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Aspen Holdings (NYSE:AHL) is a Bermuda based P&C insurer. As much as I like the common stock, I am more interested in the 7.4% preferred shares.

As of the market close on 4/8, the preferreds trade for approximately $12. Since face value of the shares is $25, the 7.4% payout (on $25) now equates to a 15% yield.

In a private transaction, the company is buying back 2.6 million of the 8 million preferred shares outstanding.

As of 12/31/2008 the company has $2.8 billion in equity and has a market capitalization under $2 billion.

For the years ended 12/31/06, 12/31/07, and 12/31/08, the company earned $378 million, $489 million, and $104 million, respectively.

Currently, the balance sheet is strong and the company remains liquid. The preferred dividend is not cumulative, but is paid before any common dividend. In addition, if the preferred payment is missed for 6 quarters, the preferred shareholders can nominate directors to the board.

The 15% payment is a high reward investment relative to the risk. In addition, there is upside on the share price as the economy recovers.

Disclosure: I am currently a owner of the preferred shares (and sold puts against the common at $20).

Source: Aspen Holdings Preferred Shares Look Particularly Attractive