Allied World Upped to Strong Buy - Analyst Blog

By Richick Panty,

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On Nov 26, Zacks Investment Research upgraded Allied World Assurance Company Holdings, AG ( AWH ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Allied World has witnessed rising earnings estimates on the back of a strong third-quarter 2013. Moreover, this property-casualty insurer has delivered positive earnings surprises in the last 4 quarters with an average beat of 32.8%. The long-term expected earnings growth rate for this stock is 12.9%    

Allied World reported its third-quarter 2013 operating net income of $2.93 per share on Oct 23. The results surpassed the Zacks Consensus Estimate by 37.6% and year ago earnings by 35.6%.

Earnings were primarily aided by growth across Allied World's niche book of business which in turn was driven by a solid underwriting performance and an attractive rate environment.

Allied World's lower loss ratio drove a year-over-year improvement of 390 basis points (bps) in combined ratio to 84.2% in the reported quarter.

Allied World exited the third quarter with cash and cash equivalents of $1.2 billion that surged 39.9% from the 2012-end level.

With respect to share buyback, Allied World spent $40.6 million to repurchase 0.43 million shares in the third quarter.

The Zacks Consensus Estimate for 2013 increased 6.8% to $10.37 per share over the last 30 days as 4 of 6 estimates were raised. For 2014, same numbers of estimates moved north lifting the Zacks Consensus Estimate by 1.9% to $7.61 per share over the same time frame.

Other Stocks to Consider

Other property and casualty insurers that look attractive at current levels include Alleghany Corp. ( Y ), Aspen Insurance Holdings Ltd. ( AHL ) and Hallmark Financial Services Inc. ( HALL ). All these stocks carry the same Zacks Rank as Allied World.

ASPEN INS HLDGS (AHL): Free Stock Analysis Report

ALLIED WORLD AS (AWH): Free Stock Analysis Report

HALLMARK FINL (HALL): Free Stock Analysis Report

ALLEGHANY CORP (Y): 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 Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AHL , AWH , HALL , Y

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