The Swiss mountain air seems to agree with ACE Limited, as it reported net income for the third quarter of $494 million, or $1.46 per share, compared with $0.16 per share for the same quarter last year, an increase of 813 percent. Operating income, which excludes net realized gains (losses), was $2.07 per share, compared with $1.50 per share in Q3 2008.
ACE also noted that its book value increased $2.2 billion during the quarter, up 13 percent from June 30, 2009. Book value per share now stands at $55.71. Annualized return on average equity was 15.9 percent, while the Company’s P/C combined ratio was 88.1 percent.
Net income for the nine months ended September 30, 2009, was $4.73 per share, compared with $3.45 per share for 2008. Income excluding net realized gains (losses) was $6.16 per share, compared with $5.81 per share for 2008.
The P/C combined ratio for the nine months ended September 30, 2009, was 87.8 percent. Book value increased $4.3 billion, up 30 percent during the nine months ended September 30, 2009.
ACE listed other operating highlights for the quarter ended September 30 as follows:
— Net premiums written and earned decreased 4 percent and 6 percent, respectively. Excluding the impact of foreign exchange, net premiums written and earned were flat and decreased 3 percent, respectively.
— The P&C combined ratio was 88.1 percent compared with 97.9 percent. The P&C combined ratio year to date was 87.8 percent compared with 90.4 percent.
— Favorable prior period development pre-tax was $203 million compared with $277 million in 2008.
— P&C pre-tax underwriting income increased to $359 million compared with $66 million.
— Catastrophe losses were $45 million compared with $411 million.
— Operating cash flow was $1 billion.
— Net loss reserves increased $344 million. Excluding foreign exchange valuation, net loss reserves increased $135 million. Year-to-date net loss reserves increased $923 million. Excluding foreign exchange valuation, net loss reserves increased $429 million.
— Net investment income decreased 2 percent to $511 million. Invested assets increased 7 percent to $46.7 billion.
— Return on average equity was 15.9 percent. Year-to-date return on average equity was 16.7 percent.
— Book value per share increased 13 percent from $49.27 at June 30, 2009, to $55.71, while it increased 29 percent from December 31, 2008.
— Tangible book value per share increased 17 percent from $38.10 at June 30, 2009, to $44.49, while it increased 39 percent from December 31, 2008.
— Net realized and unrealized gains after tax from our investment portfolio totaled approximately $1.7 billion. Net realized losses from derivative accounting related to the guaranteed minimum income benefits (GMIBs) of our life reinsurance business, net of associated hedges, were approximately $209 million. As the company’s credit spreads improved, derivative accounting required an increase in our fair value liability due to our increased ability to pay. There was also an impact due to lower interest rates.
Chairman and CEO Evan G. Greenberg commented: “ACE had an excellent third quarter with all divisions of the company performing well and contributing to results. Our book value grew 13 percent in the quarter, 30 percent for the year, and stands at an all-time high. After-tax operating income increased 39 percent from the same period last year, and our return on equity was 16 percent.
“Our P&C combined ratio was 88.1 percent and benefited from positive prior period reserve development and light catastrophe losses in the period. Excluding those items, our current accident year combined ratio for the quarter and the year was 93.3 percent and 91.4 percent, respectively; again, an excellent result. In addition, as a result of our underwriting discipline, while we sacrificed some growth, we achieved positive rate change in the quarter of about 2 percent.
“Premium revenue growth was impacted in the quarter by recessionary conditions, a strong U.S. dollar and a competitive insurance market. Growth in the period benefited, however, from customers seeking ACE’s strong balance sheet as well as our broad product portfolio and global presence. By the nature of some of our businesses, growth can be volatile quarter to quarter, but more stable when viewed over a longer period of time. In fact, we expect meaningfully stronger revenue growth in the fourth quarter regardless of foreign exchange.”
ACE will host its third quarter earnings conference call and webcast today, October 28, 2009, beginning at 8:30 a.m. ET. The earnings conference call will be available via live and archived webcast at www.acelimited.com or by dialing 888-359-3610 (within the United States) or 719-457-2605 (international); pass code 2934041. Please refer to the ACE Limited website in the Investor Information section under Calendar of Events for details. A replay of the call will be available for approximately one month. To listen to the replay, dial: 888-203-1112 (in the United States) or 719-457-0820 (international); pass code 2934041.
Source: ACE Limited
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