ACE’s A&H and Specialty Lines To Drive Higher ROE

Analysts at Citigroup reiterate their "buy" rating on ACE Ltd ACE. The target price for ACE is set to $64. ACE reiterated its guidance of 15% ROE and 12%-15% annual book value per share growth over the cycle. According to the analysts, “Mr. Greenberg maintained his stance on no share buybacks near-term indicating ACE would be a good steward of capital and that capital decisions would be looked at with a 2-3 year time horizon in mind. ACE remains our top pick.” “A&H and specialty lines will drive higher ROEs as combined they made up ~60% of Gross Premium Written in 2009. In our view, these lines have sustainable ROEs in excess of mgmt’s 15% target range relative to P&C operations which we estimate at 10% in the current environment… ACE currently has excess equity capital of ~$2-$3B and would look to a broad range of P&C acquisitions including transformational deals as long as they fit within their strategic framework. Life and A&H acquisitions would likely be smaller or bolt on style acquisitions,” Citigroup adds. More Analyst Ratings here