Urges Shareholders to Sign, Date and Return BLUE Revocation Card to
REJECT Endurance Proposals
Raises Issues About Value of Endurance Offer, Coercive Legal Tactics
and Governance Practices
HAMILTON, Bermuda--(BUSINESS WIRE)--
Aspen Insurance Holdings Limited (“Aspen”) (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.
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 1, 2014
Dear Aspen Shareholder:
We have recently sent you a letter expressing our very serious concerns
about a hostile attempt by Endurance Specialty Holdings Ltd. to acquire
Aspen Insurance Holdings Limited on highly unattractive terms. As we
said in that letter, Endurance’s proposed valuation for Aspen is
inadequate, its stock is an undesirable form of consideration and the
loss of business resulting from a combination would cause significant
financial harm to shareholders.
In addition, Endurance has submitted proposals to Aspen shareholders
related to the calling of a special meeting and a convoluted legal
strategy Endurance has said it will pursue with the Bermuda Supreme
Do not be misled by Endurance’s claims – 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 using the
pre-paid envelope provided.
If Endurance were to successfully take over Aspen, you would become an
Endurance shareholder and Endurance’s directors would be your
fiduciaries. Therefore, Endurance’s poor corporate governance
practices, particularly related to Board composition and executive
compensation, are highly relevant considerations. And, notably,
while Endurance is petitioning for your support now, it has a documented
history of disregarding shareholder interests.
ENDURANCE’S OFFER IS INCREASINGLY INADEQUATEEndurance continues to misrepresent to you the
value of its offer as $49.50 per Aspen share, even though the
aggregate consideration to Aspen shareholders under the 60/40
stock/cash offer is currently worth only $48.27 per share. Since the
announcement of Endurance's revised offer on
June 2, 2014, the aggregate value per share has NEVER equaled the
claimed $49.50 per share “headline” price.
ASPEN CONTINUES TO DELIVER ON ITS PLAN
Aspen is successfully executing a strategic plan
that we are confident will deliver superior value to
shareholders. Aspen reported very strong results in the first quarter
of 2014 and the future looks even brighter. The Company is well
positioned to achieve its 10% operating ROE objective in 2014 and we
expect operating ROE in 2015 to increase over 2014 on the order of 100
basis points.1Aspen believes that loss of business resulting
from a combination with Endurance would cause significant financial
harm to shareholders. Even Endurance acknowledges that as much
as $500 million in annual premiums would be lost in a combination.
Based on continued discussions with clients and brokers, however, we
believe that that estimate greatly understates the actual loss of
We believe Endurance’s stock is an unattractive
currency given Endurance’s overreliance on the volatile,
low-margin and challenged crop insurance business and a dependency on
reserve releases to fuel earnings.
ENDURANCE’S POOR CORPORATE GOVERNANCE PRACTICES
– INCLUDING EXCESSIVE PAY FOR CHAIRMAN/CEO JOHN CHARMAN – SHOULD CAUSE
Given that Aspen shareholders would own a significant portion of a
combined company under Endurance’s ill-conceived offer, it is important
to know the facts about Endurance’s
troubling corporate governance practices.
Granting outsized equity to executives with little regard to
Despite Mr. Charman reportedly getting kicked out of his prior
company,2 in 2013 the Endurance Board gave him a
$35.1 million restricted stock grant and options valued at
another $10.2 million.
These awards are not conditioned on performance and are simply a
handout to Mr. Charman, as long as he stays at Endurance for
several years.•Institutional Shareholder Services (ISS) said that this “mega
equity award” raises “significant concerns” including “potential
Endurance further evidences its tone deafness by actually
boasting about its high insider ownership when that ownership
level is substantially due to these excessive equity awards.
In contrast: 75% of Aspen’s executive share
awards are performance-related
|Ignoring shareholder feedback on excessive pay packages||•
Holders of over 60% of Endurance’s shares voting at this year’s
Annual Meeting rejected Mr. Charman’s compensation package.4•
Endurance’s Board has made no changes to his compensation in
response to this clear message.
