UPDATE: Goldman Sachs Reiterates Neutral Rating, Raises PT on Allied World Assurance Co. After 44Q12 Results
In a report published Friday, Goldman Sachs reiterated its Neutral rating on Allied World Assurance Co. (NYSE: AWH), and raised its price target from $87.00 to $89.00.
Goldman Sachs noted, “We update our estimates for AWH following the 4Q12 conference call and have made several assumption changes in an attempt to better align our model with changes in AWH's book over the past several quarters. The most influential changes to our estimates are higher expected underlying profitability in Reinsurance driven by growth in higher-margin property coverage, offset by a larger CAT load to reflect both growth and changes in mix. Again in 2012, AWH's reinsurance and international segments remained the engines of its underwriting profitability (over 100% between the two) and we expect that will continue in 2013. We note that in recent years, the primary strategic focus for AWH has been its Insurance segment and company-high growth rates supported that position. In 2012, growth outside of US Insurance (22%) was higher than in the segment (16%), which we expect was a response to specific opportunities and not a departure from its prior strategic focus. But even with ample growth in recent years and better pricing trends, underlying profitability in US Insurance remains challenged, and to achieve higher ROEs and expand valuation meaningfully we believe better results there will be necessary.”
Allied World Assurance Co. closed on Thursday at $86.67.
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