ACE reports strong Q2 results

ACE has reported a Q2 net income of $677m, up from $535m taking half-year net income to $1,432m compared with $1,102m.

It managed a Q2 combined ratio of 89.7%, up from 87.7%, despite more than doubling catastrophe losses.

Q2 figures $m (2009 in brackets)

• Net income 677 (535)
• Net realized gains/losses, net of tax -11 (-171)
• Income excluding net realized gains/losses, net of tax 688 (706)
• Property and casualty (P&C) combined ratio 89.7% (87.7%).
• 1H figures $m (2009 in brackets)
• Net income 1,432 (1,102)
• Net realized gains/losses, net of tax 165 (-273)
• Income excluding net realized gains/losses, net of tax 1,267 (1,375)
• P&C combined ratio 91.2%.

Evan Greenberg, chairman and chief executive officer, said: “ACE had an excellent second quarter and first half. In the quarter, we produced operating income of $688m and grew book value per share by almost 4%, and 8% year to date. Our operating ROE for the quarter was 13.8%.

“For the industry, this was an active quarter for natural catastrophes in the US, and for ACE, our total catastrophe losses were double the amount from the prior year. I believe our combined ratio of 89.7% speaks to our risk management, balance of operations, overall reserve strength and underlying underwriting performance.

“Slow economic recovery in the major developed economies of the United States, Europe and Japan and competitive global insurance markets impacted total premium growth, and I expect these conditions will be with us for some time.

“However, we continue to identify and realise opportunities for profitable growth as a result of our on-the-ground local presence globally and a broad specialty-oriented product capability.

Operating highlights included

• Net premiums written were flat and net premiums earned decreased 1%. Excluding the impact of foreign exchange, net premiums written decreased 2% while net premiums earned decreased 3%. Adjusting for a large loss portfolio transaction written in 2009 and lower crop written premium than in 2009, the growth rate in constant dollars was 2%.
• Total catastrophe losses were $81m including reinstatement premiums compared with $31m for the second quarter of 2009. Net after-tax catastrophe losses were $62m compared with $24m for the second quarter of 2009.
• Favourable prior period development pre-tax was $149m, compared with $158m in 2009.
• P&C underwriting income was $294m compared with $355m in 2009.
• Operating cash flow was $868m.
• Net loss reserves decreased $286m. Excluding foreign exchange valuation, net loss reserves decreased $33m.
• Net investment income increased 2% to $518m.
• Annualized operating return on average equity was 13.8%.

Key segments included:

• Insurance-North American: Net premiums written decreased 1%. The combined ratio was 90.3% compared with 90.0%.
• Insurance-Overseas General: Net premiums written increased 3%. Adjusting for the impact of foreign exchange, they decreased 1%. The combined ratio was 90.9% compared with 89.8%.
• Global Reinsurance: Net premiums written decreased 12%. The combined ratio was 64.7% compared with 48.2%.