ACE Limited Reports Record Year-End, Fourth Quarter Results.Business Editors 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--(BUSINESS WIRE)--Feb. 4, 2004 ACE Limited (NYSE NYSE See: New York Stock Exchange :ACE) today reported that net income for 2003 was a record $1.4 billion or $4.93 per share, compared with net income of $77 million or $0.19 per share for the prior 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) on investments for 2003 was up 142% to a record $1.2 billion, or $4.21 per share, compared with $494 million or $1.74 per share for last year.(1) The prior year included a charge of $354 million in the fourth quarter related to asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. and environmental reserves. For the quarter ended December December: see month. 31, 2003, net income was $421 million or $1.45 per share, compared with a net loss of $168 million or $0.67 per share for the prior year. Income excluding net realized gains (losses) on investments for the fourth quarter of 2003 was a record $328 million, or $1.12 per share, compared with a loss of $99 million or $0.41 per share for the same quarter last year.(1) Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. Duperreault, Chairman and Chief Executive Officer of ACE Limited, commented: "The record results of 2003 reflect the significant earnings power that ACE has built up over the last three years. With annual net income substantially in excess of $1 billion, ACE has established a preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae presence in the global property and casualty insurance industry. As we look ahead to 2004, we view our prospects for further growth with continued optimism." Other 2003 operating highlights were as follows: -- Net premiums written increased 27% to $10.2 billion, reflecting P&C net premium growth of 40% -- The P&C combined ratio was 91.1% for the year compared with 103.0% a year ago -- Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. amounted to a record $4.2 billion for the year -- Cash and invested assets increased by $5.3 billion -- Net investment income increased 7% to $861 million -- 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. increased 38% to $8.8 billion -- Tangible equity rose to $6.1 billion, a gain of 66% 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. 2002 -- Debt to total capital ratio improved to 16.9% from 20.9% at year-end 2002 -- Return on equity for 2003 was a record 15.8%; excluding FAS 115, it was 17.2% -- 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 share as of December 31, 2003 increased 22% to $29.38(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 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 38% and the combined ratio improved to 90.6%. -- Insurance-Overseas General: Net premiums written also increased 38%. The segment's combined ratio improved to 93.0%. -- 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 up 58%, a result of our continued strategy to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our reinsurance operations into multi-line reinsurance. This segment had a combined ratio of 75.7%. -- Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. : Net income increased 254% for the year reflecting a combined ratio of 94.4%. As previously disclosed on December 2, 2003, ACE Limited intends to pursue an initial public offering of its financial guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. business (ACE expects to offer approximately 65% to 75% of its interest in AGC AGC Automatic Gain Control AGC Automotive Glass Cartridge (fuse) AGC Associated General Contractors AGC Associated General Contractors of America AGC Atypical Glandular Cells AGC Attorney-General's Chambers Holdings Limited). The IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. is expected to be completed in the first half of 2004, subject to market conditions and receipt of various regulatory approvals. Please refer to the ACE Financial Supplement December 31, 2003, 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, financial guaranty portfolio, investment portfolio and capital structure. ACE's website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports/fin_supp_ december_31_2003.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 Limited (NYSE:ACE) will host its year-end, fourth quarter earnings conference call and webcast on Thursday Thursday: see week. , February 5, 2004 beginning at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The call is available via live and archived webcast at http://www.acelimited.com or by dialing 1-973-582-2745. Please refer to our website in the "Investor Information, Calendar of Events" for details. A replay of the call will be available from Thursday, February 5, 2004 until Thursday, February 19, 2004 at 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . To listen to the replay, dial: 1-877-519-4471 (in 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 1-973-341-3080 (international); passcode 4434407. The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. 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 approximately 50 countries. Additional information can be found at: http://www.acelimited.com. 1) Income (loss) excluding net realized gains (losses) on investments and the tax effect of net realized gains (losses) on investments 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) on investments 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. This measure 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) Diluted 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 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, planned public offerings, judicial and legislative 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, 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)
