Aspen Insurance Holdings announced some preliminary Q2 financialresults and alerted shareholders in a letter as the specialtyinsurer/reinsurer continues to make its case against a hostile bidfrom Endurance Specialty Holdings.

The letter to shareholders, dated yesterday and signed byChairman Glyn Jones and CEO Chris O'Kane, states, “As you may haveseen, this afternoon your company, Aspen Insurance HoldingsLimited, reported strong preliminary financial results forthe second quarter….”

It also restates Aspen's opposition to Endurance's bid and asksshareholders to sign blue revocation cards.

The letter adds, “Our continued strong performance during thesecond quarter–following an excellent first quarter–clearlydemonstrates the continued benefits of the strategic investments wehave made in our business and the strength of our plan to driveshareholder value.”

The Aspen letter follows a letter from Endurance sent to Aspenshareholders earlier that same day criticizing Aspen's standaloneplan.

“Don't be fooled by Aspen's dubious assurances about its'standalone plan,'” the Endurance letter, signed by Chairman andCEO John Charman, states. “Under the stewardship of its currentboard and management, Aspen's performance has lagged that ofEndurance across key metrics, including underwriting profitability(i.e., combined ratio), diluted book value per share growth andshare price performance. Despite the efforts of Aspen's board andmanagement to distort the truth and confuse shareholders, there isno denying the facts….”

The letter adds charts showing side-by-side performance metricsbased on company results.

Aspen's letter, though, disputes Endurance's contentions,stating, “In a letter filed publicly this morning, Endurance made anumber of erroneous and ill-informed claims about Aspen's business,which underscores our deep concern about their failure tounderstand the significant dis-synergies that would result from themisguided transaction they are proposing.”

It includes side-by-side comparisons of its own on certainmetrics. For example, Endurance's letter shows a favorable combinedratio in comparison to Aspen, while Aspen's letter contends itsaccident-year combined ratio, excluding the impact of reservereleases, compares favorably to Endurance.

As for its Q2 preliminary results, Aspen says itexpects:

• Diluted book value per share of between $44.60 and $44.80; up4.4% to 4.9% from the end of Q1.
• Diluted operating earnings per share between $1.30 and$1.35.
• Diluted earnings per share between $1.70 and $1.75.
• Gross written premiums between $775 and $780million.
• Combined ratio between 90 and 91 or 89 to 90, excluding biddefense costs.
• Net favorable reserve development equating to between 4.5 and5.5 combined-ratio points.
• Annualized operating return on equity between 12% and12.8%
• Annualized net income ROE between 16% and 16.8%

A UBS analysis of Aspen's preliminary report comes with thetitle, “The Best Defense is Good Earnings,” and notes the expectedoperating ROE of 12% to 12.8% exceeds Aspen's target of 10% for thefull year of 2014.

The UBS analysis says the improved ROE and higher book value pershare may pressure Endurance to again raise its offer.

UBS says, “Strategically, we continue to believe a combinationof [Aspen] and [Endurance] makes sense given the benefits of alarger balance sheet (particularly in the increasingly competitivereinsurance business), and the capital and expense efficienciesthat would likely be generated. We continue to believe that afair takeout value for AHL is in the range of 1.2x – 1.3xfully diluted BVPS, or $53 – $58 per share taking into account [Q2]results.”