We retain our Outperform recommendation on
) following the company's outperformance in the third-quarter
2013 earnings results as well as its efforts to boost
shareholders' value and strengthen its product suite. The
property and casualty insurer carries a Zacks Rank #2 (Buy).
Why the Reiteration?
ACE Limited has witnessed rising estimates following its solid
third-quarter results and efforts to enhance shareholders' value.
The Zacks Consensus Estimate for 2013 rose 3.8% over the last 60
days to $8.90 while the same for 2014 increased 1.7% to $8.34
over the same time frame.
Third-quarter operating net income of $2.49 per share surpassed
the Zacks Consensus Estimate by 12.7% and the year-ago number by
Solid underwriting performances aided the better-than-expected
results. Absence of any significant cat activities aided the
upside. ACE Limited also gained on account of improved commercial
property & casualty (P&C) pricing environment.
ACE Limited has, over the past several quarters, delivered
positive earnings surprises. The expected long-term earnings
growth rate for this stock is 7.8%.
In November, the board of directors also announced its intention
to propose a 24% increase in quarterly dividend to 63 cents per
share. With respect to share buyback, the board also approved a
$2 billion share repurchase program. Given its strong capital,
which exceeds $34 billion, and a solid liquidity position, we
expect to see more such initiatives going forward.
ACE Limited, with its considerable balance sheet strength,
remains focused to grow both organically and inorganically. The
company expects its acquisitions to meet or exceed its long term
return on investment (ROE) goal of 15% within 2-3 years.
Also, ACE Limited announced the launch of ACE Global Export
Protection in Continental Europe. This new product is likely to
support the casualty needs of middle-market businesses. The
timing for the launch seems perfect given that several European
mid-sized companies are now expanding in emerging economies.
ACE LIMITED (ACE): Free Stock Analysis Report
ALLIED WORLD AS (AWH): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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Other Stocks to Consider
Other stocks worth considering in the property and casualty
Allied World Assurance Company Holdings, AG
Cincinnati Financial Corp
). All these stocks sports a Zacks Rank #1 (Strong Buy).