The parade of good third quarter results continues, with Bermuda’s largest insurer, ACE Limited, posting net income for the period of $578 million, compared to a $112 million loss in Q3 2005. Excluding capital losses of $74 million, ACE made $652 million in the period, or $1.96 per share, well above analysts’ estimates.
As a measure of the difference benign weather conditions can produce, Ace noted: “In the third quarter of 2006 after-tax catastrophe losses were $5 million or $0.01 per share. The losses from hurricanes Katrina, Rita and Dennis and other catastrophes resulted in an after-tax charge of $742 million for the third quarter of 2005 or $2.56 per share. The P&C combined ratio for the current quarter was 85.7 percent. Annualized return on average equity for the quarter was 20.6 percent.”
“Net income for the nine months ended September 30, 2006 was $1.6 billion or $4.92 per share, compared with $792 million or $2.63 per share for the nine months of 2005,” said the bulletin. Income excluding net realized gains and cumulative effect was $1.7 billion or $5.13 per share for the period, compared with $711 million or $2.34 per share for the same period of 2005.
President and CEO Evan Greenberg commented: “We had an excellent quarter, with all areas of the company performing well. The positive effect of the lack of catastrophe activity only added to what was already a very good quarter of operating performance. We had record growth in book value of more than $1 billion. Our organization is in great shape, and we expect to continue to produce excellent results into the future.”
Other third quarter highlights cited in the report included the following:
— P&C net premiums written increased 4 percent over the prior year quarter.
— P&C net premiums earned increased 8 percent over the prior year quarter.
— The P&C combined ratio was 85.7 percent for the quarter compared with 116.0 percent in 2005. Excluding catastrophe losses, the P&C combined ratio for the same period in 2005 was 86.5 percent.
— P&C underwriting income increased 198 percent over the prior year quarter.
— Operating cash flow amounted to $1.3 billion for the quarter.
— Invested assets increased by $1.2 billion from June 30, 2006.
— Net losses and loss expenses increased $126 million to $20.4 billion from June 30, 2006. Excluding the impact of the reserves sold to Randall & Quilter Investment Holdings Limited, net losses and loss expenses increased approximately $614 million from June 30, 2006.
— Net investment income increased 29 percent to $414 million over the prior year quarter.
— Shareholders’ equity increased 8 percent or $1 billion to $13.5 billion from June 30, 2006 and 14 percent or $1.7 billion from December 31, 2005.
— Tangible equity rose to $10.8 billion, an increase of 11 percent from June 30, 2006.
— Debt to total capital ratio decreased to 13.4 percent from 15.9 percent at June 30, 2006.
— Annualized return on average equity for the quarter was 20.6 percent.(3)
— Book value per share as of September 30, 2006 was $39.74.(4)
ACE will host its third quarter 2006, quarter-end earnings conference call and webcast today, Wednesday, October 25, 2006 beginning at 8:30 a.m. EDT. The earnings conference call will be available via live and archived webcast at www.acelimited.com or by dialing 800-289-0572 (within the United States) or 913-981-5543 (international); passcode 1327941.
The complete report and additional information, as well as a replay of the conference call may be obtained on the Group’s Website: www.acelimited.com. Further details on the conference can be found in the Investor Information section under Calendar of Events. A replay of the call will be available from approximately 11:30 a.m. EDT on Wednesday, October 25, 2006 until Friday, November 24, 2006. To listen to the replay, dial: 888-203-1112 (in the United States) or 719-457-0820 (international); passcode 1327941 (#).
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