HAMILTON, Bermuda, July 27, 2004
ACE Limited (NYSE: ACE) today reported net income for the second quarter ended June 30, 2004 of $413 million or $1.41 per share, compared with net income of $371 million or $1.32 per share for the same quarter last year.
Income excluding net realized gains (losses) for the second quarter increased 33% to $380 million, or $1.29 per share, compared with $286 million or $1.01 per share for the same quarter of last year.
(1)
Evan Greenberg, President and Chief Executive Officer of ACE Limited, commented: "This was an excellent quarter.
All of our business segments performed well, which is a reflection of the investments we have made to increase both our product capability and physical presence globally.
In light of a softening market, I remain confident in our ability to perform given our underwriting discipline and the diversity of our business opportunities."
Other second quarter operating highlights were as follows:
-
Net premiums written increased 19% to $2.9 billion, reflecting P&C net premium growth of 25% over 2003
-
The P&C combined ratio improved to 89.0% for the quarter compared with 91.7% a year ago
-
Operating cash flow amounted to approximately $1.1 billion for the quarter
-
Cash and invested assets increased by $546 million from March 31, 2004
-
Net investment income increased 12% to $236 million.
P&C net investment income increased 24% over 2003
-
Shareholders' equity decreased 2% from
March 31, 2004
, principally because unrealized losses on investments exceeded net income
-
Tangible equity decreased to $6.6 billion, a reduction from
March 31, 2004
of 1%
-
Debt to total capital ratio rose to 19.8% from 16.1% at
March 31, 2004
.
In June 2004, the Company sold $500 million of 10-year senior debt with a 5.875% coupon.
The proceeds of this debt were used in July to redeem $75 million of callable debt and will be used in August to refinance a maturing $400 million bond.
-
Annualized return on ordinary equity for the quarter ended June 30, 2004 was 16.9%; excluding FAS 115, it was 17.7%
-
Diluted book value per ordinary share as of June 30, 2004 decreased 3% to $30.46
from March 31, 2004
(2)
Financial results improved over the prior year's results for virtually every business segment.
Further details are available in the financial supplement.
Key items include:
-
Insurance-North American: Net premiums written increased 37% and the combined ratio improved to 90.3%
-
Insurance-Overseas General: Net premiums written increased 21% (11% after foreign exchange impact) and the combined ratio improved to 89.3%
-
Global Reinsurance: Net premiums written were up 6% and this segment's combined ratio improved to 76.1%
-
Financial Services (adjusted for Assured Guaranty): Income excluding realized gains (losses) increased 37% and the combined ratio improved to 80.6%
On April 28, 2004, the Company completed the sale of 65.3 percent of its financial and mortgage guaranty reinsurance and insurance businesses through the initial public offering (IPO) of 49 million common shares of Assured Guaranty Ltd. at $18.00 per share.
The Company received total proceeds of approximately $1.035 billion.
This comprised $835 million of net offering proceeds and a return of capital of $200 million.
This was a beneficial transaction for ACE as it enabled capital to be reallocated to higher growth, higher ROE businesses and reduced its overall credit exposure.
As a result of the transaction, the Company's book value declined by approximately $61 million, comprising an $18 million after tax loss and a $43 million reduction to other comprehensive income, representing a reclassification of previously unrealized investment gains to income.
Please refer to the ACE Financial Supplement June 30, 2004, which is posted on the Company's website, for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, loss on sale of Assured Guaranty, investment portfolio and capital structure.
ACE's website reference (url) is
http://media.corporate-ir.net/media_files/nys/ace/reports/fin_supp_june_30_2004.xls. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.)