Endurances Proposal Provides Compelling Value for Aspen Shareholders
Aspen Shareholders Have Opportunity to Take Concrete Action Towards Realizing the Value Presented By Endurances Proposal and to Send an
Unequivocal Message to Aspens Board of Directors
PEMBROKE, Bermuda, June 18, 2014 Endurance Specialty Holdings Ltd.
(Endurance) (NYSE: ENH) is sending a letter to the shareholders of Aspen Insurance Holdings Limited (Aspen) (NYSE: AHL) along with a definitive solicitation statement, including a WHITE authorization and consent card,
providing a means for Aspen shareholders to requisition a special general meeting of shareholders in connection with a proposal to increase the size of Aspens board of directors from 12 to 19 directors and to authorize support for the proposal
of a Scheme of Arrangement by Endurance.
The letter being mailed to Aspen common shareholders with Endurances definitive solicitation statement
reads as follows:
Dear Fellow Aspen Shareholder:
As you may know, Endurance has announced an increased proposal to acquire all of the common shares of Aspen for $3.2 billion, or $49.50 per
Aspen share (based on Endurances unaffected closing share price on April 11, 2014), with a combination of cash and Endurance common shares.
We know from our conversations with many of you that you have been frustrated by the dismissive and entrenched response of Aspens board
and management to our highly attractive acquisition proposal in favor of an untested standalone strategy for generating future shareholder value. Our proposal represents a 19.5% premium over Aspens all-time high share price prior to our offer.
What Aspens board and management have failed to achieve for 10 years, we are prepared to deliver today.
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YOU NOW HAVE THE OPPORTUNITY TO TAKE CONCRETE ACTION TOWARDS REALIZING THE
VALUE PRESENTED BY ENDURANCES PROPOSAL AND TO SEND AN UNEQUIVOCAL MESSAGE TO THE ASPEN BOARD OF DIRECTORS
By voting
FOR
the two proposals on your
WHITE
card, you will be endorsing actions that can provide you the direct opportunity to vote for Endurances proposal through a Scheme of Arrangement under Bermuda law, as well as the right to elect a majority
of Aspen directors who will place the interests of Aspens shareholders first. In addition, your vote for Endurances two authorizations will send a strong message to Aspens board of directors that it should
engage immediately in
good faith discussions with Endurance regarding our proposed transaction
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We firmly believe that a combination of Endurance and Aspen
makes compelling strategic and financial sense, creating a company with increased scale, an attractive diversified platform across products and geographies, and greater market presence and relevance.
Aspen shareholders deserve the opportunity to
have their voices heard on this value-enhancing combination
, which offers them a highly attractive premium (including a meaningful cash component) and the opportunity to participate in future value creation through a stronger and more profitable
company.
It is clear that Aspens board and management, with less than 1.2% ownership of Aspen, are not aligned with the best
interests of their shareholders and have presented no credible plan to deliver value that can compete with what we are offering. In contrast, our board and management own approximately 5.1% of Endurance and I have personally committed to invest
another $25 million in the transaction, clearly demonstrating our alignment with the interests of our shareholders.
Aspen has a history of
underperformance and resistance to change. Endurance, on the other hand, has engineered an operational transformation and is today in the vanguard of acting on the clear need for industry consolidation and responding constructively to clients
demands for greater global scale and reach. Moreover, Endurance has consistently outperformed Aspen over the past several years, including:
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Endurance has had a significantly higher total return to shareholders for the 5 years preceding the announcement of Endurances initial proposal on April 11, 2014 124% for Endurance versus a much lower
83% for Aspen;
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Endurance has achieved meaningfully higher diluted book value per share growth (including dividends) 13.0% CAGR for Endurance versus a much lower 9.4% CAGR for Aspen;
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Endurance has attained higher underwriting profitability 95.6% average combined ratio for Endurance versus a higher 96.7% for Aspen; and
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Endurance has been more efficient than Aspen, having managed to an average expense ratio of 29.0% versus a much higher 33.5% for Aspen.
