance to annuity and retirement asset management. Life insurance in the US expanded to more than $578 billion, or nearly half of total business line. This can be attributed to an increased focus on retirement and estate planning, which has led to robust sales of combined savings protection products and annuities. The trend toward the single premium business and pension and annuities products drove sales. Sweeping national health insurance reform was signed into law in 2010 that allows young people to stay on their parent s health plan, begins to close the Medicare drug plan donut hole, and phases in mandatory coverage of all Americans. Significant challenges have arisen for property and casualty insurance companies. However, the absence of any recent major casualty or natural calamity has benefited the industry. The US reinsurance market has entered a soft phase of the cycle and will remain as such assuming no major catastrophes in the coming quarters. The primary and reinsurance sectors experienced divergent pricing trends, but the reinsurance market remains relatively stable. The insurance industry is not immune to the financial troubles that plague the rest of the US economy. Despite having minor exposure to higher risk mortgage-related assets, the slowdown in the US economy may adversely impact insurers performance in the near future. Insurers face challenges related to catastrophe losses, increasing price pressure and changes in the legal and regulatory environment, all of which could erode future underwriting performance and profitability. On a positive note, US insurers may embrace international market opportunities in response to increased market saturation at the domestic level. PEER GROUP: Insurance Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) ASPEN INSURANCE HOLDINGS 40.90 2,952 NM 2,656.20-153.90 AGO ASSURED GUARANTY LTD 36.02 4,231 5.19 1,842.00 875.00 SIGI SELECTIVE INS GROUP INC 58.80 3,433 19.53 2,406.12 177.94 WTM WHITE MTNS INS GROUP LTD 873.00 3,274 234.68 812.10 106.50 PRA PROASSURANCE CORP 59.45 3,176 22.10 885.37 144.77 MCY MERCURY GENERAL CORP 54.96 3,041 30.70 3,296.31 99.02 AFSI AMTRUST FINANCIAL SERVICES 9.11 2,624 NM 5,956.33-9.24 RLI RLI CORP 59.42 2,618 33.01 805.09 79.96 AGII ARGO GROUP INTL HOLDINGS LTD 58.50 1,736 34.41 1,737.70 54.30 EIG EMPLOYERS HOLDINGS INC 48.00 1,557 15.05 791.50 105.40 NAVG NAVIGATORS GROUP INC 51.00 1,505 44.35 1,261.59 35.22 The peer group comparison is based on Major Property & Casualty Insurance companies of comparable size. Report Date: PAGE 2
Annual Dividend Rate COMPANY DESCRIPTION Aspen Insurance Holdings Limited, through its subsidiaries, engages in insurance and reinsurance businesses in the United States and internationally. The company's Insurance segment offers property and casualty insurance products, including U.S. and U.K. commercial property, commercial liability, U.S. primary casualty, excess casualty, environmental liability, railroad liability, and programs business; and marine, aviation, and energy insurance products, such as marine and energy liability, onshore and offshore energy physical damage, marine hull, specie, inland and ocean marine, and aviation insurance products. This segment also provides financial and professional lines insurance products against financial and corporate risks, professional liability, management liability, credit and political risks, crisis management, accident and health, surety risks, and technology liability. The company's Reinsurance segment offers property catastrophe reinsurance products; other property reinsurance products; casualty reinsurance products, including U.S. treaty, international treaty, and casualty facultative reinsurance products; and specialty reinsurance products comprising credit and surety, agriculture, marine, aviation, terrorism, engineering, and other specialty lines. Aspen Insurance Holdings Limited distributes its products primarily through brokers and reinsurance intermediaries. The company was founded in 2002 and is headquartered in Hamilton, Bermuda. 141 Front Street Hamilton HM19 BMU Phone: 441-295-8201 http://www.aspen.bm Employees: 2000 STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 0.5 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than virtually none of the stocks we rate Total Return 1.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 10% of the companies we cover. Efficiency 2.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 30% of the companies we review. Price volatility 2.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 30% of the stocks we monitor. Solvency 4.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 70% of the companies we analyze. Income 4.0 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 70% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. Report Date: PAGE 3
Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial 1.00 Q4 FY17-2.54 E 2017(E) 3.98 E 2018(E) FINANCIAL ANALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 has significantly decreased when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. During the same period, stockholders' equity ("net worth") has decreased by 19.01% from the same quarter last year. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.thestreetratings.com. INCOME STATEMENT Net Sales ($mil) 718.70 751.00 EBITDA ($mil) -261.50 118.40 EBIT ($mil) -273.80 105.90 Net Income ($mil) -254.40 95.80 BALANCE SHEET Cash & Equiv. ($mil) 1,913.20 2,053.80 Total Assets ($mil) 13,051.60 12,145.70 Total Debt ($mil) 653.30 664.30 Equity ($mil) 3,160.70 3,902.80 PROFITABILITY Gross Profit Margin -36.39% 15.77% EBITDA Margin -36.38% 15.76% Operating Margin -38.10% 14.10% Sales Turnover 0.20 0.25 Return on Assets -1.17% 3.23% Return on Equity -6.45% 9.09% DEBT Current Ratio NA NA Debt/Capital 0.17 0.15 Interest Expense 7.40 7.30 Interest Coverage -37.00 14.51 SHARE DATA Shares outstanding (mil) 59 60 Div / share 0.24 0.22 EPS -4.48 1.40 Book value / share 53.20 64.82 Institutional Own % NA NA Avg Daily Volume 711,610 331,714 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. Report Date: PAGE 4
RATINGS HISTORY Our rating for has not changed since 7/28/2017. As of 11/16/2017, the stock was trading at a price of which is 29.2% below its 52-week high of $57.80 and 16.7% above its 52-week low of $35.05. 2 Year Chart BUY: $49.88 2016 HOLD: $48.60 $60 $50 $40 MOST RECENT RATINGS CHANGES Date Price Action From To 7/28/17 $48.60 Downgrade Buy Hold 11/16/15 $49.88 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/16/2017) 43.95% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 3% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 25.29% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Research Contact: 212-321-5381 Sales Contact: 866-321-8726 VALUATION HOLD. This stock s P/E ratio is negative, making its value useless in the assessment of premium or discount valuation, only displaying that the company has negative earnings per share. Conducting a second comparison, its price-to-book ratio of 0.77 indicates a significant discount versus the S&P 500 average of 3.16 and a discount versus the industry average of 1.94. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. After reviewing these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings NM Peers 26.10 Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings. 's P/E is negative making this valuation measure meaningless. Price/Projected Earnings 10.29 Peers 24.64 Neutral. The absence of a valid price-to-projected earnings ratio happens when a stock can not be valued on the basis of a negative expected future earnings. 's ratio is negative making this valuation measure meaningless. Price/Book 0.77 Peers 1.94 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a significant discount to its peers. Price/Sales 0.91 Peers 1.52 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a significant discount to its industry on this measurement. DISCLAIMER: Price/CashFlow 19.68 Peers 13.02 Premium. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. is trading at a significant premium to its peers. Price to Earnings/Growth NA Peers 3.71 Neutral. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. Ratio not available. Earnings Growth lower higher -160.48 Peers -5.08 Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher -1 Peers 6.72 Lower. A sales growth rate that trails the industry implies that a company is losing market share. significantly trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. Report Date: PAGE 5