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On Feb 19, Zacks Investment Research upgraded ACE Limited (ACE - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

ACE Limited has been witnessing rising earnings estimates on the back of sturdy fourth-quarter 2013 results. Moreover, this well-known property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of nearly 16%. The long-term expected earnings growth rate for this stock is 10%.  

ACE Limited reported its fourth-quarter results on Jan 28. Non-GAAP earnings per share came in at $2.39, surpassing the Zacks Consensus Estimate by 19.5% and the year-ago earnings by 67%.

Solid underwriting performances aided the better-than-expected results. Absence of any significant cat activities boosted the upside. Premium revenues witnessed improvement globally. Results also gained from positive prior-year reserve development. ACE Limited continues to benefit from better commercial P&C pricing environment in the U.S., enjoying another quarter of rate increase.

Full-year earnings results also surpassed expectation. ACE Limited posted record earnings of $9.35 per share which climbed 22.2% year over year and exceeded the Zacks Consensus Estimate by 4.3%. Earnings comfortably surpassed the company-provided guidance of $8.65–$8.90 per share.

In addition, ACE Limited remains committed toward returning value to its shareholders. The board approved a 24% increase in quarterly dividend and a new share repurchase authorization of $2 billion shares through Dec 31, 2014. ACE Limited eyes repurchase of $1.5 billion worth of shares by 2014-end.

The Zacks Consensus Estimate for 2014 increased 3.3% to $8.66 per share as most of the estimates were revised higher over the last 30 days. For 2015, one-third of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 2.5% to $9.09 per share.

Other Stocks to Consider

Other players in the property and casualty industry, which look attractive at current levels, include AmTrust Financial Services, Inc. (AFSI - Snapshot Report), RLI Corp. (RLI - Analyst Report) and Navigators Group Inc. (NAVG - Snapshot Report). All these stocks carry the same Zacks Rank as ACE Limited.

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