New York-listed insurer ACE expects its fourth quarter net operating income to fall below expectations due to an $80m (£55.6m) increase in property losses and $50m (£34.8m) spent on strengthening loss reserves.
The property losses were incurred in its European Commercial Property portfolio, while the loss reserve strengthening occurred mainly in its international casualty operations.
ACE expects to report its quarterly earnings on Wednesday, 13 February 2002.
The company reported a loss of $442.6m (£307m), or $1.95 per share, in the third quarter, dragged down by a loss of $558.8m (£388m) from the 11 September terrorist attacks.
Reuters reported that analysts surveyed by forecasting firm Thomson Financial/First Call were expecting ACE to earn between $0.56 per share and $0.72 per share in the fourth quarter, with a mean estimate of $0.66 per share.
ACE chairman and chief executive Brian Duperreault said: "We experienced a pattern of increased frequency and severity within our European Commercial Property portfolio.
"In response to these adverse results we have tightened underwriting controls and significantly increased prices. We believe the changes made will permit us to realize our financial objectives for this unit in 2002.
"We also carefully reviewed the development of our international casualty portfolio and determined an increase in reserves was warranted.
"The balance of our business segments have performed as expected and we do not expect the issues affecting the fourth quarter to carry forward into the new year."
