Bermuda’s ACE Limited has announced the following earnings guidance for the ACE Group of Companies for the full year 2008:
— Earnings per Common Share are expected to range between $7.00 and $7.50.
— Property & Casualty Net Earned Premiums are expected to decline 3 percent to 5 percent.
— Catastrophe Losses included in our estimated earnings are $400 million pre-tax ($315 million after-tax).
ACE noted that the “guidance does not include the impact of the Combined Insurance Company of America transaction, announced December 17, 2007. Pending the closing of that transaction, which is anticipated to occur in the second quarter of 2008, the Company will provide updated guidance.”
Due to the ongoing global credit difficulties, triggered by the subprime mortgage crisis, ACE produced a highly detailed disclosure on the composition of its fixed income investment portfolio. The Company stated as follows:
— ACE holds no collateralized debt obligations (CDOs) or collateralized loan obligations (CLOs) in its portfolio.
— Sub-prime asset-backed holdings have been reduced to $137 million from $257 million as reported on September 30, 2007, with no significant gain or loss.
— The Company’s relationship with Assured Guaranty Ltd. (AGO) is limited to its equity investment, valued at $445 million as of September 30, 2007. The Company conducts no financial guaranty business directly or with AGO and retains no financial guaranty exposures with AGO.
— As of September 30, 2007, the value of the Company’s high-yield corporate bond holdings was $2.6 billion, representing 6.5 percent of the total fixed income portfolio. The high-yield holdings are actively managed, targeted to the ‘BB/B’ or “upper tier” sectors, and are broadly diversified with over 525 issuers. In addition, the portfolio guidelines restrict issuer limits to 1.5 percent, industry limits to 15 percent and do not allow the purchase of ‘CCC’ rated securities.
CFO Philip V. Bancroft explained: “Due to the extraordinary conditions in the global credit markets, we are providing this additional disclosure to our investors to increase overall transparency. As we believe the facts demonstrate, our investment portfolio is conservatively managed with a high average credit quality of ‘AA’ and a duration of 3.6 years. Quarter-to-date, the overall marked-to-market effect on our fixed income portfolio is positive.”
Additional details on the mortgage-backed and asset-backed components of ACE’s investment portfolio are can be obtained in the full release at: www.acelimited.com.
December 18, 2007 /NR/rdonlyres/54EFE3CE-DC60-4F18-A286-F0081CEB9C3B/29902/ACEAnnouncesGuidancefor2008December2007.pdfview pdf version
Source: ACE Limited – www.acelimited.com
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