Ace Ltd vs. China explosion, Chile earthquake, Chubb merger
As Chubb deal nears
Shares of Ace Ltd., the multinational insurer, rose this morning after the company reported strong profits and limited losses as it prepares to absorb rival Chubb Corp., of Warren, N.J., in a merger that is expected to affect Ace's major U.S. offices in Philadelphia. See Ace financial reports here. More on the Chubb deal here and here.
Ace reported per-share earnings of $2.74, blowing out analysts' estimate of $2.35, notes analyst Paul Newsome, in a report to clients of Sandler O'Neill + Co. today. Newsome had expected claims plus expenses would eat up 93 cents of every premium and revenue dollar, but Ace reported spending only about 86 cents, which "more than offset" weak investment profits and the impact of an extra-strong dollar on foreign profits. The Chubb deal looks "on track to close in the first quarter of 2016," he added.
New insurance sales declined a lot less than expected (Ace has said it refuses to compete by cutting prices when it doesn't think the resulting policies will prove profitable). Life insurance income was smaller than expected; so were property-loss reports, which left Newsome wondering whether Ace has fully reported the losses it will face from the Tianjin, China industrial explosion and the earthquake in Chile. (Update: Ace said in the call that pretax loss from the Tianjin explosion in China was $22MM.)