ACE Pitch - INVESTMENT RISKS Low interest rates offer...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
HIGHLIGHTS FROM 2Q 2011 EARNINGS RELEASE EPS was $2.01 ahead of consensus ($1.65) primarily due to lower catastrophe losses and higher investment income Top-line grew 15% YoY as ACE beneFtted from improving BV grew 3% sequentially to $71.36 and the ROE of 11%+ is FORWARD LOOKING VIEW Recent acquisitions such as the HK and Korea operations of NY Life and Jerneh Insurance in Malaysia gives ACE a unique competitive advantage in the global insurance marketplace Pursuing non cyclical insurance sectors (such as crop insurance) that are not correlated with existing P&C lines provides unparalleled strategic depth High levels of excess capital ($6.5bn+ or 27% of equity) accords the company exceptional risk cushioning against catastrophic risks The fact that 2011 guidance was raised to $6.00-$6.20 from $5.40-$5.70 indicates a bullish view from management regarding future growth
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: INVESTMENT RISKS Low interest rates offer headwinds to NII across the industry Along with other P&C insurance providers, ACE is vulnerable to extreme catastrophes that threaten to crimp margins CONCLUSION Considering that the stock currently trades at 87% of BV, this would be an excellent addition to the TO± portfolio Based on analysis using DC±, a reasonable 12-month price target for ACE is $80.73. Pallav Ray The Tepper Opportunity ±und Carnegie Mellon University VALUATION RATIOS P/E (TTM): 8.36 Beta: 0.69 P/S (TTM): 1.29 P/B (MRQ): 0.87 FINANCIAL STRENGTH LT Debt to Equity: 13.93 Total Debt to Equity: 19.74 Interest Coverage: 21.57 PROFITABILITY RATIOS EBITD Margin (TTM): 34.84 Op. Margin (TTM): 18.46 Pre-Tax Margin (TTM): 18.67 Net ProFt M'gin (TTM): 15.54 MGMT. EFFECTIVENESS ROA (TTM): 3.00 ROE (TTM): 11.17 Source: Reuters ACE Limited (NYSE: ACE) Current Date: 9/6/2011 Current Price: $61.43 12 mo. PT: $80.73...
View Full Document

This note was uploaded on 02/05/2012 for the course FINANCE 101 taught by Professor George during the Spring '11 term at University of Phoenix.

Ask a homework question - tutors are online