Neutral on ACE, Pre-Earnings

ACE, Ltd. (ACE - Analyst Report) intends to release its 1Q08 results after market close on April 29, 2008, with a conference call scheduled for the next day. While recent quarterly results experienced benefits (from net investment income and a favorable prior period development), our concerns for potential pressure on shares that could be experienced over the next couple of quarters outweighs our growth expectations for this company at this time.

We have increased our FY08 earnings expectations, but maintained our FY09 earnings expectation. We maintained our Hold recommendation on the shares, but increased our six-month price target slightly to $60.00 per share.

Despite some of the general softening of casualty lines (which account for roughly two-thirds of ACE's premiums), we expect ACE to show trends in its premiums and earnings. Our six-month price target of $60.00 per share, incorporates a 10.0% premium to the peer group s average price-to-book (given the company s ROE ratios compared to its peers levels), or a 1.15x price-to-book multiple to our estimate for the company s book value of $52.10 per share at June 30, 2008.

In addition, the quantitative Zacks Rank for ACE is currently 3 (down from 2 on February 4, 2008), indicating no clear directional pressure on the shares over the near term. Short interest is currently 1.7 days, versus one day previously.

Read the full analyst report on ACE.