Zacks Investment Research upgraded
Allied World Assurance Company Holdings, AG
) to a Zacks Rank #1 (Strong Buy) on April 15, 2014.
Why the Upgrade?
Allied World has been witnessing upward estimate revisions on the
back of consistent capital deployment initiatives by the company
and launch of new products. These initiatives drove bullish
sentiment leading to a 1.3% increase in the Zacks Consensus
Estimate for full-year 2014 to $7.51 per share over the last 7
Allied World has been consistently boosting shareholders value,
be it through dividend hikes, share repurchases or even adjusting
share price through stock splits. In March 2014, the company
hiked its annual dividend by 35% and authorized a new $500
million share repurchase program that would replace the $192
million remaining under the existing authorization.
Banking on its financial strength and solid operational
performance, Allied World has increased its dividend at a 5-year
CAGR of about 30%. Additionally, over a span of 3 years, the
company has returned over $525.3 million to its shareholders,
thereby boosting investor confidence.
Concurrently, management declared a three-for-one stock split
which will increase the number of shares outstanding threefold.
As a result, the stock will be more affordable for potential
In fact, shares of the company also showed significant upward
movement since the capital deployment initiatives were announced,
increasing 3.1% to $103.52 per share on April 14, 2014. Moreover,
the 1-year return from the stock is 11.66%, better than that of
other insurers like
XL Group plc
Platinum Underwriters Holdings Ltd.
Arch Capital Group Ltd.
) generating returns of (-0.74)%, 7.49% and 8.58%, respectively,
over the same period..
Earlier this month, Allied World launched a Specified Response
Vendor Solution (SRVS) policy that provides coverage in the event
of data frauds. In March, the company also received an approval
from Lloyd's, the Prudential Regulation Authority (PRA) and the
Financial Conduct Authority (FCA) to launch its managing agency -
Allied World Managing Agency Limited - to manage syndicate
We expect these product launches to enhance the company's
operations and generate growth. The long-term growth rate of this
company currently stands at 10%.
ARCH CAP GP LTD (ACGL): Free Stock Analysis
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Allied World is scheduled to report first-quarter 2014 earnings
results on April 23, 2014, after the closing bell. Notably, the
Zacks Consensus estimate for the quarter is pegged at $2.05 per
Although Allied World's fourth-quarter 2013 results lagged the
Zacks Consensus Estimate, it improved year over year. With
respect to earnings trend, performance of this property and
casualty insurer has been impressive, as it delivered positive
earnings surprises in three of the last four quarters, with an
average beat of 26.14%.
Investors interested in the property and casualty space may also
consider Platinum Underwriters with a Zacks Rank #2 (Buy).