ACE Ltd

During the first quarter of 2015, AIG (AIG) took further actions to simplify its balance sheet and reduce risk.

On November 23, shares of KIE closed at $72.38, above its 100-day, 50-day, and 20-day moving averages of $70.07, $70.06, and $71.73, respectively.

ACE is a leading international property and casualty insurer Headquartered in Zurich, Switzerland, ACE Limited offers commercial insurance products and service offerings such as risk management programs, loss control, and engineering and complex claims management. ACE Limited operates under five segments: North American Property and Casualty, North American Agriculture, Insurance–General Overseas, Global Reinsurance, and Life. North […]

AIG’s top line dipped marginally in 4Q14 when compared to 4Q13, driven by disciplined sales and underwriting in casualty products in commercial P&C.

AIG repurchased $6.5 billion of high coupon debt, replacing it with lower coupon debt to help AIG reduce its interest burden by ~$249 million per year.

AIG (AIG) reported pre-tax operating income of $1.5 billion in 1Q15 for its commercial insurance business, as compared to $1.4 billion in 1Q14.

Progressive’s (PGR) Commercial Lines business revenues increased by 12.1% to $511 million in 3Q15, up from $456 million in 3Q14.

AIG’s shares appear to be currently undervalued despite the improvements in its operating and financial metrics.

Prudential Financial’s shares appear to be currently undervalued despite the improvements in its overall fundamentals.

Geopolitical tensions are mounting around the globe. Turkey shot down a Russian jet and Brussels remains on terrorism alert after the recent attacks in Paris.

An underwriting loss is not unusual for an insurance company. In a soft pricing environment, pricing of P&C products is low due to intense competition.

As customers use Internet-based aggregators to purchase insurance policies, insurers use online sales to interact directly with customers and reduce costs.

The impact of interest rate movements is lower in the P&C segment, as their products can be repriced annually to keep in line with interest rate movements.

For P&C insurers such as AIG and ACE, various mandatory requirements may drive sales of vehicle, workers’ compensation, and homeowners insurance.

P&C products have commoditized characteristics, resulting in sharp competition in the market and business cycles. AIG and ACE are key players in this space.

Policyholder liabilities, or policyholder reserves, represent the future claims that may arise for the pool of policies the insurer writes.

Financial market movements not only impact income from invested assets, but also the value of assets carried at fair value on an insurer’s balance sheet.

Insurance ETFs are poised to gain from industry growth. As interest rates improve, insurers should see better earnings due to higher investment returns.

In 3Q16, the company returned $930.0 million to shareholders in the form of dividends and buybacks.

Prudential’s stock has risen by 16% in the past six months, mainly due to expectations of improved fundamentals and higher investment and underwriting income.

Prudential Financial has been very consistent with dividend payouts to shareholders, which makes it a very strong prospect for long-term value investors.

Prudential Financial (PRU) reported its 2Q16 earnings results on August 3, 2016. It reported adjusted operating income per share of $1.84 in the quarter.

Prudential Financial (PRU) has been very consistent with dividend payouts to shareholders, which makes the stock a very strong prospect for long-term value investors.

In 1Q16, Prudential’s revenues fell 4.4% year-over-year to $11.3 billion. On a constant dollar basis, the company saw a decline in its international insurance and US retirement solutions businesses.

Since 2010, Prudential Financial (PRU) has returned approximately $10 billion to shareholders in the form of dividends and buybacks.

Prudential Financial’s (PRU) US Individual Life and Group Insurance division saw a fall in operating income on lower group insurance revenues.

In 2015, AIG continued its simplification process for its balance sheet. In 2016, AIG is expected to strengthen its balance sheet with higher operating cash flows.

AIG reported a pre-tax operating loss of $2.1 billion for its commercial insurance business in 4Q15 compared to a pre-tax operating income of $1.2 billion in 4Q14.

On a constant dollar basis, Prudential Financial’s (PRU) International Insurance segment reported a 7% rise in revenues in 4Q15.

As AIG continues to decline, there are suggestions as well as speculation of an AIG sale. These speculations, although they seem unlikely to happen, can push AIG’s stock prices.

In 4Q15, AIG repurchased 53 million shares for an aggregate purchase price of $3.2 billion. It made additional repurchases of $2.5 billion through the end of February 11, 2016.

KIE is the most liquid insurance ETF available in the country and is also among the cheapest, with an expense ratio of 0.35%.

Prudential Financial’s (PRU) stock has risen by 7% in the past month and has fallen by 13% in the past quarter.

AIG is expected to report EPS of $1.08 compared to operating loss per share of $1.10 in the December quarter. The company is looking to exit its hedge funds and continue stock buybacks.

Interest rates are a key performance driver for life insurance companies. They affect their margins, hedging costs, and product sales.

American International Group (AIG) has announced that it will spend $500 million on restructuring initiatives for organizational simplification, operational efficiency, and business rationalization.

With an operating loss per share of $1.10, AIG missed Wall Street analysts’ loss per share estimates of $0.91.

Prudential is trading at 7.2x compared to the industry’s 8.8x earnings multiple for the same period. The stock is currently trading at multiyear low valuations.

Prudential Financial’s stock is currently trading at a price-to-earnings multiple of 9.9x as compared to the 12x–14x ratios of other major insurance players.

McGraw Hill Financial (MHFI) traded at $100, which was above its moving average values.

