Ace profits rise as claims fall

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Combined ratio of 88.3% helps boost profits

ACE reported a full year net income rise of 6.5% to $2,759m on a 9% rise in Q4 premiums and a combined ratio for the year of just 88.3%.

Full Year highlights (2008 in brackets)

Net income $2,549m ($1,197m)
Net realized gains/losses, net of tax -$210m (-$1,394m)
Income excluding net realized gains/losses, net of tax $2,759m ($2,591m) Combined ratio 88.3% (89.6%)

Fourth Quarter highlights (2008 in brackets)

P&C pre-tax underwriting income $313m ($375m)
Net income $953m ($20)
Net realized gains/losses, net of tax $270m (-$604m)
Income excluding net realized gains (losses), net of tax $683m ($624m)
Combined ratio 89.6% (86.9%)

Evan Greenberg, chairman and chief executive officer said: “ACE had very strong fourth quarter income. Operating income was up 9% over prior year, contributing to record income for the year, and net income exceeded $900 million for the quarter.

“Our book value grew 36% in the year while tangible book grew 47%; both are now at all-time highs. In fact, over the last five years, we have grown our book and tangible book value at a compound annual rate of 15% and 17%, respectively.

“Our P&C combined ratio for 2009 was 88.3% – a world-class result – and in terms of capital efficiency, we achieved an operating return on equity for the year of more than 16%. We are confident we can continue to produce superior ROEs barring unforeseen events.

More opportunities

“P&C net written premiums were up about 9% in the quarter – a very solid performance that reflects the benefit of foreign exchange.

“While premium revenue growth will continue to be impacted by recessionary and competitive insurance market conditions, we are seeing more opportunities for profitable growth as a result of our increased geographic and product presence.

“In spite of the year’s challenging economic, financial and insurance market conditions, we continued to invest in our company and benefit from our local presence in over 50 countries, from customer and producer flight to quality and capability, and from our diversified mix of P&C, A&H and Life businesses. We fully expect to continue delivering superior results.”

Insurance-North American

Net premiums written increased 9%. Excluding large single transactions written in the quarter, net premiums written increased 2%. The combined ratio was 89.5% compared with 83.0%.

Insurance-Overseas General

Net premiums written increased 8%. Adjusting for the impact of foreign exchange, they remained flat. The combined ratio was 90.3% compared with 90.7%.