ACE Limited’s earnings report showed a 14 percent drop in fourth quarter net earnings to $572 million, down from $665 million in the same period of 2006. The Company posted Q4 investment losses of $134 million. Operating earnings for the period, however, rose 8 percent to $693 million from $643 million in Q4 2006.
Full year net earnings were up 12 percent to a record $2.578 billion, while full year operating earnings rose 15 percent to $2.712 billion.
Net income for the year was $7.66 per share, an increase of 11 percent over prior year. For 2007, income, excluding net realized gains (losses) and cumulative effect of an accounting change, was $8.07 per share, compared with $7.05 per share for 2006. The combined ratio for the year was 87.9 percent, compared with 88.1 percent for 2006. Book value increased 17 percent and return on equity for the year was 17.9 percent.
ACE also cited the following “earnings highlights:”
— Net premiums written declined 1.3 percent over the prior year quarter and 0.4 percent over the full year.
— Net premiums earned increased 1 percent over the prior year quarter and 4 percent over the full year.
— The P&C combined ratio for the quarter was 88.1 percent compared with 88.2 percent in the prior year quarter; for the full year the P&C combined ratio was 87.9 percent compared with 88.1 percent for 2006.
— P&C underwriting income was $351 million for the quarter and $1.4 billion for the full year.
— Operating cash flow amounted to $823 million for the quarter and $4.7 billion for the full year.
— Invested assets increased by $5.1 billion or 14 percent during the year to $42.3 billion.
— Net loss reserves increased 8 percent for the full year to $22.7 billion.
— Net investment income increased 18 percent over the prior year quarter and 20 percent for the year to $1.9 billion.
— Shareholders’ equity increased 17 percent for the year to $16.7 billion.
— Tangible equity(1) rose to nearly $14 billion, an increase of 21 percent from year-end 2006.
— Return on average equity for 2007 was 17.9 percent; excluding FAS 115, it was 18.6 percent.(2)
— Book value per share increased 4 percent from September 30, 2007, and 16 percent for the year to $48.89.(4)
Chairman and CEO Evan Greenberg, commented: “ACE had a strong fourth quarter that capped an excellent year for the Company. All areas of the Company performed well, and the financial markets crisis had a relatively modest impact on our results. For the year, we achieved record net income and net operating income, which increased 12 percent and 15 percent, respectively, while book value per share increased 16 percent. (4) In December we announced two acquisitions that will further diversify and contribute to ACE’s future earnings. Looking ahead, we are well positioned to manage through an increasingly difficult environment marked by continuing volatility in the financial markets, deteriorating economic fundamentals and a softening property and casualty market.”
The full earnings results and references to the notes indicated may be obtained on the Company’s web site located at: www.acelimited.com.
ACE will hold its year-end, fourth quarter earnings conference call today, Wednesday, February 6, 2008, beginning at 8:30 a.m. Eastern Time. The earnings conference call will be available via live and archived web cast will be available on the web site, or by dialing 888-819-8006 (within the United States) or 913-312-0823 (international).
A replay of the call will be available for approximately one month. To listen to the replay, please dial 888-203-1112 (in the United States) or 719-457-0820 (international); passcode for live and archived conference call is 6462453.
Source: ACE Limited
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