ACE stock returned ~15% to investors over the past three months. It focuses on serving retail and corporate clients in insurance and reinsurance products.

Banking stocks are expected to benefit from higher interest rates, but not immediately. Also, rising interest rates would be countered by higher existing liquidity.

On November 25, 2015, KIE closed at $72.23, above its 100-day, 50-day, and 20-day moving averages of $70.07, $70.06, and $71.73, respectively.

AIG’s leverage was on the lower side of the target range, according to its management. AIG’s operating return on equity stood at 2.9% for 3Q15.

American International Group reported pre-tax operating income of $815 million for its commercial insurance business in 3Q15.

Prudential Financial’s international insurance segment reported a fall in its adjusted operating income to $812 million, compared to $845 million in 3Q14.

Prudential Financial reported its 3Q15 earnings on November 4. It missed Wall Street analysts’ adjusted operating income estimates of $2.42 per share.

The top invested sectors of the Hartford Capital Appreciation – Class A fund are information technology, healthcare, and consumer discretionary.

ACE’s Life reinsurance business also fell, reflecting the run-off of the company’s variable annuity reinsurance business.

ACE’s (ACE) Global Reinsurance segment reported a decline in net premiums written of 11.5% or 9.5% on a constant dollar basis.

Progressive (PGR) reported 3Q15 earnings per share of $0.47, a 6% decrease over the third quarter of 2015.

Progressive (PGR) reported its third-quarter earnings on October 16. It reported net income of $278 million for the quarter, down 6%.

Prudential Financial’s 2Q15 revenue rose by 12% year-over-year to $12.5 billion, exceeding consensus estimates of $11.2 billion. Its net income was $1.4 billion, up by 29% compared with 2Q14.

During 2Q15, AIG worked to simplify its balance sheet and reduce risk. Its exposure to super senior corporate debt and collateralized loan obligations was reduced to zero, compared with $2.5 billion as of December 31, 2014.

AIG’s leverage was on the lower side of the target range, and its operating return on equity stood at 9.3% for 2Q15. Normalized return on equity was at 6.7%.

AIG declared an increase of 124% in its quarterly dividend to $0.28 per share, translating into an annualized dividend yield of 1.80%.

AIG reported its 2Q15 earnings on August 3. AIG posted earnings per share of $1.39, beating estimates of $1.22.

Accretion of earnings per share ACE (ACE) will benefit immediately from the transaction with Chubb (CB). The acquisition will be accretive to the company’s per-share earnings and book value per share. Accretion to EPS (earnings per share) will be in the double digits, and there will be accretion to ROE (return on equity) by the end of […]

ACE has substantial international operations, with a presence in 54 countries. In contrast, Chubb has a more US-centric model.

Pretty much anything that has a material adverse effect on the company will be considered a MAE, but there are exceptions to that rule.

Chubb’s Property and Casualty Group consists of several domestic and international subsidiaries. It offers personal insurance, standard commercial insurance, and specialty commercial insurance.

The biggest rationale for the ACE–Chubb merger is the potential for cost-cutting. By combining with Chubb, ACE Limited is creating a leading player in property and casualty insurance.

ACE Limited is buying Chubb in a cash and stock merger worth ~$28 billion. The Chubb merger is expected to close in the first quarter of 2016.

The ACE–Chubb deal will create the second-largest listed property and casualty insurer, by market capitalization, in the US.

With the acquisition of Chubb, ACE will be better positioned to compete with rivals including Warren Buffett’s Berkshire Hathaway and Allstate, among others.

Shares of Chubb Group (CB) surged by 26.12% on July 1 on news of an acquisition by global property giant Ace (ACE).

The Financial Sector Select SPDR ETF (XLF) was up 1.52% during the trading session ending on July 1, largely driven by insurance stocks, which rose 2.7%.

As of June 2015, AIG’s stock has appreciated by about 12% over the past six months and by 11% over the last year.

February 2015 catastrophe losses came about due to winter weather, floods, and storms.

Hurricanes Sandy, Ike, and Andrew remain near the top of the list of the costliest catastrophes in terms of insured losses.

Insured losses are the ones that impact the profitability of insurance companies.

The percentage points for catastrophe losses in the combined ratio have increased in recent years.

Catastrophe losses are one of the key risks to P&C insurers because these losses negatively impact profitability and capital.

The combined ratio of AIG’s commercial P&C business improved in 4Q14, when compared with the 4Q13 ratio.

The US personal lines businesses have seen improved profitability from the 2011 levels.

The underwriting cycle moves between hard and soft market conditions, which have different sets of characteristics that determine the profitability of the insurance industry.

The property and casualty insurance business is cyclical in nature. The underwriting cycle alternates between two phases: the hard market and the soft market.

In 4Q14, AIG’s operating income after tax was impacted by a charge of more than $500 million for reserve strengthening and other estimate changes.

AIG’s financial objectives focus on profitability improvement, expense management, and balance sheet growth, achieving a sustainable ROE.

AIG reported a net income dip from $2.0 billion in 4Q13 to $655 million in 4Q14, due to an after-tax charge of ~$800 million for debt retirement activities.

From 2011–2013, MetLife’s emerging market businesses saw 11% cumulative annual growth rate in operating earnings. EMEA’s growth rate was 16.1%.

MetLife plans to grow its retail and group business in Latin America, capitalizing on the growing middle class, affluent class, and corporate needs.