Global Investment Firm Predicts

March 12, 2001

Citing firming prices for insurance, the global institutional investment bank Lehman Brothers has started ACE Ltd. with a buy rating and HCC Insurance Holdings Inc. with a strong buy rating.

According to Reuter’s Securities, a $45 price target on ACE Ltd. was set. Lehman stated that it had placed ACE Ltd. at the top of its list of insurers poised to benefit from continued U.S. commercial insurance price increases. Lehman predicted that ACE earnings would improve over the next two years as a result of price increases in the 10 percent to 15 percent range.

Lehman was also quoted to the effect that it views ACE as a “higher-return/higher-risk earnings growth investment,” more leveraged in the U.S. commercial insurance market than all other public insurers. A $30 price target was set on HCC.

The strong buy rating on HCC was based on its business model as a hybrid insurance broker insurer and the fact that its products are concentrated in niche commercial markets, where some of the greatest price increases are occurring. Lehman projected that HCC earnings would increase 18 percent in 2001 and 20 percent. Lehman is headquartered in New York, London, and Tokyo and operates through a worldwide network of offices.

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