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Aspen Issues Third Letter to Holders: Suggesting Rejection of Both of Endurance's Bids

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UPDATE: Endurance Specialty Holdings Terminates Offer to Buy Aspen

Aspen Insurance Holdings Limited (“Aspen” or “Company”) (NYSE: AHL) announced
today that it is mailing a letter and a BLUE revocation card to shareholders
in opposition to Endurance Specialty Holdings Ltd. (“Endurance”) (NYSE: ENH)
solicitation of authorizations. Aspen's Board of Directors urges shareholders
to reject both of Endurance's proposals by promptly signing, dating and
returning Aspen's BLUE revocation card and disregarding Endurance's white
authorization card.

Earlier today, Aspen announced preliminary financial results for the quarter
ended June 30, 2014, which demonstrate the continued benefits of the Company's
strategic investments in its business and the strength of Aspen's plan to
drive shareholder value. Aspen will report final results for the quarter on
July 23, 2014.

Information on Aspen's response to Endurance's unsolicited offer, including
links to press releases, presentations, and other important documents and SEC
filings are available on the Internet at http://aspen.shareholderresource.com,
or on Aspen's website at http://www.aspen.co.

Below is the full text of the letter to Aspen shareholders:

July 10, 2014

Dear Aspen Shareholder:

ASPEN'S PLAN IS DELIVERING STRONG, HIGH-QUALITY RESULTS

Board Urges Shareholders NOT to Submit Any White Endurance Authorization Cards

Please Sign, Date and Return the BLUE Revocation Card Instead

As you may have seen, this afternoon your company, Aspen Insurance Holdings
Limited, reported strong preliminary financial results for the second quarter,
including:

 
Preliminary Q2 2014
Diluted Book Value Per Share^i       $44.60 – $44.80
Annualized Operating Return on Equity^ii       12.0% – 12.8%
Diluted Operating Earnings Per Share^ii       $1.30 – $1.35

Preliminary book value per share figures indicate 4.4%-4.9% growth since March
31, 2014 and 9.0%-9.5% growth since December 31, 2013. Our continued strong
performance during the second quarter – following an excellent first quarter –
clearly demonstrates the continued benefits of the strategic investments we
have made in our business and the strength of our plan to drive shareholder
value. Aspen will report final results for the quarter on July 23rd.

While we are delivering strong results for shareholders, Endurance continues
to pursue its ill-conceived and inadequate offer along with proposals related
to the calling of a special meeting and a convoluted legal strategy Endurance
has said it will pursue with the Bermuda Supreme Court. These proposals are
desperate legal tactics designed to coerce you into selling your shares at the
lowest possible price. Aspen strongly urges shareholders not to sign any white
authorization cards sent to you by Endurance. Whether or not you have
previously executed Endurance's white authorization card, you may reject
Endurance's proposals if you sign, date and return the enclosed BLUE
revocation card.

         ENDURANCE'S OFFER IS HIGHLY INADEQUATE AND IS BECOMING EVEN LESS
ATTRACTIVE
IN LIGHT OF ASPEN'S CONTINUED STRONG, HIGH-QUALITY RESULTS

Our plan is working – we are delivering high-quality results, including
diversified revenues and continued strong returns from our investments in our
business, and we remain well-positioned to deliver increased value to our
shareholders. As our book value grows, Endurance's offer is increasingly
inadequate; it now represents about half of the premium to Aspen's book value
per share in Endurance's initial proposal. ^ iii

ENDURANCE CONTINUES TO MISCHARACTERIZE
ASPEN'S CLEARLY SUPERIOR UNDERWRITING RESULTS

Aspen's underwriting results have been consistently better than those of
Endurance as shown by historic accident year combined ratios in the graph
below. Lower ratios represent stronger performance – and Aspen has performed
better than Endurance in four of the past five years with continued
outperformance in the first quarter of 2014.

