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ACE Creates Additional Capacity

Zacks Equity Research

To support additional collateralized capacity for global reinsurance business, ACE Limited (ACE) created a new special purpose insurance vehicle – Altair Re II. The capacity of the special purpose vehicle is $95 million.

Altair Re II is specifically designed to cushion ACE Tempest Re’s global property catastrophe reinsurance portfolio. Headquartered in Bermuda, ACE Tempest Re Group manages the reinsurance operations of ACE and has operations in Bermuda, London, Montreal, Stamford, Sao Paulo, Zurich and Shanghai.

The additional capacity from this special purpose vehicle will help the company cater to the requirements of its insurance as well as reinsurance clients.

ACE Limited had created another special purpose insurance vehicle – Altair Re – in Apr 2013. This had also been created to provide additional collateralized capacity for its global reinsurance business.

ACE Limited has always remained focused on strategies and initiatives that would help it capitalize on opportunities as well as ramp up its growth profile. Other than creating special purpose vehicles, it also follows an impressive inorganic route and aims at a global expansion strategy, among others. An improved commercial property & casualty pricing environment is also aiding its performance. Furthermore, the company has been experiencing solid underwriting performances.

ACE Limited has a solid track record of surpassing estimates over the past several quarters. Its average beat over the past 4 quarters stands at 13.6%. However, we cannot conclusively say whether the company would continue with this momentum when it reports its fourth quarter and full year 2013 results in the last week of January. This is because though the stock sports a Zacks Rank #2 (Buy), its Earnings ESP is -4.1%.

Nevertheless, the Zacks Consensus Estimate of $1.95 for the fourth quarter translates to a year-over-year increase of 36.5%, while for 2013 it stands at $8.90, representing a 16.4% year-over-year improvement.

Other players in the property and casualty industry, which look attractive at current levels, include Allied World Assurance Company Holdings, AG (AWH), Aspen Insurance Holdings Ltd. (AHL) and Fidelity National Financial, Inc. (FNF). All these sports a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on AWH
Read the Full Research Report on AHL

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