ACE Limited Reports Record Second Quarter Net Income of $467 Million; Income Excluding Net Realized Gains (Losses) Increases 13% to $443 Million; Net Investment Income Increases 26% to $305 Million.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 second quarter ended June June: see month. 30, 2005 of $467 million or $1.58 per ordinary 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 $423 million or $1.44 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) after tax for the second quarter was $443 million, or $1.50 per share, compared with $391 million or $1.33 per share for the same quarter a year ago.(1)
Second Quarter Summary
(in millions, except per share amounts)
(Per Share - Diluted)
2005 2004 Change 2005 2004 Change
---------------------- ----------------------
Restated Restated
Net income $467 $423 10% $1.58 $1.44 10%
Net realized gains,
net of tax 24 32 - 0.08 0.11 -
Income excluding net
realized gains,
net of tax (1) $443 $391 13% $1.50 $1.33 13%
Net income for the first six months of 2005 was $904 million or $3.06 per share, compared with $877 million or $3.00 per share for the first six months of 2004. For the first six months of 2005, income excluding net realized gains (losses) after tax was $898 million or $3.04 per share, compared with $809 million or $2.76 per share for the same period of 2004.(1)
Six Months
(in millions, except per share amounts)
(Per Share - Diluted)
2005 2004 Change 2005 2004 Change
---------------------- ----------------------
Restated Restated
Net income $904 $877 3% $3.06 $3.00 2%
Net realized gains,
net of tax 6 68 - 0.02 0.24 -
Income excluding net
realized gains,
net of tax (1) $898 $809 11% $3.04 $2.76 10%
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 an excellent quarter for ACE, highlighted by record net income and strong 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. . 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. exceeded $10 billion - a milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. - and reflects our continued and growing balance sheet strength. The quality of our earnings was excellent, with P&C underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. and investment income each contributing approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 50 percent to our operating income for the quarter. Revenue growth slowed in line with market conditions. We are maintaining discipline, and our growth reflects that." Second quarter operating highlights were as follows: --P&C net premiums earned increased 7% over the prior year's quarter --The P&C combined ratio was 90.4% for the quarter compared with 89.1% a year ago --Operating cash flow amounted to $1.1 billion for the quarter --Invested assets increased by $1.1 billion from March 31, 2005 --Net investment income increased 26% to $305 million compared to prior year's quarter --Shareholders' equity increased 5% to $10.5 billion from March 31, 2005 --Tangible equity rose to $7.8 billion, a gain of 7% from March 31, 2005 --Debt to total capital ratio improved to 15.5% from 16.1% at March 31, 2005 --Return on equity for the quarter was 17.9%; excluding FAS 115 it was 18.7% (2) --Diluted book value per share as of June 30, 2005 was $34.28 (3) Financial results for the quarter by business segment compared with prior year's results follow. Further details are available in the financial supplement. Key items include: --Insurance-North American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of : Net premiums written increased 6% for the quarter and the combined ratio was 90.1%. --Insurance-Overseas General: Net premiums written declined 3% for the quarter and the combined ratio was 89.7%. --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 flat for the quarter. This segment had a combined ratio of 80.2%. --Financial Services: Income excluding net realized gains (losses) was $49 million for the quarter. All amounts included herein for prior periods have been adjusted to reflect the previously reported restatements. Please refer to the ACE Financial Supplement June 30, 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_jun e_30_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 second quarter 2005 earnings conference call and webcast on Tuesday Tuesday: see week. , July July: see month. 26, 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 Tuesday, July 26, 2005 until Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 26, 2005. To listen to the replay dial 877-519-4471 (in the United States) or 973-341-3080 (international); passcode 6211276. 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 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. Tangible shareholder's equity is shareholders' equity less goodwill. See reconciliation of Non-GAAP Financial Measure on page 27 in the financial supplement. 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 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, such as its statements regarding growth, 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, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 and developments, internal investigation developments, the amount and timing of reinsurance recoverable, credit developments among reinsurers, actual market developments, rating agency action, possible terrorism or the outbreak outbreak see epidemic. 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.
