Property and casualty insurer,
ACE Limited
(
ACE
) purchased 80% of PT Asuransi Jaya Proteksi in Indonesia.
Jakarta-based Asuransi Jaya Proteksi will leverage ACE presence in
the fast-growing South Asian market. Furthermore, it will help
broaden accident and health and commercial property and casualty
businesses in Indonesia.
In mid June this year, ACE announced its plans to acquire Asuransi
Jaya Proteksi, one of the top 10 general insurers in Indonesia and
leading provider in personal lines. The purchase consideration
comprises a cash payment of about $130 million on closing. Being a
leader in personal lines business, the acquisition will also help
ACE strengthen its foothold in Indonesia.
ACE will not only benefit from the wide network coverage that
Asuransi Jaya Proteksi 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 Asuransi Jaya Proteksi's business with its
own.
Acquisitions have created a turnaround in premium writings and in
turn have helped the company deliver better numbers and grow
inorganically. The market has also reacted positively on the
company's move. The share price of ACE inched up 0.6% to close at
$76.85 as on Tuesday.
Recently, to expand its surety business, ACE agreed to buy Mexico
based Fianzas Monterrey, from New York Life Insurance Company for a
cash consideration of $285 million. The acquisition will expand its
footprint in Mexico and owing to the promising economic scenario in
the Mexican markets, it hopes to capitalize on the opportunities as
and when they are available.
The company expects premium growth to gain momentum in each
quarter, averaging in the mid-to-upper single digits in 2012.
Acquisition will thus help it to achieve its expectation. ACE
Limited estimated 2012 operating earnings to come in the band of
$7.20-$7.60 per share, up from $7.03-$7.43 per share guided
earlier. The Zacks Consensus Estimate for 2012 is currently pegged
at $7.80, higher than the company's guided range. This also
represents a year-over-year improvement of nearly 12%.
We currently have a Neutral recommendation on ACE Limited. The
quantitative Zacks Rank for the company is presently "3",
indicating no clear directional pressure on the shares over the
near term.
The Travelers Companies, Inc.
(
TRV
), which closely competes with ACE Limited, also shares a Zacks #3
Rank.
ACE LIMITED (ACE): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
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