Allied World Financial Services Inc., a subsidiary of Allied World Assurance Company Holdings, AG (AWH) and Crescent Capital Group LP recently entered into an investment agreement.
Per the agreement, Allied World Financial Services will acquire a minority stake in Crescent. At the same time it will allow Crescent to access and engage $500 million of Allied World’s investment portfolio in different credit policies in the upcoming years.
Allied World expects the deal to be beneficial to its credit strategies on account of the extensive experience that Crescent has gathered particularly in below investment grade credit and structured product investment. The investment strategies taken up by Crescent and the strong returns that the Crescent clientele have experienced over the years are expected to help Allied World develop a stronger credit policy for itself.
Since its inception in the third quarter of 2012, Allied World Financial Services have undertaken four strategic partnerships to enhance its insurance and reinsurance businesses. All the deals are expected to provide Allied World with the advantage of controlled expenses, maximized returns on investment and improved earnings. At this juncture the newest agreement with Crescent is viewed as an added feather on its cap as it will enhance Allied World’s financial services portfolio through its extensive credit strategies.
We expect the Zacks Consensus Estimates to move north over this optimism. Accordingly, the Zacks Consensus Estimate for 2013 is currently pegged at $7.02, representing a year-over-year increase of nearly 37.8 %.
On the other hand as an asset management firm, Crescent remains optimistic about the alliance as it is confident of improving its existing service offered to investors in search of high-return investment strategies. Crescent manages $11 billion in assets.
Allied World, a property, casualty and specialty insurance and reinsurance provider, undertakes a number of partnerships and acquisitions to strengthen its investment portfolio. In December 2012, the company announced the minority stake acquisition in Bermuda-based Aeolus Capital Management Limited to expand its financial services facility.
Endurance Specialty Holdings Ltd. (ENH) which closely competes with Allied World, bought the assets of Galileo Weather Risk Management and appointed its entire workforce to launch a unit named Endurance Global Weather last November. The new facility provides customized weather risk management products which enable clients to cope with the adverse effects of unpredictable weather changes on their businesses.
Allied world is scheduled to release its fourth quarter and full year 2012 earnings results on February 13, 2013 after the closing bell. The Zacks Consensus Estimate for the fourth quarter of 2012 is a loss $1.94 reflecting a 180.8% year over year decline. That for full year 2012 is currently pegged at $5.09, representing a year-over-year increase of 10 %.
Allied World currently carries a Zacks Rank #3 (Hold). Endurance shares the same Zacks Rank.