Back to top

Analyst Blog

On Jul 12, 2013, shares of ACE Limited (ACE - Analyst Report) reached a 52-week High of $93.57. The momentum was driven by the property and casualty insurer’s continued efforts to expand its product portfolio to ramp up its growth profile.

Recently, ACE USA has taken a step to expand its web-based desktop portal, ACE Worldview. We expect the extension of the technology to ARM business to help the company augment its primary casualty line of business, thereby strengthening its competitive position in the market.

Earlier, ACE USA introduced new services through its risk management services company, ESIS Inc. pertaining to the healthcare industry construction projects. This launch was an augmentation to the company’s Contractors Pollution Liability (CPL) coverage named Owner-Controlled Insurance Program (OCIP) launched in Jun 2013.

Last month, ACE Limited formed a new specialty casualty division within its excess and surplus lines insurance company, ACE Westchester. The formation of the new division is aimed at expanding the Specialty Casualty business of ACE Limited in the U.S.  The division will cater to industries like construction, auto and railroad transportation, energy and public entities.

In its efforts to grow inorganically, ACE Limited also closed the acquisition of the fourth largest property and casualty insurer in Mexico, ABA Seguros, from Ally Financial Inc.

Additionally, in order to share more profits with its shareholders, the board of ACE Limited approved a 4% increase in its quarterly dividend. Currently, the annualized dividend of $2.04 yields 2.18%.

Valuation for ACE Limited looks attractive. The shares are trading at a discount to the peer group average both on a price-to-book basis and on a forward price-to-earnings basis with return on equity higher than the peer group average. The 1-year return from the stock came in at 28.4%, above the S&P’s return of 23.8%.

ACE Limited presently carries a Zacks Rank #3 (Hold). Property and casualty insurers like Alleghany Corporation (Y - Snapshot Report), HCI Group, Inc. (HCI - Snapshot Report) and ProAssurance Corporation (PRA - Analyst Report), among others, carry a favorable Zacks Rank #1 (Strong Buy) and appear impressive.
 

Please login to Zacks.com or register to post a comment.