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Financial metrics shown (excluding total shareholder return) are for the five years ended December 31, 2013.
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Aspens shareholders should be asking themselves whether Aspens weak performance track
record supports the leap of faith required of them to accept Aspens untested standalone strategy for generating future shareholder value instead of Endurances proposed delivery of immediate superior value to Aspens shareholders
with the opportunity for significant upside value in the future.
We urge Aspen shareholders to take concrete action towards realizing the
value presented by Endurances proposed transaction and speak forcefully to Aspens board by supporting our two shareholder proposals. Strong shareholder support will help ensure that Aspens board and management will no longer be
able to ignore the will of the true owners of Aspen.
Our proposal delivers a highly attractive premium and the opportunity for future
value
Pursuant to Endurances increased proposal, each holder of Aspen common shares will have the right to receive, at their
election: all cash ($49.50 for each Aspen share); all Endurance common shares (0.9197 Endurance shares for each Aspen share); or a combination of cash and Endurance common shares (0.5518 Endurance common shares and $19.80 in cash for each Aspen
share). The election will be subject to a customary proration mechanism to achieve an aggregate consideration mix of 40% cash and 60% Endurance common shares (based on Endurances unaffected closing share price on April 11, 2014).
Endurances proposal represents a highly attractive premium to Aspens pre-announcement trading price
and allows you the
opportunity to participate in future value created by a stronger and more profitable company. The compelling value for Aspen shareholders includes:
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a 25.7% premium to Aspens unaffected closing share price of $39.37 on April 11, 2014;
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a 19.5% premium to Aspens unaffected all-time high share price of $41.43 on December 31, 2013;
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1.16x Aspens March 31, 2014 diluted book value per share and 1.21x Aspens December 31, 2013 diluted book value per share; and
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11.8x 2014 consensus Street earnings estimates for Aspen.
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Despite the clear and compelling
business logic and financial benefits of our proposal and the urging of major shareholders, Aspens board has rejected our offer, refusing even to discuss it with us, and adopted a poison pill to impede your ability to benefit from our
proposal. Now you have an opportunity to take concrete action towards realizing the value presented by Endurances proposed transaction and make your views known directly and emphatically.
Vote FOR Endurances two shareholder authorizations
1. Special General Meeting
A written requisition to convene a special general meeting of Aspen shareholders to consider a
proposal at that meeting to increase the size of Aspens board of directors from 12 to 19 directors. If the proposal is approved at the special general meeting, a majority of Aspens directors will stand for election at Aspens 2015
annual general meeting, thereby giving Aspen shareholders the ability to hold their board directly accountable for their failure to be responsive to the interests of the companys true owners.
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Aspens entrenchment device of a classified board, coupled with its restrictive bye-law
provisions, have necessitated this action to ensure Aspens shareholders have a voice in the direction of their company.
2. Scheme
of Arrangement
A shareholder authorization to support the proposal of a Scheme of Arrangement by Endurance, a process that will entail the holding of a court-ordered meeting of Aspen shareholders to directly consider and vote on
Endurances acquisition proposal.
Your support for the authorization concerning the Scheme of Arrangement does not require you to
vote for the Scheme if the court-ordered meeting is held; it merely expresses your support for such a meeting at which your voice can finally be heard.
A court-ordered meeting on a Scheme of Arrangement will provide Aspen shareholders with a formal mechanism to put your company back on a course
that prioritizes shareholder value creation over the self-preservation concerns of Aspens board and senior management.
The
principal obstacle to your receiving the compelling value of Endurances proposal is the entrenched opposition of Aspens own board of directors and management
The continued refusal by Aspens board and management to engage in any discussions with Endurance on behalf of your best interests
demonstrates their entrenched position. They have made irresponsible assertions about Endurances proposal without conducting the simplest due diligence on its details. The arguments that have accompanied Aspens rejections
have been merely a smokescreen for criticizing Endurance, a company that has from its inception delivered superior growth in book value per share to that of Aspen. They amount to nothing more than a brazen attempt by the Aspen board and management
to distract you from the highly attractive premium value the Endurance proposal represents.