In contrast:Aspen received 94% support for
executive compensation at its 2014 Annual Meeting
|Granting option to private equity firm without seeking
Without shareholder input, Endurance’s Board gave CVC Capital
Partners an option to acquire $250 million of common shares of
the combined company at a below market price, and has promised,
if CVC exercises the option, to give them warrants to purchase
additional shares over the next 10 years.
Neither Endurance nor Aspen shareholders would have a say in
this dilutive option grant.
In contrast:Aspen has not granted options
or warrants to any outside investor
|Combined Chairman and CEO positions||•
Combined Chairman and CEO position creates a structure where the
CEO's board leadership is not challenged.
This may explain the failure of Endurance’s Board to stand up
In contrast:Aspen has a separate Chairman
|Entrenched Endurance Board||•
Endurance has not appointed a new independent director in the
past 3 years.
Excluding Mr. Charman, the median tenure of Endurance’s
directors is 10 years.
Endurance’s lead director has served on the Board since 2001.
In contrast:Aspen added 3 new independent
directors in 2013; median director tenure 6 years
REJECT ENDURANCE’S COERCIVE PROPOSALS: PLEASE
SIGN, DATE AND RETURN THE ENCLOSED BLUE REVOCATION CARD TODAY
Rather than offer real value for your company, Endurance has instead
determined to engage in convoluted legal tactics that are destructive to
the value of your company in an effort to coerce you into selling your
shares on the cheap. Endurance’s goal is to usurp the power of your
Board as negotiator and bring its current offer to you as a "take it or
leave it" proposition – an offer your Board unanimously believes – and
all of the shareholders we have spoken with believe – significantly
undervalues Aspen. We urge you to reject Endurance’s coercive tactics to
force through its inadequate offer.
sign Endurance’s white authorization card.
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 are important.
Chairman of the Board of Directors
Chief Executive Officer
Goldman, Sachs & Co. is acting as financial advisor and Wachtell,
Lipton, Rosen & Katz and Willkie Farr & Gallagher LLP are acting as
legal advisors to Aspen.
About Aspen Insurance Holdings Limited
Aspen provides reinsurance and insurance coverage to clients in various
domestic and global markets through wholly-owned subsidiaries and
offices in Bermuda, France, Germany, Ireland, Singapore, Switzerland,
the United Kingdom and the United States. For the year ended December
31, 2013, Aspen reported $10.2 billion in total assets, $4.7 billion in
gross reserves, $3.3 billion in shareholders’ equity and $2.6 billion in
gross written premiums. Its operating subsidiaries have been assigned a
rating of “A” (“Strong”) by Standard & Poor’s, an “A” (“Excellent”) by
A.M. Best and an “A2” (“Good”) by Moody’s.
Cautionary Statements Concerning Forward-Looking Statements
This press release contains written, and Aspen may make related oral,
"forward-looking statements" within the meaning of the U.S. federal
securities laws. These statements are made pursuant to common law
doctrine and (as applicable) the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
include all statements that do not relate solely to historical or
current facts, and can be identified by the use of words such as
"expect," "intend," "plan," "believe," "do not believe," "aim,"
"project," "anticipate," "seek," "will," "likely," “assume,” "estimate,"
"may," "continue," "guidance," “objective,” “outlook,” “trends,”
“future,” “could,” “would,” “should,” “target,” and similar expressions
of a future or forward-looking nature.
All forward-looking statements rely on a number of assumptions,
estimates and data concerning future results and events and are subject
to a number of uncertainties and other factors, many of which are
outside Aspen’s control that could cause actual results to differ
materially from such statements.
Forward-looking statements do not reflect the potential impact of any
future collaboration, acquisition, merger, disposition, joint venture or
investments that Aspen may enter into or make, and the risks,
uncertainties and other factors relating to such statements might also
relate to the counterparty in any such transaction if entered into or
made by Aspen.
