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Ace quarterly profit rises nearly 21%

Posted On: Jul. 22, 2015 12:00 AM CST

Ace quarterly profit rises nearly 21%

Ace Ltd. posted strong 2015 second-quarter results driven by an increase in premiums written and a strong dollar, the insurer said.

Ace on Tuesday reported net income for the quarter ended June 30 of $942 million, up 20.9% compared with the same period last year.

Net written premiums for the quarter rose 4.9% from the previous year to $4.78 billion, the insurer said in a statement. Property/casualty net premiums written grew 5.5% to $4.28 billion, and global property/casualty net premiums written, which excluded agriculture, increased by 6.3% to $3.91 billion.

Net investment income for the quarter was $562 million, up 1.1% from the year-ago period.

Ace’s combined ratio for property/casualty for the quarter remained virtually flat at 87.7%, compared with 87.5% in the year-ago period.

The quarter was the first to include contributions from Fireman’s Fund Insurance Co.’s high-net-worth personal lines insurance business in the results, which contributed to both revenue and earnings, Ace chairman and CEO Evan Greenberg said during a conference call with investors Wednesday. In April, Ace closed the deal to acquire Fireman’s Fund’s high-net-worth personal lines business from Allianz S.E. for $365 million.

The transfer of Fireman’s Fund’s “in-force business” contributed $15 million of operating income that is nonrecurring in 2016, the insurer said. Operating income totaled $788 million, down 4.5% from the previous year.

First-half net income was $1.62 billion, up 7.3% from the prior-year period. Net premiums written were $8.86 billion, up 1.4% from the first half of 2014. The combined ratio was 88.0%, compared with 88.2% in the year-ago period.

“Ace had an excellent second quarter with earnings per share essentially flat with prior year as a strong dollar impacted both revenue and earnings,” Mr. Greenberg said in the earning statement.

“The quarter’s result once again confirms the operating and financial strength of Ace and, in our view, gives us more reason to be confident in the ability of the company to successfully execute upon the acquisition of Chubb. We expect ACE/CB to be the world leader in specialty insurance but still positioned to grow,” Cliff Gallant, an analyst with Nomura Securities International Inc., said in a research note Wednesday.

Earlier this month Ace announced a definitive agreement to acquire Chubb Corp. for $28.3 million, a move Mr. Greenberg called “the highlight of the quarter,” in the earnings release, adding that the companies are “engaged in integration planning.”

“We’re going to balance culture, we’re going to balance service and quality and what the franchise is about with a competitive profile of the combined companies,” Mr. Greenberg said during the conference call.