ACE Limited Reports Second 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)--July 28, 2003 ACE Limited (NYSE NYSE See: New York Stock Exchange :ACE) today reported the results of operations for the quarter ended June June: see month. 30, 2003. Highlights for the quarter are as follows: -- Net income for the quarter was $371 million compared with net income of $104 million for the comparable quarter a year ago. -- Net income per share was $1.32 for the quarter compared with $0.36 for the same quarter last year, an increase of 267%. -- 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) was $286 million compared with $229 million for the second quarter of 2002.(1) -- Earnings per share excluding net realized gains (losses) was $1.01 for the current quarter compared with $0.82 for the same quarter last year, an increase of 23 percent.(1) -- Net realized gains, net of income tax, were $85 million ($0.31 per share) compared with net realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. of $125 million ($0.46 per share) for the same quarter in 2002. Net unrealized gains totaled $273 million compared with $107 million for the same quarter in 2002. -- 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 at June 30, 2003 was $27.24 compared with $24.16 at December December: see month. 31, 2002 and $24.21 at June 30, 2002.(2) -- Net premiums written increased 28% over the same quarter a year ago, while net premiums earned increased 46% quarter on quarter. -- The combined ratio was 91.7% for the quarter compared to 91.5% for the second quarter 2002. -- 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. was $978 million for the quarter compared with $427 million in the comparable quarter of 2002. -- Net investment income rose 5% to $211 million for the quarter compared with $201 million in the prior year's quarter. 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: "If I had to single out a defining characteristic of the second quarter, I would point to the significant increase in our capital strength. Everything that happened this quarter contributed to our capital resources. We posted record income, generated positive gains in both our fixed income and equity portfolios, completed the conversion of $311 million of mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. securities to common equity and completed the issue of $575 million of perpetual PERPETUAL. That which is to last without limitation as to time; as, a perpetual statute, which is one without limit as to time, although not expressed to be so. preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. . The result was a 22% increase in 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. for the quarter from $6.7 billion to $8.2 billion." Please refer to the ACE Financial Supplement June 30, 2003, which is posted on the Company's website, for more detailed information on individual segment performance, together with additional disclosure on 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. recoverable, loss reserves, 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. portfolio, 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_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 a live webcast of its second quarter earnings conference call on Tuesday Tuesday: see week. , July 29, 2003, 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 public may access both the webcast, available on a listen-only basis, and the financial supplement at http://www.acelimited.com. Please refer to our website under "Investor Information, Calendar of Events", one half hour before the webcast, for further details. Individuals who access the webcast will be asked to identify themselves and their affiliation. A replay of the webcast will be available following the live webcast on Tuesday, July 29, 2003 until Tuesday, August 12, 2003 at 5:00 p.m. EDT. The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients. The ACE Group conducts its business on a global 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 nearly 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. (3) Debt prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. expense in 2002 of $11 million ($7 million, net of income tax) has been reclassified to other income (expense) to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current year presentation. Application of 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. 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: Any 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. 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 provisions of the Private Securities Litigation Reform Act 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, the impact of aggregate policy coverage limits, the impact of bankruptcies of various 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. producers and related businesses, new theories of liability, 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.