Endurance is fully committed to delivering
our highly attractive premium to Aspen shareholders. We stand ready and willing to meet with Aspen and its advisors to make this transaction a reality
or, if Aspens board and management continue to ignore the value presented by our
proposal and the will of Aspens shareholders, to continue to move towards completing the actions we have proposed with all conviction.
Continued delay and non-engagement by the Aspen board represent the only true risks to both
companies shareholders.
Endurances proposed combination with Aspen is compelling and value-enhancing for investors
If Endurances proposals are approved by Aspens shareholders, Aspens board and management will have little choice but to
recognize that the will of the true owners of the company is to engage in discussions with Endurance in order to make the proposed transaction a reality, fulfilling the significant benefits of a combination between Endurance and Aspen, including:
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Increased scale and market presence:
On a combined basis, the companies will have over $5 billion of shareholders equity and over $5 billion of annual gross premiums written, a size equal to or greater than
many of our key competitors. This will create an enterprise of both scale and broad expertise well positioned to capitalize on the critical distribution relationships within its global markets and more effectively able to compete in an increasingly
challenging market environment.
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Diversified platform across products and geographies:
While Endurance and Aspen share certain common businesses, the relative weighting of each is quite complementary. Aspens core strength in the London
insurance market including through Lloyds is an attractive area where Endurance has significant management experience but currently has limited market presence. In addition, while Endurance has a market-leading and profitable
agriculture insurance business in the U.S. that is uncorrelated with traditional property and casualty insurance and reinsurance, as well as a highly profitable global catastrophe reinsurance business, Aspen has historical strength in marine and
energy lines. These are just a few examples where each companys relative strengths are a natural fit and where, on a combined basis, the two companies can form a market leader of significant importance to brokers and customers.
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Enhanced profit potential:
While a key strategic rationale for this transaction is the enhanced scale and diversification evident in the combined company, as described above, we believe the combination of a
strong management team comprised of industry-leading talent and world-class underwriting expertise from both companies, and expected transaction synergies exceeding $100 million annually (including cost savings, underwriting improvements, capital
efficiencies, and enhanced capital management opportunities) will enable significantly improved profit potential.
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Strengthened balance sheet and capital position:
With a pro forma combined shareholders equity as of March 31, 2014 of $5.9 billion and total capital of $7.3 billion, the combined Endurance and Aspen
will have a significantly enhanced capital position, which will allow the combined company to more meaningfully pursue growth opportunities and better withstand volatility. We also believe the added diversification of the business has the potential
to create capital efficiencies. Through the unique combination of our businesses we also believe this added diversification, significantly increased size, as well as the combined strength of reserves and investments from both companies, will be
viewed favorably by rating agencies.
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The path forward is in YOUR hands. VOTE TODAY to take concrete action towards
realizing the value presented by Endurances proposed transaction and to tell the Aspen board its time to engage with Endurance
Aspen shareholders deserve a board and management team that focuses less on erecting self-preserving defenses and more on enhancing
Aspens value for its shareholders. Today, Aspens shareholders have the ability to take concrete action towards realizing the substantial benefits of Endurances proposal and make their opinions known on this value-enhancing
combination. In the face of ongoing resistance from Aspens board and management,
the time is now for Aspens shareholders to reassert their voice and their final authority over the future direction of their company by voting FOR the
proposals on the WHITE card
.
Your vote is extremely important.
A vote
FOR
the proposals on the
WHITE
card will
represent concrete action towards realizing the value presented by Endurances proposed transaction and will send a clear message that you want the Aspen board of directors to engage with Endurance. Please vote the
WHITE
card
TODAY
by signing, dating and returning the enclosed
WHITE
card in the postage-paid envelope provided.
