ACE Reports $421 Million Q4 Net; $1.4 Billion Full-year

ACE Limited reported that net income for the quarter ended December 31, 2003 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. For the fill year ACE posted a record $1.4 billion or $4.93 per share, compared with net income of $77 million or $0.19 per share for 2002.

“Income excluding net realized gains (losses) on investments for 2003 was up 142 percent to a record $1.2 billion, or $4.21 per share, compared with $494 million or $1.74 per share for last year,” said the announcement. It noted that the figures for 2002 had “included a charge of $354 million in the fourth quarter related to asbestos and environmental reserves.”

This year’s fourth quarter operating results (which exclude gains and losses on investments) were a great deal better. ACE posted 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. The results exceeded analysts’ consensus estimates of an average $1.08 per share.

Chairman and CEO Brian Duperreault 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 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.”

The bulletin listed the following “operating highlights:”
— Net premiums written increased 27 percent to $10.2 billion, reflecting P&C net premium growth of 40 percent.
— The P&C combined ratio was 91.1 percent for the year compared with 103.0 percent a year ago.
— Operating cash flow amounted to a record $4.2 billion for the year.
— Cash and invested assets increased by $5.3 billion.
— Net investment income increased 7 percent to $861 million.
— Shareholders’ equity increased 38 percent to $8.8 billion.
— Tangible equity rose to $6.1 billion, a gain of 66 percent from year-end 2002.
— Debt to total capital ratio improved to 16.9 percent from 20.9 percent at year-end 2002.
— Return on equity for 2003 was a record 15.8 percent; excluding FAS 115, it was 17.2 percent.
— Diluted book value per share as of December 31, 2003 increased 22 percent to $29.38.

The announcment also noted that ACE’s financial results “improved over the prior year’s results for virtually every business segment. Further details are available in the financial supplement [available on the company’s Web site at: www.ace.bm]. “Key items” include the following:
— Insurance-North American: Net premiums written increased 38 percent and the combined ratio improved to 90.6 percent.
— Insurance-Overseas General: Net premiums written also increased 38 percent. The segment’s combined ratio improved to 93.0 percent.
— Global Reinsurance: Net premiums written were up 58 percent, a result of our continued strategy to diversify our reinsurance operations into multi-line reinsurance. This segment had a combined ratio of 75.7 percent.
— Financial Services: Net income increased 254 percent for the year reflecting a combined ratio of 94.4 percent.

The announcement also repeated the company’s plan to “pursue an initial public offering of its financial guaranty business (ACE expects to offer approximately 65 percent to 75 percent of its interest in AGC Holdings Limited). The IPO is expected to be completed in the first half of 2004, subject to market conditions and receipt of various regulatory approvals.”