ACE Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars)
----------------------------------------------------------------------
June 30 December 31
2003 2002
----------- -----------
(Unaudited)
Assets
Total investments and cash $ 21,186 $ 18,324
Reinsurance recoverable 13,891 13,991
Insurance and reinsurance balances receivable 3,186 2,654
Other assets 8,363 8,482
----------- -----------
Total assets $ 46,626 $ 43,451
=========== ===========
Liabilities
Unpaid losses and loss expenses $ 24,940 $ 24,315
Unearned premiums 6,394 5,586
Other liabilities 7,114 6,850
----------- -----------
Total liabilities $ 38,448 $ 36,751
----------- -----------
Commitments and contingencies
Mezzanine equity $ - $ 311
Shareholders' equity
Total shareholders' equity $ 8,178 $ 6,389
----------- -----------
Total liabilities, mezzanine equity and
shareholders' equity $ 46,626 $ 43,451
=========== ===========
Diluted book value per Ordinary Share $ 27.24 $ 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 Six Months Ended
June 30 June 30
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Gross premiums
written $ 3,405 $ 2,929 $ 7,518 $ 6,047
Net premiums
written 2,406 1,875 5,336 3,861
Net premiums
earned 2,306 1,576 4,378 2,936
Losses and loss
expenses 1,459 961 2,742 1,814
Life and annuity
benefits 44 23 92 46
Policy acquisition
costs 334 234 630 432
Administrative
expenses 287 231 547 428
------------ ------------ ------------ ------------
Underwriting
income 182 127 367 216
Net investment
income 211 201 417 401
Other income
(expense)(3) 1 (12) (5) (7)
Interest expense 43 52 88 98
Income tax expense 65 35 126 67
------------ ------------ ------------ ------------
Income excluding
net realized
gains (losses)
(1) $ 286 $ 229 $ 565 $ 445
Net realized gains
(losses) 107 (140) 67 (166)
Tax effect of net
realized gains
(losses) (22) 15 (14) 23
------------ ------------ ------------ ------------
Net income 371 104 618 302
Preference shares
dividend (4) - (4) -
FELINE PRIDE
dividend (3) (6) (10) (13)
------------ ------------ ------------ ------------
Net income
available to
holders of
Ordinary Shares $ 364 $ 98 $ 604 $ 289
============ ============ ============ ============
Diluted earnings
per share:
Income excluding
net realized
gains (losses)
(1) $1.01 $0.82 $2.04 $1.59
Net income $1.32 $0.36 $2.23 $1.06
Weighted average
diluted shares
outstanding 275,232,339 271,181,229 270,718,977 271,249,367
Loss and loss
expense ratio 64.5% 62.0% 63.9% 63.0%
Policy acquisition
cost ratio 14.6% 14.8% 14.5% 14.5%
Administrative
expense ratio 12.6% 14.7% 12.7% 14.7%
Combined ratio 91.7% 91.5% 91.1% 92.2%
Ratios exclude life reinsurance business
ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
----------------------------------------------------------------------
Three Months Six Months
Ended Ended
June 30 June 30
-------------- --------------
2003 2002 2003 2002
------ ------ ------ ------
Gross Premiums Written
----------------------------------------
Insurance - North American $1,648 $1,428 $3,312 $2,693
Insurance - Overseas General 1,244 941 2,650 1,903
Global Reinsurance(a) 395 242 906 645
Financial Services 118 318 650 806
------ ------ ------ ------
Total $3,405 $2,929 $7,518 $6,047
------ ------ ------ ------
Net Premiums Written
----------------------------------------
Insurance - North American $ 969 $ 718 $1,902 $1,231
Insurance - Overseas General 916 616 1,897 1,230
Global Reinsurance(a) 389 224 879 607
Financial Services 132 317 658 793
------ ------ ------ ------
Total $2,406 $1,875 $5,336 $3,861
------ ------ ------ ------
Net Premiums Earned
----------------------------------------
Insurance - North American $ 920 $ 606 $1,673 $1,079
Insurance - Overseas General 860 566 1,674 1,075
Global Reinsurance(a) 311 176 607 320
Financial Services 215 228 424 462
------ ------ ------ ------
Total $2,306 $1,576 $4,378 $2,936
------ ------ ------ ------
Income (Loss) excluding Net Realized
Gains (Losses)(1)
----------------------------------------
Insurance - North American $ 134 $ 126 $ 254 $ 220
Insurance - Overseas General 70 26 135 60
Global Reinsurance(a) 82 78 171 158
Financial Services 58 57 117 104
Corporate (58) (58) (112) (97)
------ ------ ------ ------
Total $ 286 $ 229 $ 565 $ 445
------ ------ ------ ------
(a) Includes both property and casualty reinsurance and life
reinsurance
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