ACE Limited – Insurance Stock Analysis
ACE Limited is an insurance company. They have a product line that includes accident, health, reinsurance and P&C coverage. They run the Lloyd’s of London insurance company. This company offers policies for unusual coverage, like celebrities’ faces and professional athletes’ limbs. This company is based in Bermuda and Switzerland and they trade on the New York Stock Exchange.
Whenever you are learning how to invest in stocks, you will probably figure out that insurance, and financial companies in general, are a different animal. Operating companies and financial companies have to be evaluated differently. In fact, financial stocks, like ACE, has more risk but also more potential for higher returns.
They currently have a market cap of $23 billion. Their price to earnings ratio is at 13. They have 336 million shares outstanding.
One particular difference between operating and financial companies is in their balance sheets. You can’t ever be sure of their assets. The value of debt is usually consistent. But the value of financial assets can be very volatile. This is part of the risk of investing in financial stocks.