MKM Partners Raise Price Target on Allied World Assurance (AWH) Following a Strong 2Q

MKM Partners reiterated a Buy rating on Allied World Assurance (NYSE: AWH), and raised the price target to $45.00 (from $40.00), following the company's 2Q earnings report. AWH reported operating earnings of $0.93, ahead of the consensus estimate of $0.39. The low estimates may be contributed to analyst's fears that the company was to have much more in catastrophe losses.

Analyst Harry Fong commented, "Allied World reported 2016 second quarter operating earnings of $0.93 against our estimate of $0.52 and the consensus estimate of $0.39. The consensus estimate had been coming down as many analysts were expecting the company to have much more in catastrophe losses. Cat losses for the second quarter amounted to only $20.9 million or 3.5 points. This was only a tad higher than what we modeled. The real differentiator was favorable loss reserve development of $37.8 million or 6.3 points. We modeled $23.3 million or 3.5 points of favorable development. The variance to our estimate for development was about $0.16 per share. Investment income was also much stronger than our estimate at $55.8 million against our estimate of $47 million. Virtually all of the possible favorable variables that an insurer can hope to influence performed better this quarter."

For an analyst ratings summary and ratings history on Allied World Assurance click here. For more ratings news on Allied World Assurance click here.

Shares of Allied World Assurance closed at $35.50 yesterday.

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