Bermuda’s ACE Ltd. became one of the first insurers, but certainly not the last, to issue a profit warning on fourth quarter earnings in 2001. Yesterday’s announcement indicated that it expected fourth quarter net operating incometo fall below expectations due to an increase in property losses of approximately $80 million after taxes.
ACE attributed the decrease to “property losses incurred in its European Commercial Property portfolio together with a $50 million charge taken to strengthen loss reserves principally in its International Casualty Operations.”
Brian Duperreault, Chairman and CEO, commented in the announcement that, “We experienced a pattern of increased frequency and severity within our European Commercial Property portfolio. In response to these adverse results we have tightened underwriting controls and significantly increased prices. We believe the changes made will permit us to realize our financial objectives for this unit in 2002. We also carefully reviewed the development of our international casualty portfolio and determined an increase in reserves was warranted. The balance of our business segments have performed as expected and we do not expect the issues affecting the fourth quarter to carry forward into the new year.”
ACE will formally report its quarterly earnings on February 15.
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