Ace Halts Wall Street Guidance as CEO Asks ‘God Why’Zachary Tracer
Ace Ltd., the insurer with operations in more than 50 nations, said it will halt earnings-per-share guidance after Wall Street questioned the usefulness of the company’s forecasts.
“After giving considerable thought to this subject, including a number of discussions with analysts and shareholders, we’ve decided that we will stop providing explicit operating EPS and catastrophe-loss guidance after 2013,” Phil Bancroft, chief financial officer of the Zurich-based insurer, said in a conference call today.
Ace, led by Chairman and Chief Executive Officer Evan Greenberg, joins insurer Travelers Cos. in shying away from providing forecasts that have proved difficult to make because of fluctuations in weather and pricing trends. Ian Gutterman of Adage Capital Management LP told the company in a January conference call that Ace’s projections created confusion “more years than not.”
Greenberg welcomed Gutterman’s remark.
“Everyone here is cheering, because we’ve said that to ourselves,” the CEO said in January. “My god, why are we doing guidance?”
Bancroft said the company will still provide projections for results from its investment portfolio.
“We will continue to evaluate our disclosures as we go forward,” Bancroft told analysts on today’s call. “We will remain open and accessible to you if you have questions or need clarifications.”
Greenberg affirmed the company’s targets for a 15 percent return on equity and an underwriting profit.
“We have not changed our objective,” he said.
Greg Locraft, the Morgan Stanley analyst who pressed Ace for more details about its 2013 forecast in January, said today that he won’t miss the company’s projections.
“Taking away the guidance, beginning next year, I think it’s going to make our lives a lot easier, just given the nature of how you all have done it,” he said on the call.
Quarterly per-share operating earnings at Ace last fell short of analysts’ estimates in the third quarter of 2009, according to data compiled by Bloomberg. The stock has rallied 21 percent in the past year, and gained 0.8 percent to $90 at 4:01 p.m. in New York.
Operating profit, which excludes some investing results, was $2.17 a share in the first quarter of 2013, Ace said yesterday in a statement. That beat the $1.93 average estimate of 20 analysts surveyed by Bloomberg.