ACE Limited’s (ACE) fourth quarter earnings of $2.01 per share were well ahead of the Zacks Consensus Estimate of $1.93. The company posted earnings of $1.86 a share a year earlier. Results were primarily driven by an increase in premiums earned.
Including net realized gains and losses, ACE reported a net income of $953 million or $2.81 per share compared with $20 million or 6 cents per share in the year-ago quarter. The company has experienced a significant gain in investments compared to losses in the year-ago quarter.
Results in the reported quarter included an investment gain of $373 million ($270 million net of tax) while the year-ago period experienced an investment loss of $644 million ($604 million net of tax).
For the full year 2009, ACE reported net income of $2.55 billion or $7.55 per share, up from $1.19 billion or $3.50 per share. Excluding net realized gains and losses, operating earnings came in at $8.17 per share, compared with $7.67 per share for 2008.
For the reported quarter, net premiums written were up 8% year-over-year to $3.31 billion while net premiums earned rose 5% to $3.39 billion. Excluding the foreign exchange impact, net premiums written and earned increased 4% and 1%, respectively.
ACE reported an underwriting income of $313 million compared with $375 million a year ago. Combined ratio deteriorated to 89.6% from 86.9% reported in the year-ago quarter. Though catastrophe losses were low compared to the prior year quarter, the company experienced relatively low favorable prior period reserve development in the reported quarter than in the year-ago quarter.
Catastrophe losses were $23 million in the quarter, compared with $67 million in the year-ago quarter. Favorable prior period reserve development was $147 million compared with $252 million in the year-ago period.
Investment income was down 2% from the prior-year period to $512 million. Net realized and unrealized gains after tax from its investment portfolio totaled approximately $170 million. Book value per share were up 5% sequentially and 35% year-over-year to $58.44.
Segment Performance
Insurance – North American segment reported an increase of 9% year-over-year in net premiums written, primarily due to a large single transaction. Excluding that, the premiums were up 2% from the prior-year quarter. The combined ratio deteriorated to 89.5% from 83.0% reported in the same quarter last year.
Insurance – Overseas General segment reported an increase of 8% year-over-year in net premiums written, primarily reflecting the positive impact of foreign exchange movements. Excluding this impact, premiums were flat compared to the prior-year quarter. The combined ratio was 90.3%, almost flat compared to 90.7% in the year-ago quarter.
Global Reinsurance segment reported a 14% increase in net premiums written. The combined ratio improved to 67.1% from 72.3% reported in year-ago period.
Life Insurance and Reinsurance segment reported a 5% year-over-year increase in net premiums written. Underwriting income increased to $104 million compared with $21 million.
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