In order to further explore the fast-growing South Asian
market, property and casualty insurer
) recently announced its decision to acquire Jakarta-based Asuransi
Jaya Proteksi ("JaPro"), one of the top 10 general insurers in
Indonesia. The purchase consideration comprises a cash payment of
about $130 million on closing. Subject to the approval of the
regulatory bodies, the deal is likely to be sealed in the third
quarter of this year.
ACE will not only benefit from the wide network coverage that
JaPro has already established in the Indonesian market, but will
also have a defined structure for marketing and distributing its
products. The growing customer base in this region is expected to
support its revenue growth. Moreover, with both the companies
having almost similar service offerings, ACE will find it easier to
amalgamate JaPro's business with its own.
The news of this acquisition comes on the heels of positive
ratings assigned on ACE Limited and its subsidiaries by A.M.
Best Co. a couple of days ago. The outlook for the ratings
remains stable. The company's cash position also manifests a
favorable image that supports the acquisition. It has a free cash
balance of $2.2 billion. Continued improvement in top and bottom
line results are expected to boost shareholders value in the near
ACE retains a Zacks #3 Rank, which translates into a short-term
Hold rating. We also maintain a long-term Neutral recommendation on
its shares. The company competes very closely with
EMC Insurance Group Inc.
) that currently retains a Zacks #1 Rank (a short-term Strong Buy
ACE LIMITED (ACE): Free Stock Analysis Report
EMC INSURANCE (EMCI): Free Stock Analysis
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