On Mar 12, 2013, shares of
) hit a 52-week high of $88.52. Previously, the company had
reported solid fourth-quarter results with an earnings surprise
of 10%. This property & casualty insurer witnessed positive
earnings surprises in all four quarters of 2012, with an average
beat of 9.7%. Further, ACE Limited has been delivering positive
earnings surprise over the last 16 quarters.
Recently, the board of directors of ACE Limited announced its
intention to propose a 4% increase in the quarterly dividend at
the extraordinary general meeting scheduled on May 16, 2013. If
approved, ACE Limited will pay a quarterly dividend of 51 cents.
The company has also started underwriting energy risks through
Syndicate 2488 at Lloyd's of London.
On Jan 31, ACE Limited reported fourth-quarter 2012 operating
income of $1.43 per share, up 14 cents from the Zacks Consensus
Net premiums earned improved 0.4% year over year to $3.8 billion
in the quarter. Net investment income in the quarter totaled $567
million, up 0.4% year over year.
The absence of any major catastrophe events in the first nine
months of 2012 was beneficial to the underwriting results of the
company. However, the occurrence of Hurricane Sandy in the fourth
quarter altered the picture. 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.
Nevertheless, underwriting income improved 11% year over year to
$1.2 billion in 2012. Combined ratio improved 80 basis points
(bps) on a year-over-year basis to 93.9%.
During its earnings release, ACE Limited guided operating
earnings to a band of $6.60-$7.00 per share. The guidance
includes catastrophe loss of $450 million. The Zacks Consensus
Estimate is above the company's guidance. The estimate represents
a year-over-year increase of 0.4%.
ACE Limited expects its acquisitions to meet or exceed its
long-term return on equity (ROE) goal of 15% within 2-3 years.
The acquisitions help the company further expand its
Valuation for ACE looks attractive. The shares are trading at a
discount to the peer group average, both on a price-to-book basis
and forward price-to-earnings basis, with return on equity
remaining above the peer group average.
ACE Limited presently carries a Zacks Rank # 3 (Hold). Property
and casualty insurers like
XL Group plc
Cincinnati Financial Corp
Arch Capital Group Ltd
), among others, carry a favorable Zacks Rank # 1 (Strong Buy).
ACE LIMITED (ACE): Free Stock Analysis Report
ARCH CAP GP LTD (ACGL): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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