Ace’s Greenberg Shuns ‘Big and Ugly,’ Bides Time for Insurer Acquisitions
Ace Ltd. (ACE), the Swiss insurer with operations in more than 50 countries, will wait for the right buyout, even if it means holding cash at near record-low interest rates, Chief Executive Officer Evan Greenberg said.
“You don’t just say, ‘I’ve got money, let me go out and deploy it,'” Greenberg said today in a conference call. “If you do that, what will you do? You’ll buy big and ugly. You’ll be sorry what you did. Whatever you do, you have to live with for a long time.”
Greenberg has used acquisitions to expand in nations including Malaysia and Ecuador and to build business like U.S. crop insurance. He said more insurers may be available as financial firms struggle with writedowns and face tighter regulations on capital.
An acquisition may increase the company’s return on equity, said Greg Locraft, an analyst at Morgan Stanley. The Zurich-based insurer is earning “next to nothing” on its excess capital as the Federal Reserve keeps it benchmark rate near zero to stimulate the economy, Locraft said on the call.
“You’ve got to be patient, and things happen,” Greenberg said. “I wish it were as simple as ‘You got some money and, boy you know, let’s just this week look around and there you go.’”
Ace rose 3.7 percent to $72.15 at 11:31 a.m. in New York after posting fourth-quarter profit late yesterday that beat analysts’ estimates. The insurer has gained about 16 percent in the past year.
Net income slipped 25 percent to $750 million as investment gains narrowed. The company’s average market yield on its fixed- maturity portfolio fell to 3.1 percent in the fourth quarter from 3.6 percent a year earlier, the company said in a financial supplement.
To contact the reporter on this story: Andrea Ludtke in New York at aludtke@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net
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