Aspen's superior results came in spite of the fact that during this period we
were investing $150 million in our insurance platform to build underwriting,
claims, actuarial, technological and other infrastructure capabilities in the
U.S. – investments that are now paying dividends and enabling us to generate
even stronger results. In addition, Endurance's results have reflected an
increasing reliance on prior year reserve releases, masking the
underperformance of its business and raising serious questions about the
quality of its earnings. In 2012, Endurance's reserve releases improved its
combined ratio by 6 percentage points. This increased to 11 percentage points
in 2013 and almost 13 points in the first quarter of 2014.

SETTING THE RECORD STRAIGHT ON ENDURANCE'S LATEST ERRONEOUS CLAIMS

In a letter filed publicly this morning, Endurance made a number of erroneous
and ill-informed claims about Aspen's business, which underscores our deep
concern about their failure to understand the significant dis-synergies that
would result from the misguided transaction they are proposing. We want to set
the record straight:

Aspen's catastrophe reinsurance exposures: In contrast to Endurance, Aspen Re
has a very strong and successful brand and track record in the catastrophe
reinsurance business. Unlike Endurance, Aspen has embraced the significant
changes heralded by third party capital in catastrophe reinsurance and views
this as a significant opportunity for future growth and diversity of earnings.
Since Aspen Re enjoys numerous long-term and highly profitable relationships
with core clients, Aspen Re was able to increase its share on some of the most
desirable risks in the catastrophe reinsurance market, not only during the
important January 1 renewal period, but throughout this year. We have
benefited significantly from Aspen Capital Markets, our third-party capital
markets entity, which enables us to increase our gross premiums written while
maintaining the same net risk position by redistributing risk to the capital
markets and at the same time adding underwriting fees and profit commission.

U.S. programs: Similar to most major insurers, we have found that for certain
categories of smaller and homogenous risks, it is economically beneficial to
participate on a program basis, with tight and careful controls over
underwriting, claims, and risk management. Currently our U.S. Program business
is profitable and represents approximately 6% of our 2013 annual written
premium.

Reserving: We have consistently said publicly that we aim to maintain our
reserves at a prudent level such that the probability of reserve redundancies
in future periods is in the mid-to-high 80% range. At year end 2013 the figure
was 86%. Endurance references our year end 2011 reserving at the 90th
percentile in a veiled attempt to discredit our robust reserving process. The
higher than normal percentile selected at that time was due to the extreme
catastrophe events that occurred during that year. At year end 2009 our
reserving percentile stood at 86%. Furthermore, since Endurance does not make
a similar type of disclosure, it is impossible for shareholders to assess the
consistency of their reserving strength over time or the relative level of the
reserving risk they are taking. This is one of many reasons for our deep
concern with receiving Endurance shares in exchange for Aspen's.

PROTECT THE VALUE OF YOUR INVESTMENT:
PLEASE SIGN, DATE AND RETURN THE ENCLOSED BLUE REVOCATION CARD TODAY

Aspen strongly urges shareholders not to sign any white authorization cards
sent to you by Endurance. Whether or not you have previously executed
Endurance's white authorization card, you may reject Endurance's proposals if
you sign, date and return the enclosed BLUE revocation card using the pre-paid
envelope provided.

 1. Do NOT sign Endurance's white authorization card.
 2. Sign, date and return the enclosed BLUE revocation card.
 3. Even if you have already signed Endurance's white authorization card, you
have every right to revoke your authorizations by signing, dating and
returning the enclosed BLUE revocation card.

If you have questions or need assistance revoking your authorizations for your
shares, please contact our agent Innisfree M&A Incorporated: Shareholders call
toll-free: (877) 717-3930; Banks and Brokers call collect: (212) 750-5833.

Regardless of the number of ordinary shares of Aspen that you own, your views
and your vote are important.

Sincerely yours,

/s/           /s/
 
Glyn Jones Chris O'Kane
Chairman of the Board of Directors Chief Executive Officer

Posted-In: News Press Releases

 

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