----------------------------------------------------------------------
December 31 December 31
2003 2002
----------- -----------
(Unaudited)
Assets
Total investments and cash $ 24,008 $ 18,709
Insurance and reinsurance balances receivable 2,837 2,654
Reinsurance recoverable 14,081 13,991
Other assets 8,598 8,600
----------- -----------
Total assets $ 49,524 $ 43,954
=========== ===========
Liabilities
Unpaid losses and loss expenses $ 27,155 $ 24,315
Unearned premiums 6,051 5,586
Other liabilities 7,506 7,353
----------- -----------
Total liabilities $ 40,712 $ 37,254
----------- -----------
Commitments and contingencies
Mezzanine equity $ - $ 311
Shareholders' equity
Total shareholders' equity $ 8,812 $ 6,389
----------- -----------
Total liabilities, mezzanine equity and
shareholders' equity $ 49,524 $ 43,954
=========== ===========
Diluted book value per ordinary share (2) $ 29.38 $ 24.16
ACE Limited
Summary Consolidated Financial Data
(in millions of U.S. dollars, except share, per share data, and
ratios)
(Unaudited)
----------------------------------------------------------------------
Three Months Ended Years Ended
December 31 December 31
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Gross premiums
written $ 3,668 $ 3,244 $ 14,637 $ 12,819
Net premiums
written 2,573 1,984 10,215 8,068
Net premiums
earned 2,827 1,969 9,602 6,830
Losses and loss
expenses 1,857 1,764 6,118 4,906
Life and annuity
benefits 44 52 181 158
Policy acquisition
costs 384 275 1,357 960
Administrative
expenses 320 266 1,160 944
------------ ------------ ------------ ------------
Underwriting
income (loss) 222 (388) 786 (138)
Net investment
income 228 202 861 802
Other income
(expense) (19) 1 (27) (21)
Interest expense 44 47 177 193
Income tax expense
(benefit) 59 (133) 246 (44)
------------ ------------ ------------ ------------
Income (loss)
excluding
net realized
gains (losses)
(1) 328 (99) 1,197 494
Net realized gains
(losses) 105 (88) 229 (489)
Tax effect of net
realized gains
(losses) (12) 19 (32) 72
------------ ------------ ------------ ------------
Net income (loss) 421 (168) 1,394 77
Preference shares
dividend (11) - (26) -
FELINE PRIDE
dividend - (7) (10) (26)
------------ ------------ ------------ ------------
Net income (loss)
available to
holders of
ordinary shares $ 410 $ (175)$ 1,358 $ 51
============ ============ ============ ============
Diluted earnings
per share:
Income (loss)
excluding
net realized
gains (losses)
(1) $1.12 ($0.41) $4.21 $1.74
Net income (loss) $1.45 ($0.67) $4.93 $0.19
Weighted average
diluted shares
outstanding 282,647,642 260,965,129 275,655,969 269,870,023
Loss and loss
expense ratio 66.8% 91.8% 65.0% 73.5%
Policy acquisition
cost ratio 13.6% 14.3% 14.2% 14.2%
Administrative
expense ratio 11.5% 13.7% 12.3% 14.0%
Combined ratio 91.9% 119.8% 91.5% 101.7%
Ratios exclude life reinsurance business
ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
----------------------------------------------------------------------
Three Months Years Ended
Ended December 31
December 31
-------------- ----------------
2003 2002 2003 2002
------ ------ ------- -------
Gross Premiums Written
--------------------------------------
Insurance - North American $1,764 $1,640 $ 6,895 $ 6,116
Insurance - Overseas General 1,341 1,203 5,191 4,114
Global Reinsurance(a) 274 163 1,505 1,052
Financial Services 289 238 1,046 1,537
------ ------ ------- -------
Total $3,668 $3,244 $14,637 $12,819
------ ------ ------- -------
Net Premiums Written
--------------------------------------
Insurance - North American $1,048 $ 819 $ 4,015 $ 2,919
Insurance - Overseas General 982 796 3,751 2,716
Global Reinsurance(a) 267 141 1,410 936
Financial Services 276 228 1,039 1,497
------ ------ ------- -------
Total $2,573 $1,984 $10,215 $ 8,068
------ ------ ------- -------
Net Premiums Earned
--------------------------------------
Insurance - North American $ 991 $ 742 $ 3,654 $ 2,475
Insurance - Overseas General 1,007 671 3,563 2,393
Global Reinsurance(a) 357 264 1,284 835
Financial Services 472 292 1,101 1,127
------ ------ ------- -------
Total $2,827 $1,969 $ 9,602 $ 6,830
------ ------ ------- -------
Income (Loss) Excluding Net Realized
Gains (Losses)(1)
--------------------------------------
Insurance - North American $ 153 $ (236)$ 532 $ 97
Insurance - Overseas General 94 72 315 116
Global Reinsurance(a) 95 72 361 296
Financial Services 57 50 231 202
Corporate (71) (57) (242) (217)
------ ------ ------- -------
Total $ 328 $ (99)$ 1,197 $ 494
------ ------ ------- -------
(a) Includes both property and casualty reinsurance and life
reinsurance
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