ACE Posts $237 Million Q4 Net Profit; Over $1 Billion Full Year

At least one Bermuda-based company seems to have weathered the storms of 2005 reasonably well. Ace Limited reported $237 million net income for the fourth quarter – a 15 percent drop from 2004 – and $1.029 billion for the full year. Despite catastrophe losses of $1.049 billion ACE still managed a 99.3 percent combined ratio.

The $237 million profit equals 70 cents per common share after payment of preferred dividends, compared with net income of $278 million or 93 cents per share for Q4 2004. Ace noted: “Income excluding net realized gains (losses) for the fourth quarter was $245 million, or $0.72 per share, compared with $160 million or $0.52 per share for the same quarter of last year. The losses from hurricane Wilma, $251 million, and development primarily related to hurricanes Katrina, Rita and Dennis, $53 million, together resulted in an after-tax charge for the quarter of $0.94 per share.”

2005, however, did take a toll. ACE’s net income for the year decreased by 11 percent to $3.31 per share, compared with the $1.153 billion or $3.88 per share it earned in 2004. “For 2005, income excluding net realized gains (losses) decreased 4 percent to $956 million or $3.06 per share, compared with $1 billion or $3.34 per share in 2004,” said the bulletin. “Record industry catastrophe losses resulted in a net after-tax charge of $1,049 million or $3.53 per share, compared with $437 million or $1.53 per share in 2004.”

Other earning highlights cited in the report included the following:
— P&C net premiums written increased 2 percent for the year
— The P&C combined ratio was 99.3 percent for the year compared with 96.9 percent a year ago
— Operating cash flow amounted to $4.3 billion for the year — Cash and invested assets increased by $5 billion in 2005 to $32.4 billion
— Net paid and unpaid losses and loss expenses increased $3 billion to $19.6 billion
— Net investment income increased 25 percent for the year to $1.26 billion
— Shareholders’ equity increased 20 percent for the year to $11.8 billion
— Tangible equity rose to $9.1 billion, a gain of 27 percent from year-end 2004
— Debt to total capital ratio improved to 14.8 percent from 16.3 percent at year-end 2004
— Return on equity for 2005 was 8.9 percent(2); excluding FAS 115, it was 9.3 percent
— Book value per share as of December 31, 2005 increased 7 percent in 2005 to $34.78(3)

President and CEO Evan Greenberg commented: “This past year was the worst in history for insured catastrophe losses, yet ACE finished the year with a combined ratio under 100 percent, an ROE of approximately 9 percent, and book value growth of 7 percent. While failing to meet our standards, these results are a testament to the underwriting discipline of our organization. Looking ahead, ACE is well-positioned both operationally and financially to capitalize on a dynamic market and the opportunities it presents.”

The full report is available on the Company’s Website at: http://www.acelimited.com.