Ace to boost reserves, sell A&E runoff.
Evan Greenberg, Ace's president and chief executive officer, said the company would take an after-tax charge of $298 million, or $1.05 a share, against fourth-quarter earnings to strengthen its asbestos, environmental and other runoff reserves. That charge includes $279 million related to Ace's Brandywine unit and $19 million in relation to Ace's Westchester Specialty unit.
The Brandywine reserve increase is $788 million gross and $339 million net of reinsurance and before tax. For Westchester, the increase is $200 million gross and $25 million net of reinsurance and before tax. Most of the Westchester gross losses are covered by a reinsurance agreement with Berkshire Hathaway Inc.'s National Indemnity Co.
The fourth-quarter charge includes a bad-debt provision of $95 million and a tax benefit of $161 million.
The Brandywine runoff business consists mainly of the legacy exposures of Century Indemnity Co. and its subsidiaries, which Ace acquired when it purchased Cigna Property & Casualty in 1999.
Greenberg said Ace can't yet reflect the limited nature of those liabilities in its financial reports under U.S. generally accepted accounting principles.
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|Title Annotation:||ACE Ltd.|
|Date:||Feb 1, 2005|
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