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Aspen CEO plots independent future after rejecting Endurance bid

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Aspen CEO plots independent future after rejecting Endurance bid

Hostile takeover target Aspen Insurance Holdings Ltd. is healthy, growing and well-positioned to continue as an independent insurer and reinsurer rather than accept a $3.2 billion offer from rival Endurance Specialty Holdings Ltd., said Aspen CEO Chris O'Kane in an interview with Business Insurance on Friday.

Mr. O'Kane has spent the past two weeks with analysts and investors discussing Aspen's prospects as an independent company in the wake of Endurance's bid.

Aspen rejected the Endurance $47.50 per share offer last month.

Growth in its U.S. insurance business and development of its capital markets unit will help move Hamilton, Bermuda-based Aspen forward, said Mr. O'Kane.

“The area of growth has indeed been U.S. insurance,” Mr. O'Kane said. Aspen has spent about $150 million over the past four years building its U.S. insurance franchise, he said, and is now poised to reap the benefits of that investment.

“$47.50 doesn't begin to recognize the financial prospects of Aspen,” he said.

In addition, Aspen is restructuring its ceded reinsurance and retrocessional reinsurance programs, which will result in a $25 million profit improvement for 2014 and a $20 million improvement in 2015, Mr. O'Kane said.

Endurance declined to comment for this story. In previous statements, Endurance argued that the combination of the Bermuda-based companies would create a market leader with bigger scale and a diversified business platform.

Mr. O'Kane disagreed with Endurance's claim that a combined entity would create a stronger company.

“Bigger might be better, but in what way?” said Mr. Kane. “You can be bigger by being taller, by being more muscular, or you can be bigger by being fat and flabby, and not many people want to achieve scale by being fat and flabby. That's what I think Endurance offers us. It's the wrong way to be bigger,” he said.

An analyst following the takeover battle said it's difficult to assess what would be the best option for Aspen.

Aspen “has a good long-term track record of generating book value growth and profitability, but whether they would be more profitable or capital efficient on their own, it's hard to say,” said Mark Dwelle, director of insurance equity research at RBC Capital Markets, a unit of RBC Dominion Securities Inc. in Richmond, Virginia.