Allied World Assurance Company Holdings, AG
), or Allied World has been on an uptrend since the beginning of
this quarter, reflecting investors' enthusiasm about its
developments so far. The company's shares have gained almost
11.3% since Oct 1.
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Among others, A.M. Best Co. has upgraded issuer credit ratings
(ICR) of Allied World Assurance Company Ltd. and its operating
subsidiaries to "a+" from "a". Concurrently, the rating agency
affirmed the financial strength rating (FSR) of Allied World
Assurance Company Ltd. and its subsidiaries at A (Excellent).
Allied World Assurance Company Ltd. is a subsidiary of Allied
World. While the ICR outlook was revised to stable from positive,
the outlook for the FSR remains stable.
Subsequently, the rating agency upgraded the ICRs to "bbb+" from
"bbb" for Allied World and its downstream holding company, Allied
World Assurance Company Holdings Ltd. (Allied World Holdings
Bermuda). The debt rating of the latter was also upgraded to
"bbb+" from "bbb". Outlook has been revised to stable from
In addition, an FSR of A (Excellent) and an ICR of "a+" was
assigned to Vantapro Specialty Insurance Company, a reinsured
subsidiary of Allied World. Ratings carry a stable outlook.
The ratings reflect diversified mix of business, sturdy
risk-adjusted capitalization, efficient management team and
strong framework of enterprise risk management.
The outlook accounted for sustained solid operating results,
excellent risk management culture and widening product breadth.
However, casualty orientation of Allied World weighed on the
positives. Casualty business is cyclical in nature and faces
stiff competitions. This longer-tailed business is also subject
to rate fluctuations and susceptible to current low interest-rate
The rating agency might consider a rating upgrade if Allied World
continues to post strong operating profits and excellent risk
adjusted capital levels. Deteriorating operating trends, expanded
investment or insurance losses and any occurrence of shortfall in
reserves in future will likely lead to ratings or outlook being
With respect to earnings performance, Allied World has delivered
positive earnings surprises in the last four quarters with an
average beat of 32.8%. Operating net income of $2.93 per share in
the last reported quarter surpassed the Zacks Consensus Estimate
by 37.5% and the year-ago results by 35.6%.
The Zacks Consensus Estimate for 2013 of this Zacks Rank #1
(Strong Buy) property and casualty insurer has been raised over
the last 30 days by 10.3% to $10.37 as all 6 estimates were
raised. The same for 2014 moved up by 2% to $7.61 as more than
half of the estimates moved north over the same time frame.
The latest price appreciation is certainly encouraging. However,
make sure to keep a close watch on this firm in the near future
before investing in it.
Among other property and casualty insurers, A.M. Best Co.
affirmed FSR of A (Excellent) and ICR of "a" for Aspen American
Insurance Company and Aspen Specialty Insurance Company on Sep
19, 2013. Both these companies are wholly owned subsidiaries of
Aspen Insurance Holdings Limited
). A stable outlook is assigned to all the ratings.
Apart from Allied World, other property and casualty insurers
Cincinnati Financial Corp.
), both of which carry a Zacks Rank #1, are also worth