) to beat expectations when it reports first-quarter 2013 results
on Apr 23.
Why a Likely Positive Surprise?
Our proven model shows that the property & casualty insurer
is likely to beat earnings because it has the two key
Positive Zacks ESP
: Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, is +1.04%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #2 (Buy)
: Note that stocks with a Zacks Rank of #1, #2 and #3 have a
significantly higher chance of beating earnings. The sell rated
stocks (#4 and #5) should never be considered going into an
The combination of ACE Limited's Zacks Rank # 2 (Buy) and +1.04%
ESP makes us expect a positive earnings beat on Apr 23.
What is Driving the Better Than Expected
ACE Limited acquired Fianzas Monterrey from New York Life
Insurance Company for a cash consideration of $293 million. This
acquisition will help the company expand its surety business.
Moreover, it will augment ACE Seguros, the existing commercial
lines and personal accident insurance business in Mexico.
In addition, the U.S.-based retail operations of ACE Limited ACE
USA, has introduced a Foreign Casualty Pollution Liability
coverage endorsement. ACE came up with this coverage option to
provide insurance and risk management solutions to the globally
operating mid-sized and large-scale multinational companies
located in the U.S.A.
ACE has also started underwriting energy risks through Syndicate
2488 at Lloyd's of London.
The positive trend was seen in the trailing four-quarter's
average surprise of 9.74%, significantly aided by a 10% surprise
in the last-reported quarter. 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.
Other Stocks to Consider
ACE Limited is not the only firm looking up this earnings season.
We also expect earnings beats coming from these 3 industry
Aspen Insurance Holdings Ltd
), Earnings ESP of +13.54% and a Zacks Rank #1 (Strong Buy).
), Earnings ESP of +6.78% and a Zacks Rank # 1 (Strong Buy).
W.R. Berkley Corporation
), Earnings ESP of +2.70% and a Zacks Rank #1 (Strong Buy).
ACE LIMITED (ACE): Free Stock Analysis Report
ASPEN INS HLDGS (AHL): Free Stock Analysis
PARTNERRE LTD (PRE): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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