Ace Returns To The Black In Third Quarter

By Michael Ha

NU Online News Service, Oct. 29, 4:30 p.m.EST?Bermuda-based insurer ACE Ltd. reported $355 millionfor its third-quarter profit, reversing a net loss of $57 millionposted one year ago when the company suffered $205 million in netrealized losses.

In contrast, ACE posted $51 million in net realized investmentgains for this third quarter.

The company also reported overall improvements in itsunderwriting results. It posted $2.3 billion in net premiumswritten for the quarter, a 4 percent jump from the year-ago period,while net premiums earned rose 24.5 percent to reach $2.4 billioncompared to one year ago.

The company's overall combined ratio also improved, falling to91.4 percent from 97.7 percent reported one year earlier.

Excluding the gains and losses, ACE's third-quarter operatingincome more than doubled to $304 million from $148 million reportedone year ago.

"We had a very good quarter. All of our property-casualtybusinesses--in the United States, Europe and Asia--and both directand reinsurance, had a very good quarter," Brian Duperreault, chiefexecutive officer at ACE, told National Underwriter.

"Growth rates were in the 20-plus percent range. Combined ratioswere also good--we produced record earnings," he said.

Mr. Duperreault also commented that the company's investmentincome is starting to pick up, "as the buildup in our investmentassets starts to show in terms of investment income. So across theboard, it was pretty good results."

Commenting on ACE's improved operating income, Mr. Duperreaultadded that "it's a combination of more premium income producingbetter underwriting results--the underwriting was significantlybetter than what it was this time last year."

He also pointed out that ACE suffered from relatively lowcatastrophe losses this quarter. The CAT losses for the quartertotaled $42 million, 1.9 percent of p-c earned premiums, which isless than half of the $100 million, or 6.7 percent of p-c earnedpremiums, recorded last year.

"Last year, ACE suffered from some large catastrophes,particularly the European floods. But we had less catastrophes thisthird quarter," Mr. Duperreault explained. "So the combination ofmore premium income, less catastrophes, better overall resultsexcluding catastrophes and the investment income growth allcombined to produce strong earnings."

Mr. Duperreault also commented on the high-priced market, notingthat he sees a continuing divergence between rates for casualty andproperty lines and that casualty rates are still climbing.

"The trends haven't changed from last quarter. Property ratesremain somewhat flat--they are up a little bit in Europe. Butcasualty rates continue to go up--maybe not at the same pace as atthe end of second quarter, but they are still going up. So we arecontinuing to see this divergence," he said.

"We believe property rates are still quite good, and casualtyrates probably need to continue to go up."

ACE Limited sells property-casualty insurance and reinsurance inthe United States and about 50 other countries through itssubsidiaries.