ACE's earnings fell 60% in the fourth quarter of last year.
The company reported earnings of $46.3m (£32.2m) for the last three months of the year, down from $113.8m (£79.4m) in the same period the previous year.
For 2001 as a whole, ACE made a net loss of $146.4m (£102m), compared to a net profit of $543m (£381m) the year before.
The loss is equivalent to 74 cents a share for the Bermuda-based insurer and reinsurer.
Net premiums written for the fourth quarter rose 83% globally to $1.9bn (£1.3bn), up from $1bn (£700m) in 2000. Net premiums written for the full year 2001 rose by 30% to $6.4bn (£4.49bn) compared to $4.9bn (£3.4bn) in 2000.
ACE Europe and ACE Global Markets president and chief executive Gary Schmalzriedt told Insurance Times the fall in earnings was down to large losses and previously soft market conditions.
He said: "The pricing was inferior or was not adequate, and you have to couple that with a rash of large losses in September and October, which we thought was unusual."
The company confirmed an $80m (£56.2m) rise in losses from European property cover and took a $50m (£35m) charge to its balance sheet to boost reserves.
Schmalzriedt said: "We thought it was prudent on the casualty side, which includes financial lines to some extent, to shore up our reserves on a global basis."
The company's combined ratio - the cost of claims and expenses compared to income from premiums - rose to 111.6%.
But Schmalzriedt said the outlook was "extremely positive".
He said rates for insuring standard property risks had increased about 40% and commercial casualty had increased about 30%.
He said: "In large global business, particularly property, you have to speak in terms of multiples and that's true of energy as well."
He was "very bullish" about the prospects for ACE's Lloyd's operation
