ZURICH--Apr 24, 2012--(BUSINESS WIRE)--ACE Limited (NYSE: ACE) today reported net income for the quarter ended March 31, 2012, of $2.84 per share, compared with $0.73 per share for the same quarter last year.(1) Income excluding net realized gains (losses) was $2.05 per share, compared with $0.76 per share for the same quarter last year.(2) Book value and tangible book value increased 4.5% and 5.3%, respectively, from December 31, 2011. Book value and tangible book value per share now stand at $75.09 and $60.74, respectively. Annualized operating return on equity for the quarter was 12.2%.(2) The property and casualty (P&C) combined ratio for the quarter was 89.2%.
|First Quarter Summary|
|(in millions, except per share amounts)|
|(Per Share - Diluted)|
|Net realized gains (losses), net of tax||272||(9||)||NM||0.79||(0.03||)||NM|
|Income excluding net realized gains|
|(losses), net of tax (2)||$||701||$||259||171||%||$||2.05||$||0.76||170||%|
Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, commented: “ACE had a good first quarter and strong start to the year. After-tax operating income topped $700 million and our operating ROE surpassed 12%. Book value grew 4.5% in the quarter. Our balance sheet is in excellent shape – capital now exceeds $30 billion and shareholders’ equity exceeds $25 billion.
“Our underwriting results were simply excellent as demonstrated by a P&C combined ratio of 89.2%. We and much of the industry benefited from relatively light catastrophe losses in the quarter, particularly compared to prior year. It’s noteworthy that our operating income excluding catastrophes was up 2% over the first quarter last year. As for revenue, total company net premiums written grew 3.7% in the quarter, right in line with our plans. We expect our company’s premium growth rate to accelerate as the year progresses.
“Insurance rates were in line with or marginally better than our expectations. In fact, this was the strongest quarter yet for rate increases, which were more broad-based. Rates on our U.S. business were up 3.6% on average. We benefited from improved pricing in many of our property-related classes and modestly improved pricing in certain casualty classes. As a result, our customer retention rates improved globally and we incrementally increased our new business writings. At the same time, we continued to shed lines of business, particularly U.S. general market workers’ compensation, where pricing for some time has not met our standards for earning an underwriting profit.”
Operating highlights for the quarter ended March 31, 2012, were as follows: (1)
Details of our financial results for our business segments are available in the ACE Limited Financial Supplement. Key segment items for the quarter ended March 31, 2012, include:
The company is issuing updated guidance for full-year 2012 to account for the positive first quarter prior period reserve development and the lower-than-planned catastrophe losses realized in the first quarter. The range is $7.03 to $7.43 per share in after-tax operating income for the year. This includes estimated catastrophe losses of $325 million after tax for the second through fourth quarters.
Please refer to the ACE Limited Financial Supplement, dated March 31, 2012, which is posted on our website in the Investor Information section, and access Financial Reports for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio and capital structure.
ACE will host its first quarter earnings conference call and webcast on Wednesday, April 25, 2012, beginning at 8:30 a.m. Eastern. The earnings conference call will be available via live and archived webcast atwww.acegroup.com or by dialing 888-300-2343 (within the United States) or 719-325-2204 (international); passcode 4955002. Please refer to the ACE Limited website in the Investor Information section under Calendar of Events for details. A replay of the call will be available until May 9, 2012. To listen to the replay, dial: 888-203-1112 (in the United States) or 719-457-0820 (international); passcode 4955002.
The ACE Group is one of the world’s largest multiline property and casualty insurers. With operations in 53 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Limited, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index. Additional information can be found at: www.acegroup.com.
(1) All comparisons are with the same period last year unless specifically stated.
(2) Non-GAAP Financial Measures:
Operating income or income excluding net realized gains (losses), net of tax is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) and net realized gains (losses) included in other income (expense) related to partially-owned entities because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities.
