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Member, Beacon International Group, Ltd.
ZURICH (Bloomberg)—ACE Ltd. has capital to withstand Egyptian claims, and investors should buy the insurer’s shares because the firm usually has lower-than-industry-average losses from political upheaval, according to Credit Suisse Group A.G.
ACE, AXIS Capital Holdings Ltd. and Aspen Insurance Holdings Ltd. are among insurers that may face political-risk claims from Egypt, Credit Suisse’s Vinay Misquith said in a report Monday. The insurance protects investors, lenders and exporters from losses on political violence and events such as confiscation or government nationalization.
ACE has about $1.8 billion at risk from the policies in the Middle East, Turkey and Africa, compared with $3 billion in excess equity capital, Mr. Misquith said. The company slipped 3.2% on Jan. 28 as protesters clashed with police and set fire to buildings, demanding that President Hosni Mubarak step down.
“We would be buyers of the stock on further weakness related to this issue, since we believe that ultimate losses should be substantially lower than gross exposures,” said Mr. Misquith. He rates Zurich-based ACE “outperform” and has “neutral” ratings on Aspen and AXIS, both based in Bermuda.
ACE advanced 63 cents to $61.80 at 9:44 a.m. in New York Stock Exchange composite trading. The insurer has gained about 25% in the past year. AXIS climbed 9 cents to $35.70. Aspen rose 6 cents to $30.08.
Copyright 2011 Bloomberg