ACE Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
(Unaudited)
----------------------------------------------------------------------
Restated
June 30 December 31
2005 2004
----------- -----------
Assets
Total investments $28,897 $27,048
Cash 651 507
Insurance and reinsurance balances receivable 3,728 3,255
Reinsurance recoverable 14,432 14,887
Other assets 10,412 10,556
----------- -----------
Total assets $58,120 $56,253
=========== ===========
Liabilities
Unpaid losses and loss expenses $32,101 $31,483
Unearned premiums 6,457 5,983
Other liabilities 9,066 8,944
----------- -----------
Total liabilities $47,624 $46,410
----------- -----------
Shareholders' equity
Total shareholders' equity $10,496 $ 9,843
----------- -----------
Total liabilities and shareholders' equity $58,120 $56,253
=========== ===========
Diluted book value per ordinary share (3) $ 34.28 $ 32.50
----------------------------------------------------------------------
ACE Limited
Summary Consolidated Financial Data
(in millions of U.S. dollars, except share, per share data, and
ratios)
(Unaudited)
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ------------------
Restated Restated
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Gross premiums written $ 4,213 $ 4,042 $ 8,756 $ 8,460
Net premiums written 2,909 2,861 6,275 6,081
Net premiums earned 2,921 2,782 5,798 5,370
Losses and loss
expenses 1,844 1,726 3,633 3,255
Life and annuity
benefits 37 44 72 86
Policy acquisition costs 429 396 817 761
Administrative expenses 316 304 652 622
-------- -------- -------- --------
Underwriting income(1) 295 312 624 646
Net investment income 305 243 590 491
Net realized gains
(losses) 32 42 18 99
Interest expense 43 46 85 90
Other (income) expense (6) (1) (11) 16
Income tax expense 128 129 254 253
-------- -------- -------- --------
Net income 467 423 904 877
Preference shares
dividend (11) (11) (22) (22)
-------- -------- -------- --------
Net income available
to holders of
ordinary shares $ 456 $ 412 $ 882 $ 855
======== ======== ======== ========
Diluted earnings per share:
Income excluding
net realized
gains (losses) (1) $1.50 $1.33 $3.04 $2.76
Net income $1.58 $1.44 $3.06 $3.00
Weighted average
diluted shares
outstanding 288,451,164 285,371,164 288,172,519 285,037,944
Loss and loss
expense ratio 64.4% 63.2% 63.9% 61.8%
Policy acquisition
cost ratio 14.8% 14.3% 14.2% 14.2%
Administrative
expense ratio 11.0% 11.2% 11.4% 11.8%
Combined ratio 90.2% 88.7% 89.5% 87.8%
----------------------------------------------------------------------
Ratios exclude life reinsurance business
ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
Restated Restated
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Gross Premiums Written
----------------------
Insurance - North American $ 2,344 $ 2,102 $ 4,494 $ 4,007
Insurance - Overseas General 1,428 1,501 3,064 3,174
Global Reinsurance(a) 426 424 1,020 1,052
Financial Services 15 15 178 223
------- ------- ------- -------
Total $ 4,213 $ 4,042 $ 8,756 $ 8,460
------- ------- ------- -------
Net Premiums Written
--------------------
Insurance - North American $ 1,412 $ 1,330 $ 2,837 $ 2,541
Insurance - Overseas General 1,062 1,098 2,257 2,276
Global Reinsurance(a) 420 420 1,005 1,043
Financial Services 15 13 176 221
------- ------- ------- -------
Total $ 2,909 $ 2,861 $ 6,275 $ 6,081
------- ------- ------- -------
Net Premiums Earned
-------------------
Insurance - North American $ 1,319 $ 1,178 $ 2,604 $ 2,185
Insurance - Overseas General 1,081 1,069 2,169 2,088
Global Reinsurance(a) 429 401 843 784
Financial Services 92 134 182 313
------- ------- ------- -------
Total $ 2,921 $ 2,782 $ 5,798 $ 5,370
------- ------- ------- -------
Income (Loss) Excluding Net Realized
Gains (Losses)(1)
------------------------------------
Insurance - North American $ 187 $ 159 $ 395 $ 311
Insurance - Overseas General 146 103 305 216
Global Reinsurance(a) 128 123 245 248
Financial Services 49 58 90 143
Corporate (67) (52) (137) (109)
------- ------- ------- -------
Total $ 443 $ 391 $ 898 $ 809
------- ------- ------- -------
----------------------------------------------------------------------
(a) Includes both property and casualty reinsurance and life
reinsurance
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