ACE Reports $827 Million Q4 Operating Income; $3.3 Billion Full-Year

January 29, 2015

ACE Limited reported Q4 operating Income of $827 Million and record full-year Earnings of $3.3 Billion, up 4.7 percent per share. Net income for the fourth quarter ended December 31, 2014, was $1.66 per share, compared with $2.90 per share for the same quarter last year. The difference was primarily due to including figures for net realized losses in the calculation.

Other highlights included the following:
– Operating ROE of 11.8 percent for the Quarter and 12 percent for the Year;
– Full-Year P&C Combined Ratio of 87.7 percent versus 88 percent Last Year
– Global P&C net premiums written, which exclude Agriculture, up 5.8 percent for the quarter and 6.9 percent for the year in constant dollars
– P&C underwriting income up 7.1 percent for the quarter and 7.2 percent for the year, driven by strong current accident year underwriting income excluding catastrophe losses, up 23.3 percent for the quarter and 13 percent for the year; current accident year combined ratio excluding catastrophe losses of 89.5 percent for the quarter and 89.3 percent for the year
– Record net investment income of $577 million for the quarter; for the year, net investment income of $2.3 billion, up 5.1 percent
– Full-year operating cash flow of $4.5 billion
– In the quarter, unfavorable foreign currency movement negatively impacted book value by $596 million and reduced Global P&C net premiums written growth by 2.8 percentage points

Chairman and CEO Evan G. Greenberg commented: “ACE had excellent operating results for the fourth quarter which contributed to another record year. Quarterly and annual results were driven by growth in both underwriting and investment income. Record full-year after-tax operating income of $3.3 billion was up 4.7 percent per share with a strong operating ROE of 12 percent.

“Our P&C combined ratio was 88.5 percent for the quarter and 87.7 percent for the year with fourth quarter and full-year underwriting income both up over 7 percent. Our excellent underwriting results were driven by a particularly strong current accident year performance, which reflects the fundamental strength of our current year business. Current accident year underwriting income excluding catastrophes was up 23 percent for the quarter and 13 percent for the year.

“Net investment income was a record $577 million in the quarter and $2.3 billion for the year, up more than 5 percent. We benefited from strong operating cash flow and achieved an exceptional result given the historically low interest rate environment.

“For the quarter and year, global P&C net premiums written grew about 6 percent and 7 percent, respectively, on a constant-dollar basis with the strong dollar negatively impacting growth by about 2.8 percentage points in the quarter and 1.2 percentage points for the year. Per share book value declined modestly in the quarter and grew 6.1 percent for the year with foreign exchange negatively impacting book value by $596 million in the quarter and $747 million for the year. Excluding foreign currency movement, book value per share grew 8.8 percent for the year.

“There has been a rapid investor flight to the dollar in search of safety, driven by the decline in oil prices, economic uncertainty in many countries and regions, and geopolitical tensions. ACE is a truly global multinational insurer, and we are dollar-based. Our diversified presence, product and customer capabilities, and distribution focus in 54 countries are a unique source of earnings strength that enables us to take advantage of so many opportunities around the globe over time.

“In the quarter, we closed our acquisition of the large corporate P&C business of Brazil’s Ita├║ Seguros and announced our intention to purchase the U.S. high net worth personal lines business of Fireman’s Fund. These are just two of many investments we made last year in the future of our company that will strengthen our presence and capabilities and increase our ability to produce sustainable outperformance. We are off to a good start in January and we remain confident in our strategy and are relentless in our drive to execute with excellence.”

Source: ACE Limited

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