ACE Limited Reports $734 Million Q1 Net Income; $777 Million Operating

April 30, 2014

ACE Limited report first quarter, 2014 net income of $734 million, compared to $953 million in Q1, 2013. The decrease came from the capital gain/loss side of the ledger. ACE posted a $207 million capital gain in Q1, 2013, compared to a $43 million loss in Q1, 2014.

Operating income net of tax rose slightly from $746 million in Q1, 2013 to $777 million this year. Net income per share in the first quarter was $2.14, compared with $2.77 per share for the same quarter last year. Operating income was $2.27 per share, compared with $2.17 per share for the same quarter last year.

Book value and tangible book value per share increased 2.4 percent and 3.0 percent, respectively, from December 31, 2013. Book value and tangible book value per share now stand at $86.90 and $70.97, respectively. Operating return on equity for the quarter was 11.2 percent. The property and casualty (P&C) combined ratio for the quarter was 88.8 percent.

In ACE’s North American P&C sector net premiums written increased by 12 percent to $3.691 billion from $3.296 billion. Net premiums written in constant dollars were up 13.7 percent at $3.247 billion. Underwriting income rose by 7 percent to $ 390 million from $364 million, while the combined ratio rose slightly to 88.8 percent from 88.2 percent.

The company’s operations in its global P&C sector also showed gains with net premiums written up 9.9 percent to $3.497 billion, compared to $3.183 billion in Q1, 2013. In constant dollar terms net premiums increased by 11.6 percent to $ 3.134billion. Underwriting income rose 19.1 percent to $421 million from $353 million, while the combined ratio in the sector decreased slightly to 87.6 percent from 88.4 percent.

Although net premiums written in ACE’s agricultural sector showed gains, rising to $194 million from $113 million, ACE reported an underwriting loss in from agricultural business of $31 million, compared to an $11 profit in Q1, 2013, the combined ratio in the sector ballooned to 130.3 percent from 79.3 percent last year.

Chairman and CEO Evan G. Greenberg commented: “ACE had an excellent first quarter and a very good start to the year. After-tax operating income of $777 million was driven by both strong underwriting and investment income results, which generated an operating ROE of 11.2 percent. Per share book and tangible book value grew 2.4 percent and 3 percent, respectively.

“Underwriting results were particularly strong in the quarter, with underwriting income up 7 percent and a P&C combined ratio of 88.8 percent. Underwriting income benefited from excellent current accident year underwriting income growth before catastrophe losses of 17 percent as a result of double-digit growth in earned premium and improved margin.

“Premium revenue growth across the company was exceptionally strong, with total P&C net premiums up 12 percent, or nearly 14 percent in constant dollars. In North America, our P&C business grew 11 percent in the quarter and continued to achieve positive rate increases with overall pricing up in casualty-related lines and down in property-related. Internationally, where our P&C business grew more than 12 percent in constant dollars, pricing was generally flat. Commercial P&C market conditions globally are stable but growing more competitive. This is not a surprise – we are a disciplined organization and prepared. Given our excellent diversification by product, geography and distribution, many areas of our business have attractive growth prospects, and as a result we are confident in our ability to outperform.”

Source: ACE Group

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