ACE Limited's Shares Hit 52-Week High - Analyst Blog
13 Mars 2013 - 9:30AM
Zacks
On Mar 12, 2013, shares of ACE Limited (ACE)
hit a 52-week high of $88.52. Previously, the company had reported
solid fourth-quarter results with an earnings surprise of 10%. This
property & casualty insurer witnessed positive earnings
surprises in all four quarters of 2012, with an average beat of
9.7%. Further, ACE Limited has been delivering positive earnings
surprise over the last 16 quarters.
Recently, the board of directors of ACE Limited announced its
intention to propose a 4% increase in the quarterly dividend at the
extraordinary general meeting scheduled on May 16, 2013. If
approved, ACE Limited will pay a quarterly dividend of 51
cents.
The company has also started underwriting energy risks through
Syndicate 2488 at Lloyd’s of London.
On Jan 31, ACE Limited reported fourth-quarter 2012 operating
income of $1.43 per share, up 14 cents from the Zacks Consensus
Estimate.
Net premiums earned improved 0.4% year over year to $3.8 billion in
the quarter. Net investment income in the quarter totaled $567
million, up 0.4% year over year.
The absence of any major catastrophe events in the first nine
months of 2012 was beneficial to the underwriting results of the
company. However, the occurrence of Hurricane Sandy in the fourth
quarter altered the picture. Though its exposure to cat loss weighs
on the results, prudent underwriting practices, international
presence, diversified product offering, and a sturdy balance sheet
managed to limit the adverse effect. Nevertheless, underwriting
income improved 11% year over year to $1.2 billion in 2012.
Combined ratio improved 80 basis points (bps) on a year-over-year
basis to 93.9%.
During its earnings release, ACE Limited guided operating earnings
to a band of $6.60–$7.00 per share. The guidance includes
catastrophe loss of $450 million. The Zacks Consensus Estimate is
above the company’s guidance. The estimate represents a
year-over-year increase of 0.4%.
ACE Limited expects its acquisitions to meet or exceed its
long-term return on equity (ROE) goal of 15% within 2-3 years. The
acquisitions help the company further expand its international
footprint.
Valuation for ACE looks attractive. The shares are trading at a
discount to the peer group average, both on a price-to-book basis
and forward price-to-earnings basis, with return on equity
remaining above the peer group average.
ACE Limited presently carries a Zacks Rank # 3 (Hold). Property and
casualty insurers like XL Group plc (XL),
Cincinnati Financial Corp. (CINF) and Arch
Capital Group Ltd. (ACGL), among others, carry a favorable
Zacks Rank # 1 (Strong Buy).
ACE LIMITED (ACE): Free Stock Analysis Report
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis Report
XL GROUP PLC (XL): Free Stock Analysis Report
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