Aspen Insurance Holdings Limited (NYSE: AHL) and Validus Holdings (NYSE:VR) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Analyst Ratings

This is a summary of recent recommendations and price targets for Aspen Insurance Holdings Limited and Validus Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aspen Insurance Holdings Limited 0 2 0 0 2.00
Validus Holdings 0 3 1 0 2.25

Aspen Insurance Holdings Limited presently has a consensus price target of $52.00, suggesting a potential upside of 8.90%. Validus Holdings has a consensus price target of $58.25, suggesting a potential upside of 8.57%. Given Aspen Insurance Holdings Limited’s higher possible upside, equities research analysts clearly believe Aspen Insurance Holdings Limited is more favorable than Validus Holdings.

Institutional and Insider Ownership

90.5% of Aspen Insurance Holdings Limited shares are held by institutional investors. Comparatively, 97.8% of Validus Holdings shares are held by institutional investors. 1.3% of Aspen Insurance Holdings Limited shares are held by company insiders. Comparatively, 2.3% of Validus Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Aspen Insurance Holdings Limited has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Validus Holdings has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Valuation and Earnings

This table compares Aspen Insurance Holdings Limited and Validus Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aspen Insurance Holdings Limited $2.68 billion 1.07 $310.20 million $2.42 19.73
Validus Holdings $2.48 billion 1.72 $538.06 million $3.63 14.78

Validus Holdings has higher revenue, but lower earnings than Aspen Insurance Holdings Limited. Validus Holdings is trading at a lower price-to-earnings ratio than Aspen Insurance Holdings Limited, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Aspen Insurance Holdings Limited and Validus Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aspen Insurance Holdings Limited 7.66% 3.84% 1.16%
Validus Holdings 11.81% 7.75% 2.55%

Dividends

Aspen Insurance Holdings Limited pays an annual dividend of $0.96 per share and has a dividend yield of 2.0%. Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 2.8%. Aspen Insurance Holdings Limited pays out 39.7% of its earnings in the form of a dividend. Validus Holdings pays out 41.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aspen Insurance Holdings Limited has increased its dividend for 5 consecutive years and Validus Holdings has increased its dividend for 2 consecutive years.

Summary

Validus Holdings beats Aspen Insurance Holdings Limited on 11 of the 17 factors compared between the two stocks.

Aspen Insurance Holdings Limited Company Profile

Aspen Insurance Holdings Limited is a holding company. The Company underwrites specialty insurance and reinsurance on a global basis. It manages its business as two business segments: Aspen Insurance and Aspen Reinsurance (Aspen Re). The reinsurance segment consists of property catastrophe reinsurance (including the business written through Aspen Capital Markets), other property reinsurance (risk excess, pro rata and facultative), casualty reinsurance (U.S. treaty, international treaty and global facultative) and specialty reinsurance (credit and surety, agriculture insurance and reinsurance, marine, aviation, terrorism, engineering and other specialty lines). The insurance segment consists of property and casualty insurance; marine, aviation and energy insurance, and financial and professional lines insurance. Aspen Re participates in alternative reinsurance market through Aspen Capital Markets, which is part of property catastrophe reinsurance line of business.

Validus Holdings Company Profile

Validus Holdings, Ltd. is a holding company. The Company operates through four segments: Validus Re, Talbot, Western World and AlphaCat. Validus Re is a Bermuda-based reinsurance segment focused treaty reinsurance. Validus Re concentrates on first-party property and other reinsurance risks. Talbot is a specialty insurance segment operating within the Lloyd’s insurance market through Syndicate 1183. The Talbot segment is focused on a range of marine and energy, political lines, commercial property, financial lines, contingency, accident and health and aviation classes of business. Western World is a specialty excess and surplus lines insurance segment operating within the United States commercial market. AlphaCat is a Bermuda-based investment advisor, managing capital from third parties and the Company in insurance linked securities and other investments in the property catastrophe reinsurance space.

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