ACE Limited Reports Record First Quarter Operating Income; Net Investment Income Increased 19%.HAMILTON Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. , Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the -- ACE Limited (NYSE NYSESee: New York Stock Exchange :ACE) today reported net income for the first quarter ended March 31, 2005 of $433 million or $1.46 per common share after payment of preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) , compared with net income of $447 million or $1.53 per share for the same quarter last year. Income excluding net realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. (losses) for the first quarter was $441 million, or $1.49 per share, compared with $411 million or $1.40 per share for the same quarter a year ago.(1)
First Quarter Summary
(in millions, except share and per share amounts)
(Per Share-Diluted)
2005 2004 Change 2005 2004 Change
----------------- -------------------
Net income $433 $447 (3)% $1.46 $1.53 (5)%
Net realized gains (losses),
net of tax (8) 36 - (0.03) 0.13 -
Income excluding net realized
gains (losses), net of tax (1) 441 411 7% 1.49 1.40 6%
Evan Greenberg Green·berg , Joseph Harold Born 1915. American linguist. His influential works include Languages of Africa (1966) and Language Universals (1966). Noun 1. , President and Chief Executive Officer of ACE Limited, commented: "This was a very good quarter for ACE. We had record operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , led by substantial increases in earned premiums Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. and net investment income, and excellent P&C underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. results as reflected in a combined ratio of 89.2%. Our written premium growth rate is naturally slowing in line with a softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. rate environment and our determination to maintain underwriting discipline." Other first quarter operating highlights were as follows: --P&C net earned premiums increased 15% over the prior year quarter --The P&C combined ratio was 89.2% for the quarter compared with 88.4% a year ago --Operating cash flow amounted to $1.2 billion for the quarter --Invested assets increased by $756 million from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2004 --Net investment income increased 19% to $284 million over the prior year quarter --Shareholders' equity increased to $9.9 billion from year-end 2004 --Tangible equity rose to $7.3 billion, a gain of 2% from year-end 2004 --Debt to total capital ratio improved to 16.1% from 16.3% at year-end 2004 --Return on equity for the quarter was 18.4%; excluding FAS 115 it was 19.4% (2) --Diluted book value per share as of March 31, 2005 was $32.62 (3) Financial results by business segment compared with prior year's results follow. Further details are available in the financial supplement. Key items include: --Insurance-North American: Net premiums written increased 18% for the quarter and the combined ratio was 88.6%. --Insurance-Overseas General: Net premiums written were flat for the quarter. The segment's combined ratio improved to 87.0%. --Global Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. : Net premiums written were down 7% for the quarter. This segment had a combined ratio of 82.4%. --Financial Services: Income excluding net realized gains (losses) was $40 million for the quarter. Please refer to the ACE Financial Supplement March 31, 2005, 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, investment portfolio and capital structure. ACE's website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports/ fin_supp_march_31_2005.xls. (Due to the length of this URL, it may be necessary to copy and paste To copy files from one location to another or to copy text and images from one document to another. All modern operating systems and applications have a copy and paste capability that is typically selected from an Edit menu. See cut and paste and Win Copy between windows. this hyperlink A predefined linkage between one object and another. See hypertext. hyperlink - anchor into your Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the browser's URL address field.) ACE will host its first quarter 2005 earnings conference call and webcast on Wednesday, April 27, 2005 beginning at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The earnings conference call will be available via live and archived webcast at http://www.acelimited.com or by dialing 888-889-5602 (within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) or 973-582-2734 (international). 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 from Wednesday, April 27, 2005 until Friday, May 27, 2005. To listen to the replay dial 877-519-4471 (in the United States) or 973-341-3080 (international); passcode 5826870. The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited, a component of the Standard & Poor's 500 stock index, the ACE Group conducts its business on a worldwide basis with operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. in more than 50 countries. Additional information can be found at: http://www.acelimited.com. (1) Non-GAAP Financial Measures: Operating Income or Income excluding net realized gains (losses) and the tax effect of net realized gains (losses) is a common performance measurement. 