Sterne Agee Comments On Aspen Insurance Holdings 3Q

Following a more thorough review of Aspen Insurance Holdings AHL third quarter results and taking into account recently announced repurchase activity, Sterne Agee is lowering its 2011 estimate to $3.80 from $3.90. The decrease is driven by reduced top-line growth assumptions, reduced reserve release estimates and modestly lower NII, partly offset by faster repurchase activity versus our previous estimates. Sterne is leaving its 2012 estimate unchanged as benefits from estimated repurchase essentially offset the impact of other headwinds. Sterne's 2010 estimate of $3.03 implies a $1.00 estimate for fourth quarter. AHL is currently trading at a 0.75x multiple on 3Q10 tangible book value. This compares to the group average multiple at 0.87x. Sterne's price target of $34 assumes a 0.77x multiple of year-end 2011 tangible book value. At the current valuation we feel downside for the stock is more limited. Going forward, AHL should benefit from strategic efforts to build out its U.S. business and improve underwriting results. However, Sterne Agee remains Neutral on the stock given a lower ROE estimate versus peer companies. AHL closed Tuesday at $28.72