Cloutier: Aspen wants to hit “high teens returns” through careful organic growth and cycle management

By David Bull

May 8 - (The Insurer) - Aspen’s return to the public markets will allow it to consider “careful” inorganic opportunities, but its focus will remain on the “fundamentals” after its return to a profitable growth trajectory in recent years under Apollo ownership, according to the Bermudian’s leadership team.

Speaking to The Insurer on Thursday after an upsized IPO priced at $30 a share that valued the Bermudian at $2.76 billion before the float, executive chairman and CEO Mark Cloutier highlighted the (re)insurer’s recent track record and potential value to shareholders.

He said the timing of the IPO had been carefully considered as the company navigated market volatility and market uncertainty in recent months.

“[This is] a business that has got three years of double-digit returns, consistent earnings and a very stable earnings profile in a sector that is pretty resilient to stuff like the current tariff environment … Given the macro backdrop and the performance and risk characteristics of the business, we felt it would be a good business to try to reopen the IPO markets with,” he commented.

Cloutier reiterated that an IPO had always been the preferred path of Aspen’s management.

“And we were very appreciative of how constructive Apollo has been in the process with us, in participating and enabling us to get it away with the current backdrop,” he said.

Aspen’s group president and Bermuda CEO Christian Dunleavy said that the pitch to investors had been about the company continuing on its current trajectory, as well as continuing to build in areas like technology enablement.

“The pitch was really focused around continuing to invest in what we're doing well and going deeper with our existing customers and clients, bringing third-party capital, in which we have a real industry-leading offering, along with our own balance sheet to support our clients.

Aspen chief financial officer Mark Pickering also highlighted the company’s recent track record, with three years of mid-teen ROEs.

“And we’re going to continue to target that mid-teen ROE by managing volatility in the portfolio and continuing to enhance the quality of earnings,” he said.

M&A AND EMBRACING THE PUBLIC MARKETS

Asked about a return to the glare of the public markets for Aspen, which was acquired by Apollo in 2019 and was able to execute its turnaround as a private company, Cloutier said: “We are going to enjoy the challenge of it.

“We are running the company to drive the best returns we can for our shareholders. And we really believe strongly in what we've built here … and our fundamentals and philosophy around cycle management and risk management [mean] that we have a company that is well suited to this form of capital.

Cloutier added that having access to equity capital markets will give Aspen flexibility when it comes to M&A and inorganic growth opportunities.

“But we’re going to stay pretty focused on proving to our new partners that their trust is well placed. We’re going to stay pretty focused on our fundamentals and what we’ve been doing,” he continued.

Aspen will consider inorganic growth opportunities, but will be “very, very careful” about them. Potential opportunities could include acquiring portfolios of business and seeking to optimise them for the benefit of its shareholders, the former Brit CEO suggested.

But the overall focus will be on growing its existing $4.6 billion premium book of business following the “careful” underwriting it has gone through in recent years, including the emphasis on managing its limits profile and line sizes.

“Time has proven over and over that renewal business produces a much better result than chasing new business. So we’re going to continue to manage the cycle, grow with the business we know well. We want to hit high teens returns by careful organic growth, cycle management, risk management of our portfolios and just continuing to prove that we’re good at our fundamentals.

“In my mind, having a business that continuously generates mid to high teens ROEs – that in and of itself is kind of an exciting future,” he concluded.

Shares in Aspen ended their first day of trading up by just over 8% at $32.50 after reaching a high of $34.00.