Endurance blasts Aspen record in new attack

Endurance has again launched a blistering attack on the performance of Aspen Insurance as it continues to try to convince Aspen shareholders to force a special general meeting that would pave the way for Endurance to buy the company.

The letter, signed by Endurance chief executive John Charman, again criticises the performance of Aspen and describes the attitude of its board as entrenched and not acting in the best interests of its shareholders. Aspen declined to comment but said it may respond to this latest letter to its shareholders in due course.

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.

In the letter seen by Intelligent Insurer, Endurance urges Aspen’s shareholders to “make their voices heard and tell Aspen’s board and management it’s time to put entrenched interests aside and focus on the clear benefits of Endurance’s offer”.

The letter goes onto describe its offer for Aspen as highly attractive and a compelling opportunity for future value creation. It accuses the Aspen board of taking actions to entrench their position rather than take the opportunity to realise significant value for Aspen shareholders.

“Don’t be fooled by Aspen’s dubious assurances about its ‘standalone plan.’ Under the stewardship of its current board and management, Aspen’s performance has lagged that of Endurance across key metrics, including underwriting profitability (i.e. combined ratio), diluted book value per share growth and share price performance. Despite the efforts of Aspen’s board and management to distort the truth and confuse shareholders, there is no denying the facts,” it says.

The letter sets out several measurements of performance including share price, book value per share and combined ratio. It says that it has outperformed Aspen based on these measurements over the past five years. Last week, Intelligent Insurer ran an article based on an analysis by an independent firm that argued the performance of the two companies had been very similar over the past five years.

Specifically, Endurance accuses the Aspen board and management of not carefully managing its catastrophe risk exposures in a declining rate environment. Instead, these exposures increased in the first quarter, a move it describes as only offering the “dubious benefit of short term growth”.

It also specifically claims that Aspen has been “propping up” the growth of its US insurance business with third party insurance programmes, which deliver control of Aspen’s underwriting and claims authority to unaffiliated third parties. Such partners do not necessarily have the best long-term interests of Aspen as their primary objective, Endurance claims.

“Aspen’s campaign of rhetoric and misinformation regarding Endurance is a smokescreen designed to deflect attention away from Aspen’s long track record of poor operating performance and dismal corporate governance under its current board and management, including a classified board, a poison pill and a substantially larger share grant for the CEO following Endurance’s announcement of the proposed transaction,” the letter says.

“Endurance’s proposed transaction represents a unique opportunity for Aspen’s shareholders to realise a highly attractive premium value for their shares. While Aspen’s board and management team are making vague promises of future value, their past performance has shown that they are unlikely to deliver and their entrenched corporate governance position shows that they won’t care.”