If you have any
questions or need assistance voting your shares, please contact the firm assisting us with this solicitation, Georgeson Inc., at (877) 278-9672 (toll-free) or via email at enduranceaspen@georgeson.com.
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Thank you in advance for your support.
John R. Charman
Chairman and Chief Executive Officer
Endurance Specialty Holdings Ltd.
Please visit us at www.endurance-aspen.com for up to date information and copies of past letters
and presentations to Aspen shareholders.
If you would like to receive information from us directly, please email us at
enduranceaspen@georgeson.com or call us at (877) 278-9672 (toll-free).
About Endurance Specialty Holdings
Endurance Specialty
Holdings Ltd. is a global specialty provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance writes agriculture, professional lines, property, and casualty and other specialty lines of insurance and
catastrophe, property, casualty, professional lines and specialty lines of reinsurance. We maintain excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best (XV size category) and A (Strong) from Standard and
Poors on our principal operating subsidiaries. Endurances headquarters are located at Waterloo House, 100 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784,
No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. For more information about Endurance, please visit www.endurance.bm.
Cautionary Note Regarding
Forward-Looking Statements
Some of the statements in this press release may include, and Endurance may make related oral, forward-looking statements
which reflect our current views with respect to future events and financial performance. Such statements may include forward-looking statements both with respect to us in general and the insurance and reinsurance sectors specifically, both as to
underwriting and investment matters. These statements may also include assumptions about our proposed acquisition of Aspen (including its benefits, results, effects and timing). Statements which include the words should,
would, expect, intend, plan, believe, project, anticipate, seek, will, and similar statements of a future or forward-looking nature identify
forward-looking statements in this press release for purposes of the U.S. federal securities laws or otherwise. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the Private
Securities Litigation Reform Act of 1995.
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or
may be important factors that could cause actual results to differ materially from those indicated in the forward-looking statements. These factors include, but are not limited to, the effects of competitors pricing policies, greater frequency
or severity of claims and loss activity, changes in market conditions in the agriculture insurance industry, termination of or changes in the terms of the U.S. multiple peril crop insurance program, a decreased demand for property and casualty
insurance or reinsurance, changes in the availability, cost or quality of reinsurance or retrocessional coverage, our inability to renew business previously underwritten or acquired, our inability to maintain our applicable financial strength
ratings, our inability to effectively integrate acquired operations, uncertainties in our reserving process, changes to our tax status, changes in insurance regulations, reduced acceptance of our existing or new products and services, a loss of
business from and credit risk related to our broker counterparties, assessments for high risk or otherwise uninsured individuals, possible terrorism or the outbreak of war, a loss of key personnel, political conditions, changes in accounting
policies, our investment performance, the valuation of our invested assets, a breach of our investment guidelines, the unavailability of capital in the future, developments in the worlds financial and capital markets and our access to such
markets, government intervention in the insurance and reinsurance industry, illiquidity in the credit markets, changes in general economic conditions and other factors described in our Annual Report on Form 10-K for the year ended December 31,
2013 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. Additional risks and uncertainties related to the proposed transaction include, among others, uncertainty as to whether Endurance will be able to enter into or
consummate the transaction on the terms set forth in the proposal, the risk that our or Aspens shareholders do not approve the transaction, potential adverse reactions or changes to business relationships resulting from the announcement or
completion of the transaction, uncertainties as to the timing of the transaction, uncertainty as to whether Aspen shareholders tender into the exchange offer, uncertainty as to the actual premium of the Endurance share component of the proposal that
will be realized by Aspen shareholders in connection with the transaction, competitive responses to the transaction, the risk that regulatory or other approvals required for the transaction are not obtained or are obtained subject to conditions that
are not anticipated, the risk that the conditions to the closing of the transaction are not satisfied, costs and difficulties related to the integration of Aspens businesses and operations with Endurances businesses and
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operations, the inability to obtain, or delays in obtaining, cost savings and synergies from the transaction, unexpected costs, charges or expenses resulting from the transaction, litigation
relating to the transaction, the inability to retain key personnel, and any changes in general economic and/or industry specific conditions.
Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation publicly to update or revise any forward-looking
statement, whether as a result of new information, future developments or otherwise.
The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in our most recent reports on Form 10-K and Form 10-Q and the risk factors included in
Aspens most recent reports on Form 10-K and Form 10-Q and other documents of Endurance and Aspen on file with the U.S. Securities and Exchange Commission (the SEC). Any forward-looking statements made in this press release are
qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Endurance will be realized or, even if substantially realized, that they will have the expected consequences to, or
effects on, us or our business or operations.
Additional Information about the Proposed Transaction and Where to Find It
This press release relates to the offer commenced by Endurance to exchange each issued and outstanding common share of Aspen (together with associated
preferred share purchase rights) for $49.50 in cash, 0.9197 Endurance common shares, or a combination of cash and Endurance common shares, subject to a customary proration mechanism. This press release is for informational purposes only and does not
constitute an offer to exchange, or a solicitation of an offer to exchange, Aspen common shares, nor is it a substitute for the Tender Offer Statement on Schedule TO or the preliminary Prospectus/Offer to Exchange included in the Registration
Statement on Form S-4 (including the Letter of Transmittal and Election and related documents and as amended from time to time, the Exchange Offer Documents) that Endurance has filed with the SEC. The Endurance exchange offer will be
made only through the Exchange Offer Documents.
This press release is not a substitute for any other relevant documents that Endurance may file with the
SEC or any other documents that Endurance may send to its or Aspens shareholders in connection with the proposed transaction. Endurance is sending to Aspen shareholders a solicitation statement with respect to the solicitation of
(i) written requisitions that the board of directors of Aspen convene a special general meeting of Aspens shareholders to vote on an increase in the size of Aspens board of directors from 12 to 19 directors and (ii) Aspen
shareholder support for the proposal of a scheme of arrangement by Endurance which will entail the holding of a court-ordered meeting of Aspen shareholders at which Aspens shareholders would vote to approve a scheme of arrangement under
Bermuda law pursuant to which Endurance would acquire all of Aspens outstanding common shares on financial terms no less favorable than those contained in its acquisition proposal announced on June 2, 2014 (the Solicitation
Statement).
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE EXCHANGE OFFER DOCUMENTS AND THE SOLICITATION STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS THAT ENDURANCE HAS FILED OR MAY FILE WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. All such documents, when filed, are available free of charge at
the SECs website (www.sec.gov) or by directing a request to Endurance at the Investor Relations contact below.
Participants in the Solicitation
Endurance and its directors and certain of its executive officers and employees may be deemed to be participants in any solicitation of shareholders
in connection with the proposed transaction. Information about Endurances directors, executive officers and employees who may be deemed to be participants in the solicitation, including a description of their direct and indirect interests, by
security holdings or otherwise, is set forth in the Solicitation Statement and Endurances proxy statement, dated April 9, 2014, for its 2014 annual general meeting of shareholders.
Regulation G Disclaimer
In this press release, Endurance
has included certain non-GAAP measures, including return on equity, combined ratio and diluted book value per share. Endurance management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the
proposed transaction in a manner that allows for a more complete understanding. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP. For a complete description of non-GAAP measures and
reconciliations, please review the Investor Financial Supplement on Endurances website at www.endurance.bm.
Additional Information
All references in this press release to $ refer to United States dollars.
The contents of any website referenced in this press release are not incorporated by reference herein.
Contacts:
Endurance Specialty Holdings Ltd.
Investor Relations
Phone: +1 441 278 0988
Email: investorrelations@endurance.bm
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Georgeson
Donna
Ackerly and David Drake
Phone: 212 440 9837/9861
Email:
dackerly@georgeson.com and ddrake@georgeson.com
Media Relations
Ruth Pachman and Thomas Davies
Kekst and Company
Phone: 212 521 4891/4873
Email: Ruth-Pachman@kekst.com and
Tom-Davies@kekst.com
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