Underwriting income is calculated by subtracting losses and loss expenses, policy benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting income and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other income (expense), interest and income tax expense and net realized gains (losses). Life underwriting income includes net investment income and gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under generally accepted accounting principles (GAAP). P&C underwriting income and consolidated underwriting income are non-GAAP financial measures. We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
Annualized operating return on equity (ROE) or annualized ROE calculated using income excluding net realized gains (losses) is a non-GAAP financial measure. The ROE numerator includes income adjusted to exclude net realized gains (losses), net of tax. The ROE denominator includes the average shareholders' equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. To annualize a quarterly rate, multiply by four. Annualized ROE calculated using income excluding realized gains (losses) is a useful measure as it enhances the understanding of the return on shareholders' equity by highlighting the underlying profitability relative to shareholders' equity excluding the effect of unrealized gains and losses on our investments.
Book value per common share is shareholders’ equity divided by the shares outstanding.
Tangible book value per common share is shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.
Operating effective tax rate or effective tax rate on income excluding net realized gains (losses) is a non-GAAP financial measure.
See reconciliation of Non-GAAP Financial Measures on pages 20-21 in the Financial Supplement. These measures should not be viewed as a substitute for net income, return on equity, or effective tax rate determined in accordance with GAAP.
(3) Refer to the Financial Supplement page 1 for further detail.
NM – not meaningful comparison
Cautionary Statement Regarding Forward-Looking Statements:
Forward-looking statements made in this press release, such as those related to company performance and guidance, economic outlook and insurance market conditions, reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, integration activities and performance of acquired companies, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, rating agency action, possible terrorism or the outbreak and effects of war, and economic, political, regulatory, insurance and reinsurance business conditions, as well as management’s response to these factors, and other factors identified in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(tables to follow)
|Summary Consolidated Balance Sheets|
|(in millions of U.S. dollars, except per share data)|
|March 31||December 31|
|Insurance and reinsurance balances receivable||4,487||4,387|
|Reinsurance recoverable on losses and loss expenses||12,057||12,389|
|Unpaid losses and loss expenses||$||37,247||$||37,477|
|Total shareholders' equity||25,431||24,332|
|Total liabilities and shareholders' equity||$||89,749||$||87,321|
|Book value per common share (2)||$||75.09||$||72.22|
|Summary Consolidated Financial Data|
|(in millions of U.S. dollars, except share, per share data, and ratios)|
|Three Months Ended|
|Gross premiums written||$||4,787||$||4,644|
|Net premiums written||3,572||3,446|
|Net premiums earned||3,381||3,309|
|Losses and loss expenses||1,804||2,263|
|Policy acquisition costs||582||559|
|Underwriting income (loss)(2)||338||(103||)|
|Net investment income||544||544|
|Net realized gains (losses)||260||(45||)|
|Other income (expense):|
|Gains from fair value changes in separate account assets(2)||18||-|
|Income tax expense||110||96|
|Diluted earnings per share:|
|Income excluding net realized gains (losses) (2)||$||2.05||$||0.76|
|Weighted average diluted shares outstanding||341.7||339.7|
|Loss and loss expense ratio||56.9||%||73.7||%|
|Policy acquisition cost ratio||17.4||%||16.7||%|
|Administrative expense ratio||14.9||%||14.8||%|
|Consolidated Supplemental Segment Information|
|(in millions of U.S. dollars)|
|Three Months Ended|
Gross Premiums Written
|Insurance - North American||$||2,012||$||1,958|
|Insurance - Overseas General||1,984||1,908|
Net Premiums Written
|Insurance - North American||$||1,293||$||1,285|
|Insurance - Overseas General||1,528||1,410|
Net Premiums Earned
|Insurance - North American||$||1,287||$||1,346|
|Insurance - Overseas General||1,391||1,278|
Income Excluding Net Realized Gains (Losses) (2)
|Insurance - North American||$||334||$||263|
|Insurance - Overseas General||214||9|