Bermuda’s two largest insurers, ACE and XL, both announced disappointing fourth quarter results, with ACE’s net income down around 60 percent to $46.265 million for the period, and XL recording a net loss of $6.1 million. Both companies also announced net losses for the year.
ACE reported that, “income excluding net realized gains (losses) of $41.9 million for the quarter ended December 31, 2001 compared with $164.3 million for the same quarter in 2000 and earnings per share excluding net realized gains (losses), after deducting preferred dividends, of $0.14 for the current quarter compared with $0.65 last year. Net income for the quarter ended December 31, 2001 was $46.3 million compared with $113.8 million for fiscal 2000 and earnings per share, after deducting preferred dividends, was $0.15 for the current quarter compared with $0.44 for the same quarter last year.
XL reported that it experienced “a net loss of $83.6 million, or a loss of $0.64 per share in the fourth quarter of 2001, compared with net income of $0.6 million, or income of $0.01 per share, in 2000’s fourth quarter. The net operating loss for the fourth quarter ended December 31, 2001 was $6.1 million, or a loss of $0.05 per share, compared to net operating income of $143.0 million, or income of $1.13 per share in the fourth quarter a year ago. Economic operating income was $8.2 million, or $0.06 per share, in the fourth quarter of 2001 compared with $160.1 million, or $1.26 per share, during the same period in 2000. These results reflect the inclusion of the acquired Winterthur International operations from July 1, 2001.”
For the year ended December 31, 2001 ACE reported a net loss of $68.9 million, compared with net income of $581.9 million last year. Brian Duperreault, Ace’s Chairman and CEO remained upbeat, “In spite of the losses incurred during the year, we ended 2001 in a stronger financial position than we began,” he stated. “Our surplus was at its highest levels ever, providing us with the capital resources we need to meet increased customer demand.”
XL stated that, “For the year ended December 31, 2001, the net loss was $576.1 million, or a loss of $4.55 per share, compared with net income of $506.4 million, or income of $4.03 per share, for the year ended December 31, 2000. The net operating loss for 2001 was $451.2 million, or a loss of $3.56 per share, compared with net operating income of $567.6 million, or income of $4.52 per share, for the year ended December 31, 2000. The economic operating loss was $392.6 million, or a loss of $3.10 per share, during 2001 compared with economic operating income of $626.2 million, or income of $4.98 per share, for 2000.”
Chairman and CEO Brian O’Hara, while not quite as upbeat as Duperreault, found some encouraging signs. While he acknowledged that “The underwriting results for 2001 were the worst ever for the property and casualty industry,” and confirmed that “our fourth quarter results are disappointing, primarily reflecting the impact of certain prior period loss reserve adjustments and a number of large losses,” he stated that “we are pleased to note significant growth in premiums written, due largely to our expanded global platform and demonstrating our strength in the upward turn in the underwriting cycle.”
“The changes in the market are allowing us to demonstrate underwriting leadership while obtaining substantial price increases in all of our business lines during the important January 1 renewal season on a much larger base than a year ago,” O’Hara concluded.
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