NU Online News Service, July 28, 3:55 p.m. EDT

Zurich, Switzerland-based ACE Limited reported yesterday that quarterly net income fell 28 percent, but management pointed to an improvement in book value and pricing.

Net income in the second quarter was $535 million compared with $746 million for the period last year, or $1.58 per share, compared with $2.18 per share for the same 2008 period.

“ACE had a very good second quarter and an excellent first half. Book value increased $1.8 billion or 12 percent in the quarter, benefiting from improved financial market conditions and strong earnings,” said Evan G. Greenberg, ACE chairman and chief executive officer, in a statement.

He noted that company return on equity was 18 percent and p&c combined ratio improved to 87.7 from 87.8.

Mr. Greenberg, during a teleconference with analysts, said in addition to careful expense and investment management, the insurer is “repositioning our products and marketing programs to have greater appeal to individuals and companies in recessionary times.”

He advised that reinsurance property risk prices are up 5 percent, and rates overall for international p&c insurance are up 2 percent.

“In the United States, right now I think the market will continue to firm for us, but slowly. In the U.K., same thing; Australia seems to have accelerated a little more rapidly. The continent of Europe is firming more slowly, but it also got softer more slowly. It’s a more orderly and slower-to-react market. Beyond that, I can’t read the tea leaves right now,” said Mr. Greenberg.

Among financial highlights mentioned by the company:

o Net p&c premiums written and earned, which include international accident and health, decreased 5 percent. Excluding the impact of foreign exchange, net p&c premiums written and earned increased 1 percent and 2 percent, respectively.

o The p&c pre-tax underwriting income decreased 5 percent to $355 million compared with $373 million. Adjusting for the impact of foreign exchange, p&c pre-tax underwriting income increased 3 percent.

o The p&c expense ratio increased by 0.2 percentage points. Excluding accident and health, the p&c expense ratio decreased 0.4 percentage points.

o Operating cash flow was $760 million.

o Net loss reserves increased $192 million, excluding foreign exchange valuation.

o Net investment income decreased 5 percent to $506 million from $532 million. Invested assets increased 6 percent to $43.7 billion.

o Insurance-North American net premiums written decreased 4 percent. The combined ratio was 90 compared with 89.5.

o Global reinsurance net premiums written increased 22 percent. The combined ratio was 48.2 compared with 68.6.

o Life net premiums written decreased 2 percent. Adjusting for the impact of foreign exchange, they increased 1 percent. Income excluding net realized gains (losses) was $66 million.