ACE Limited Shares Hit 52-Week High - Analyst Blog


On May 14, 2013, shares of ACE Limited ( ACE ) hit a 52-week high of $92.69. The momentum was driven by a strong first quarter, which included a 12.4% positive surprise, rating upgrade and successful closure of the acquisition of ABA Seguros.

ACE Limited reported first-quarter 2013 earnings on Apr 22. Net operating earnings came in at $2.17, up 5.8% year over year. Solid underwriting performances aided the better-than-expected results. Both the U.S. and international business operations experienced growth and better margins. ACE Limited also benefited from improved commercial property & casualty pricing environment.

Based on positive first-quarter prior period reserve development, lower-than-planned catastrophe losses realized in the first quarter and better-than-expected current accident year results excluding catastrophe losses, ACE Limited raised the operating earnings expectation to $7.10-$7.50 per share, up from $6.60-$7.00 per share for 2013. The Zacks Consensus Estimate of $8.10 is much above the company guided range.

With respect to earnings trend, ACE Limited delivered positive earnings surprise in all the past 4 quarters with an average of 10.9%

Recently, Fitch Ratings upgraded the ratings of ACE Limited and its subsidiaries. While senior debt ratings were upgraded to 'A+' from 'A', the Issuer Default Ratings (IDR) were revised higher to 'AA-' from 'A+', and the Insurer Financial Strength (IFS) ratings to 'AA' from 'AA-'. Outlook was revised to Stable from Positive.

ACE Limited also closed the acquisition of the fourth largest property and casualty (P&C) insurer in Mexico, ABA Seguros from Ally Financial Inc. for $865 million.

Additionally, valuation for ACE Limited looks attractive. The shares are trading at a discount to the peer group average both on a price-to-book basis and on a forward price-to-earnings basis with return on equity higher than the peer group average.

ACE Limited presently carries a Zacks Rank #2 (Buy). Property and casualty insurers like AXIS Capital Holdings Ltd . ( AXS ), Montpelier Re Holdings Ltd . ( MRH ) and Hilltop Holdings Inc . ( HTH ), among others, carry a favorable Zacks Rank #1 (Strong Buy) and appear impressive.

ACE LIMITED (ACE): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

HILLTOP HLDGS (HTH): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ACE , AXS , HTH , MRH

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