All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that
could cause actual results to differ materially from those indicated in
these statements. Aspen believes these factors include, but are not
limited to: our ability to successfully implement steps to further
optimize the business portfolio, ensure capital efficiency and enhance
investment returns; the possibility of greater frequency or severity of
claims and loss activity, including as a result of natural or man-made
(including economic and political risks) catastrophic or material loss
events, than our underwriting, reserving, reinsurance purchasing or
investment practices have anticipated; the assumptions and uncertainties
underlying reserve levels that may be impacted by future payments for
settlements of claims and expenses or by other factors causing adverse
or favorable development; the reliability of, and changes in assumptions
to, natural and man-made catastrophe pricing, accumulation and estimated
loss models; decreased demand for our insurance or reinsurance products
and cyclical changes in the highly competitive insurance and reinsurance
industry; increased competition from existing insurers and reinsurers
and from alternative capital providers and insurance-linked funds and
collateralized special purpose insurers on the basis of pricing,
capacity, coverage terms, new capital, binding authorities to brokers or
other factors and the related demand and supply dynamics as contracts
come up for renewal; changes in general economic conditions, including
inflation, deflation, foreign currency exchange rates, interest rates
and other factors that could affect our financial results; the risk of a
material decline in the value or liquidity of all or parts of our
investment portfolio; evolving issues with respect to interpretation of
coverage after major loss events; our ability to adequately model and
price the effect of climate cycles and climate change; any intervening
legislative or governmental action and changing judicial interpretation
and judgments on insurers’ liability to various risks; the effectiveness
of our risk management loss limitation methods, including our
reinsurance purchasing; changes in the total industry losses, or our
share of total industry losses, resulting from past events and, with
respect to such events, our reliance on loss reports received from
cedants and loss adjustors, our reliance on industry loss estimates and
those generated by modeling techniques, changes in rulings on flood
damage or other exclusions as a result of prevailing lawsuits and case
law; the impact of one or more large losses from events other than
natural catastrophes or by an unexpected accumulation of attritional
losses; the impact of acts of terrorism, acts of war and related
legislation; any changes in our reinsurers’ credit quality and the
amount and timing of reinsurance recoverables; changes in the
availability, cost or quality of reinsurance or retrocessional coverage;
the continuing and uncertain impact of the current depressed lower
growth economic environment in many of the countries in which we
operate; the level of inflation in repair costs due to limited
availability of labor and materials after catastrophes; a decline in our
operating subsidiaries’ ratings with S&P, A.M. Best or Moody’s; the
failure of our reinsurers, policyholders, brokers or other
intermediaries to honor their payment obligations; our ability to
execute our business plan to enter new markets, introduce new products
and develop new distribution channels, including their integration into
our existing operations; our reliance on the assessment and pricing of
individual risks by third parties; our dependence on a few brokers for a
large portion of our revenues; the persistence of heightened financial
risks, including excess sovereign debt, the banking system and the
Eurozone debt crisis; changes in our ability to exercise capital
management initiatives (including our share repurchase program) or to
arrange banking facilities as a result of prevailing market changes or
changes in our financial position; changes in government regulations or
tax laws in jurisdictions where we conduct business; changes in
accounting principles or policies or in the application of such
accounting principles or policies; Aspen or Aspen Bermuda Limited
becoming subject to income taxes in the United States or the United
Kingdom; loss of one or more of our senior underwriters or key
personnel; our reliance on information and technology and third party
service providers for our operations and systems; and increased
counterparty risk due to the credit impairment of financial
institutions. For a more detailed description of these uncertainties and
other factors, please see the "Risk Factors" section in Aspen's Annual
Report on Form 10-K as filed with the U.S. Securities and Exchange
Commission on February 20, 2014 and in Aspen’s Quarterly Report on Form
10-Q as filed with the U.S. Securities and Exchange Commission on May 1,
2014. Aspen undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
dates on which they are made.
