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ACE Limited Hits New 52-Week High

Zacks Equity Research

On Apr 2, 2013, shares of ACE Limited (ACE) hit a 52-week high of $89.51.

ACE Limited acquired Fianzas Monterrey from New York Life Insurance Company for a cash consideration of $293 million. This acquisition will help the company expand its surety business. Moreover, it will augment ACE Seguros, the existing commercial lines and personal accident insurance business in Mexico.

Also, the U.S.-based retail operations of ACE Limited ACE USA, has introduced a Foreign Casualty Pollution Liability coverage endorsement. ACE came up with this coverage option to provide insurance and risk management solutions to the globally operating mid-sized and large-scale multinational companies located in the U.S.A.

The board of directors of ACE Limited announced its intention to propose a 4% increase in the quarterly dividend at the extraordinary general meeting scheduled on May 16, 2013. If approved, ACE Limited will pay a quarterly dividend of 51 cents.

The company has also started underwriting energy risks through Syndicate 2488 at Lloyd’s of London.

ACE Limited delivered positive earnings surprise in all four quarters of 2012 with an average of 9.74%. We expect the company’s endeavors to enhance its offerings and operations coupled with absence of any major catastrophe activities will help it deliver solid numbers in the first quarter of 2013. ACE Limited is scheduled to release its first-quarter 2013 earnings results on Apr 22 after the closing bell. The Zacks Consensus Estimate for the first quarter is currently pegged at $1.85 per share.

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 is 21.5%, much above S&P’s return of 11.5%.   

ACE Limited presently carries a Zacks Rank # 2 (Buy). Property and casualty insurers like AXIS Capital Holdings Ltd. (AXS), Montpelier Re Holdings Ltd. (MRH) and Arch Capital Group Ltd. (ACGL) among others, carry a favorable Zacks Rank # 1 (Strong Buy) and appear impressive.

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