FBR Capital Reiterates an 'Outperform' on ACE Ltd (ACE); Raises PT & Estimates After Solid Q3

October 28, 2009 1:10 PM EDT

FBR Capital reiterates an Outperform rating on ACE Ltd (NYSE: ACE), price target increased from $69 to $76.

FBR analyst says, "We are reiterating our Outperform rating for ACE Limited and increasing our price target following a solid 3Q09 earnings report. On October 27, 2009, ACE's 3Q09 earnings beat did not come as much of a surprise. Operating EPS of $2.07 compares with the $1.97 consensus estimate, which was even increased in recent weeks as analysts adjusted for fewer catastrophe losses in the quarter. The third quarter clearly was strong for the company, as annualized operating ROE was 15.9% and book value grew 13% quarter over quarter to $55.71...ACE is clearly one of the best underwriting companies we follow, and based on valuation, it is also one of the most attractive names among large-capitalization insurers that we cover. Unfortunately, the larger account, specialized, and brokered market products, on which ACE focuses, appear to have become more competitive than smaller, less specialized accounts that are sold through agents, a distribution channel in which Travelers and Chubb are more active. That said, the valuation difference and ROE advantage of ACE make the stock as attractive as any large-capitalization commercial lines insurer in our coverage universe."

"We are increasing our 2009 operating EPS estimate to $8.00 from $7.85 to reflect the 3Q09 EPS beat. We are lowering our 2010 estimate to $7.50 from $7.90, however, to reflect our expectations for lower investment income and fewer reserve releases. Our new price target is based on a 1.2x multiple to our 2010 year-end book value estimate of $63.51."

To see more analyst ratings on ACE Click Here.

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