The guidance in this communication relating to 10% Operating ROE in 2014
and with a further 100 basis point increase over 2014 in 2015 was and is
made as at April 23, 2014. Such guidance assumes for 2014 a pre-tax
catastrophe load of $185 million per annum, normal loss experience and
given the current interest rate and insurance pricing environment and
for 2015 a pre-tax catastrophe load of $200 million, normal loss
experience, our expectations for rising interest rates, and a less
favorable insurance pricing environment. Aspen has identified and
described in the presentations in the investor relations section of its
website actions and additional underlying assumptions in each of its
three operating return on equity levers – optimization of the business
portfolio (including particular lines of business), capital efficiency
and enhancing investment returns – to seek to achieve the targeted
operating ROE in 2014 and 2015. These forward looking statements are
subject to the assumptions, risks and uncertainties, as discussed above
and in the presentations noted, which could cause actual results to
differ materially from these statements.
In addition, any estimates relating to loss events involve the exercise
of considerable judgment and reflect a combination of ground-up
evaluations, information available to date from brokers and cedants,
market intelligence, initial tentative loss reports and other sources.
The actuarial range of reserves and management's best estimate
represents a distribution from our internal capital model for reserving
risk based on our then current state of knowledge and explicit and
implicit assumptions relating to the incurred pattern of claims, the
expected ultimate settlement amount, inflation and dependencies between
lines of business. Due to the complexity of factors contributing to the
losses and the preliminary nature of the information used to prepare
these estimates, there can be no assurance that Aspen’s ultimate losses
will remain within the stated amounts.
This communication does not constitute an offer to buy or solicitation
of an offer to sell any securities or a solicitation of any vote or
approval. This communication is for informational purposes only and is
not a substitute for any relevant documents that Aspen may file with the
U.S. Securities and Exchange Commission (“SEC”).
Endurance has commenced an exchange offer for the outstanding shares of
Aspen (together with associated preferred share purchase rights). Aspen
has filed with the SEC a solicitation/recommendation statement to its
shareholders on Schedule 14D-9. Endurance is also soliciting
authorizations from Aspen’s shareholders. Aspen has filed a revocation
statement to its shareholders on Schedule 14A with the SEC in opposition
to Endurance’s solicitation of authorizations.
INVESTORS AND SECURITY HOLDERS OF ASPEN ARE URGED TO READ THIS AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders will be able to obtain free copies of these documents
(when available) and other documents filed with the SEC by Aspen through
the web site maintained by the SEC at http://www.sec.gov.
These documents will also be available at. http://aspen.shareholderresource.com
or on Aspen’s website at http://www.aspen.co.
Certain Information Regarding Participants
Aspen and certain of its respective directors and executive officers may
be deemed to be participants under the rules of the SEC. Security
holders may obtain information regarding the names, affiliations and
interests of Aspen’s directors and executive officers in Aspen’s Annual
Report on Form 10-K for the year ended December 31, 2013, which was
filed with the SEC on February 20, 2014, and its proxy statement for the
2014 Annual Meeting, which was filed with the SEC on March 12, 2014.
These documents can be obtained free of charge from the sources
iGuidance as at April 23, 2014. In 2014, ROE guidance assumes
a pre-tax catastrophe load of $185 million, normal loss experience and
given the current interest rate and insurance pricing environment. In
2015, ROE guidance assumes a pretax catastrophe load of $200 million,
normal loss experience, Aspen’s expectations for rising interest rates,
and a less favorable insurance pricing environment. See Cautionary
Statement disclosure above.
iiSNL Insurance Daily,
August 23, 2013
iiiSource: ISS Report, Endurance
Specialty Holdings Ltd.May 21, 2014 (Permission to quote was neither
sought nor obtained)
ivAccording to a recent study, this
puts Endurance among the 5% of mid-cap companies that failed to get
majority shareholder support for executive compensation “Say-on-Pay”
proposals in shareholder meetings held this year.
For further information:
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140701005767/en/
Kerry Calaiaro, +1-646-502-1076
Vice President, Investor Relations
de Guzman, +1-646-289-4912
Vice President, Investor Relations
Arthur Crozier/Jennifer Shotwell/Larry Miller,
+44 20 7184 8337
Head of Communications
America – Sard Verbinnen & Co
Paul Scarpetta or Jamie Tully,
International – Citigate Dewe Rogerson
Donovan or Caroline Merrell, +44 20 7638 9571
Source: Aspen Insurance Holdings Limited