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 million for its third-quarter profit, reversing a net loss of $57 million posted one year ago when the company suffered $205 million in net realized losses.

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

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

The company's overall combined ratio also improved, falling to 91.4 percent from 97.7 percent reported one year earlier.

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

"We had a very good quarter. All of our property-casualty businesses--in the United States, Europe and Asia--and both direct and reinsurance, had a very good quarter," Brian Duperreault, chief executive officer at ACE, told National Underwriter.

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

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

Commenting on ACE's improved operating income, Mr. Duperreault added that "it's a combination of more premium income producing better underwriting results--the underwriting was significantly better than what it was this time last year."

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

"Last year, ACE suffered from some large catastrophes, particularly the European floods. But we had less catastrophes this third quarter," Mr. Duperreault explained. "So the combination of more premium income, less catastrophes, better overall results excluding catastrophes and the investment income growth all combined to produce strong earnings."

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

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

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

ACE Limited sells property-casualty insurance and reinsurance in the United States and about 50 other countries through its subsidiaries.

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Ace Returns To The Black In Third Quarter

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