Endurance and Aspen: ‘two peas’ in their performance

The relative performance of Aspen Insurance and Endurance has been remarkably similar over the past five years despite marked variances in their exposures, the sectors they operate in and their respective claims about each other’s performance in recent weeks.

That is the conclusion of an analysis of the two businesses by Litmus Analysis, which has been conducted against the backdrop of the increasingly bitter public row between the firms as the board of Aspen Insurance continues to try to rebuff Endurance’s unsolicited bid to acquire the business.

Endurance made an unsolicited £3.2 billion bid for Aspen earlier this year, which was rejected by the insurer’s board. Since then, the two companies have engaged in a very public war of words as they battle to win the confidence of Aspen’s shareholders.

The tension has ratcheted up in recent weeks as Endurance attempts to force a special general meeting that would pave the way for Endurance to buy the company. Endurance has been critical of the ability of the Aspen board to deliver shareholder value while the Aspen board has responded in kind arguing that Endurance is guilty of ignoring its shareholders and attacking the governance of the company and even, specifically, the level of compensation received by chairman and chief executive John Charman.

The Litmus report attempts to cut through the allegations and rhetoric and examine some of the key performance indicators underpinning each business. Litmus examined AM Best’s latest reports on the financials of the company’s respective holding companies, which cover the period 2009 – 2013.

Taking the five year average for all the following figures, Endurance’s combined ratio for the period was 95.6 percent while Aspen’s was 96.7 percent. In terms of loss ratio, Endurance’s five year average was 66.6 percent while Aspen’s was 63.2 percent. Endurance’s return on equity as an average in the five year period was 9.7 percent while Aspen’s was 8 percent. Finally, Endurance’s return on revenue was 14.5 percent; Aspen’s, in comparison, was 13.1 percent.

Stuart Shipperlee, analytical partner, Litmus Analysis, said: “The results across four key performance metrics are striking. These are two peas from the same performance pod. Even the volatility profiles are remarkably alike.

“Indeed given the inherent variances in exposures between any two organisations in their sectors the numbers are almost spookily similar.

“Of course, both organisations are really trying to tell a story about the future. Aspen’s being that it has built a business platform and culture that it can now leverage to drive up sustainable profitability; Endurance’s that dynamic new leadership will do the same. And, to be frank, neither group’s last five years have been stellar. OK, but not great (2011, of course, had a big impact on that).

It added: “For the last five years these have been two very, very similarly performing businesses.”