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) because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. , the availability of market opportunities. Underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. is calculated by subtracting losses and loss expenses, life and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting income and operating ratios Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: 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). We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. These measures should not be viewed as a substitute for net income determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). (2) Calculated using income excluding net realized gains (losses). (3) Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. book value per ordinary share is ordinary shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. and net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from assumed conversions of outstanding in-the-money options In-the-money option An option that has value. divided by the sum of shares outstanding and the number of options assumed issued. Cautionary Statement Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : Any forward-looking statements made in this press release reflect the Company's current views with respect to future events and financial performance and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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, the Company's forward-looking statements could be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, market acceptance, changes in demand, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative and other governmental developments, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. tactics, the amount and timing of reinsurance recoverable, credit developments among reinsurers, actual market developments, 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 the Company's 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. The Company undertakes 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)
ACE Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
March 31 December 31
2005 2004
----------- -----------
(Unaudited)
Assets
Total investments $ 27,406 $ 26,650
Cash 574 534
Insurance and reinsurance balances receivable 3,692 3,272
Reinsurance recoverable 14,608 15,254
Other assets 10,685 10,632
-------- --------
Total assets $ 56,965 $ 56,342
======== ========
Liabilities
Unpaid losses and loss expenses $ 31,426 $ 31,513
Unearned premiums 6,527 5,923
Other liabilities 9,047 9,070
-------- --------
Total liabilities $ 47,000 $ 46,506
-------- --------
Shareholders' equity
Total shareholders' equity $ 9,965 $ 9,836
-------- --------
Total liabilities and shareholders' equity $ 56,965 $ 56,342
======== ========
Diluted book value per ordinary share (3) $ 32.62 $ 32.48
ACE Limited
Summary Consolidated Financial Data
(in millions of U.S. dollars, except share, per share data, and
ratios)
(Unaudited)
Three Months Ended
March 31
-------------------------
2005 2004
------------ ------------
Gross premiums written $ 4,543 $ 4,416
Net premiums written 3,365 3,238
Net premiums earned 2,876 2,600
Losses and loss expenses 1,786 1,542
Life and annuity benefits 35 42
Policy acquisition costs 388 365
Administrative expenses 356 315
------------ ------------
Underwriting income (1) 311 336
Net investment income 284 238
Net realized gains (losses) (4) 57
Interest expense 42 44
Other (income) expense (4) 17
Income tax expense 120 123
------------ ------------
Net income 433 447
Preference shares dividend (11) (11)
------------ ------------
Net income available to holders of ordinary
shares $ 422 $ 436
============ ============
Diluted earnings per share:
Income excluding net realized gains
(losses) (1) $1.49 $1.40
Net income $1.46 $1.53
Weighted average diluted shares
outstanding 287,565,370 284,289,568
Loss and loss expense ratio 63.4% 60.5%
Policy acquisition cost ratio 13.6% 14.1%
Administrative expense ratio 12.6% 12.3%
Combined ratio 89.6% 86.9%
Ratios exclude life reinsurance business
ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
Three Months Ended
March 31
-----------------
2005 2004
------ ------
Gross Premiums Written
----------------------
Insurance - North American $2,151 $1,905
Insurance - Overseas General 1,635 1,674
Global Reinsurance(a) 594 629
Financial Services 163 208
------ ------
Total $4,543 $4,416
------ ------
Net Premiums Written
--------------------
Insurance - North American $1,425 $1,212
Insurance - Overseas General 1,194 1,198
Global Reinsurance(a) 585 620
Financial Services 161 208
------ ------
Total $3,365 $3,238
------ ------
Net Premiums Earned
-------------------
Insurance - North American $1,283 $1,007
Insurance - Overseas General 1,089 1,034
Global Reinsurance(a) 414 380
Financial Services 90 179
------ ------
Total $2,876 $2,600
------ ------
Income (Loss) Excluding Net Realized Gains
(Losses) (1)
------------------------------------------
Insurance - North American $ 193 $ 148
Insurance - Overseas General 162 112
Global Reinsurance(a) 118 122
Financial Services 40 85
Corporate (72) (56)
------ ------
Total $ 441 $ 411
------ ------
(a) Includes both property and casualty reinsurance and life
reinsurance
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion