ACE Limited Shares Hit 52-Week High

On May 14, 2013, shares of ACE Limited (ACE) hit a 52-week high of $92.69. The momentum was driven by a strong first quarter, which included a 12.4% positive surprise, rating upgrade and successful closure of the acquisition of ABA Seguros.

ACE Limited reported first-quarter 2013 earnings on Apr 22. Net operating earnings came in at $2.17, up 5.8% year over year. Solid underwriting performances aided the better-than-expected results. Both the U.S. and international business operations experienced growth and better margins. ACE Limited also benefited from improved commercial property & casualty pricing environment.

Based on positive first-quarter prior period reserve development, lower-than-planned catastrophe losses realized in the first quarter and better-than-expected current accident year results excluding catastrophe losses, ACE Limited raised the operating earnings expectation to $7.10–$7.50 per share, up from $6.60–$7.00 per share for 2013. The Zacks Consensus Estimate of $8.10 is much above the company guided range.

With respect to earnings trend, ACE Limited delivered positive earnings surprise in all the past 4 quarters with an average of 10.9%.

ACE Limited also closed the acquisition of the fourth largest property and casualty (P&C) insurer in Mexico, ABA Seguros from Ally Financial Inc. for $865 million.

Additionally, 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.