Bermuda-based Ace Ltd. reported second quarter net income for the insurer increased 23 percent to $573 million from $467 million in the comparable year-ago period.

But even as it posted better than expected earnings, the company warned of slowing top-line growth.

Morgan Stanley analyst William Wilt put the earnings upside surprise at 10 percent.

The company posted a combined ratio of 87.8 compared to 90.3 a year ago, while net premiums increased 6 percent over the prior year period.

ACE Chairman Evan Greenberg said premium growth reflected global conditions, "which in all remain favorable but mixed."

He said he would continue the policy of "capitalizing on opportunities when they make economic sense and walking away from business when they do not."

Bear Stearns analyst David Small said the better than expected earnings rise was driven by a 61.1 loss ratio, lower administrative expenses and a lower tax rate.

Amid all the good news, the carrier did lower its predictions for the range of top-line growth to 2 percent to 3 percent, from 6 percent to 8 percent.

"The implication may be that ACE sees fewer profitable growth opportunities given written premiums grew by almost 6 percent in the quarter," Mr. Small wrote.

Despite an annualized return on equity of almost 20 percent, Mr. Small expressed concern about limited new business opportunities and a deteriorating pricing environment.

"ACE has recently benefited from favorable loss cost trends in liability lines, but we do not anticipate these trends will last and anticipate that lower pricing, as it has historically done, will lead to margin compression," he wrote.

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ACE Posts 23% Profit Rise

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