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Allied World Allies with Gravity - Analyst Blog

Posted
8/19/2013 12:10:00 PM
By: Zacks.com
Referenced Stocks:ACO;AWH;GBLI;HCI;RE

Last week, Allied World Assurance Company Holdings, AG ( AWH ) announced that Allied World Assurance Holdings (Ireland) Ltd. had inked a deal with Gravity Underwriting Limited (Gravity). Per the agreement, the former will invest as well as own 21.2% stake of the latter.

London-based Gravity Underwriting Limited is a provider of a suite of property and casualty products for insurance brokers in the U.K. SME market. The transaction will help Allied World to strengthen its European footprint.

The agreement also requires that Gravity Underwriting augment Allied World Europe's property book of business.

In order to grow inorganically, Allied World Financial Services Company Inc., a subsidiary of Allied World, entered into a partnership with MatlinPatterson in Oct 2012. The partnership was intended to expand Allied World's asset management business. Additionally, the transaction will entail the company to hold a minority interest in MatlinPatterson. While Allied World will financially support expansion of asset management platform, MatlinPatterson will be responsible for managing $500 million of Allied World's portfolio in existing and future liquid credit strategies.

The company also remains focus on other strategic avenues that ensure a stable revenue flow for the company. Last month, Allied World Bermuda launched a new Accountable Care Organization (ACO) liability solution product that will provide coverage for ACOs.  It also launched Allied WorldWide, to cater to the insurance coverage needs of international clients.

In the last reported quarter, the property and casualty insurer delivered earnings of $2.94 per share, surpassing the Zacks Consensus estimate by nearly 69% and year-ago earnings by 23%. We expect continued initiatives undertaken by the company will help it to ramp up its growth profile. The Zacks Consensus Estimate for 2013 is currently pegged at $8.44 per share, translating to a year-over-year increase of 55%. The long-term expected earnings growth rate for this stock is 11.1%.    

Allied World carries a Zacks Rank #2 (Buy). Property and casualty insurer Everest Re Group Ltd . ( RE ), Global Indemnity plc ( GBLI ), and HCI Group, Inc . ( HCI ), among others, carry a favorable Zacks Rank #1 (Strong Buy) and are also worth considering.



ALLIED WORLD AS (AWH): Free Stock Analysis Report

GLOBAL INDEMNTY (GBLI): Free Stock Analysis Report

HCI GROUP INC (HCI): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

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