News Releases

ACE Limited Reports Fourth Quarter, Year-End Results
Feb 3, 2005
HAMILTON, Bermuda--(BUSINESS WIRE)--Feb. 2, 2005--ACE Limited (NYSE:ACE) today reported net income for the fourth quarter ended December 31, 2004 of $282 million or $0.94 per common share after payment of preferred dividends, compared with net income of $444 million or $1.53 per share for the same quarter last year. Income excluding net realized gains (losses) for the fourth quarter was $166 million, or $0.54 per share, compared with $328 million or $1.12 per share for the same quarter of last year.(1) The asbestos, environmental and other run-off (A&E) losses resulted in an after-tax charge of $302 million for the quarter or $1.06 per share. The combined ratio for the quarter was 104.0%. Excluding A&E losses, the combined ratio would be 87.7%, a 4.2 point improvement over the comparable quarter in 2003.(1)
                        Fourth Quarter Summary           (in millions, except share and per share amounts)                                                   (Per Share - Diluted)                             2004  2003  Change    2004   2003  Change                             ----- ----- ------   ------ ------ ------ Net income                  $282  $444   (37%)   $0.94  $1.53   (39%) Net realized gains  (losses), net of tax        116   116      -     0.40   0.41      - Income excluding net  realized gains, net of tax  (1)                         166   328    (49)    0.54   1.12   (52) A&E charge, net of tax       302     -      -     1.06      -      - Income excluding net  realized gains (losses)  and A&E charge, net of  tax (1)                    $468  $328     43%   $1.60  $1.12     43% Combined ratio, excluding  A&E charge                 87.7% 91.9% 
 

Net income for the year decreased 20 percent to $1.1 billion or $3.83 per share, compared with $1.4 billion or $5.01 per share in 2003. For 2004, income excluding net realized gains (losses) decreased 17 percent to $1.0 billion or $3.30 per share, compared with $1.2 billion or $4.21 per share in 2003. Record industry catastrophe losses resulted in an after-tax net loss of $437 million or $1.53 per share, compared with $105 million or $0.38 per share in 2003. The combined ratio for the year was 96.6%.

                              Years Ended           (in millions, except share and per share amounts)                                                   (Per Share - Diluted)                           2004    2003  Change    2004   2003  Change                         ------- ------- ------   ------ ------ ------ Net income              $1,139  $1,417   (20%)   $3.83  $5.01   (24%) Net realized gains,  net of  tax               151     220      -     0.53   0.80      - Income excluding net  realized gains  (losses), net of tax  (1)                       988   1,197    (17)    3.30   4.21    (22) A&E charge, net of tax     302       -      -     1.06      -      - Catastrophe losses, net  of tax                    437     105      -     1.53   0.38      - Income excluding net  realized gains  (losses), A&E charge  and catastrophe  losses, net of tax (1) $1,727  $1,302     32%   $5.89  $4.59     28% 

 

Evan Greenberg, President and Chief Executive Officer of ACE Limited, commented: "The strength of our organization was demonstrated in 2004. Despite record natural catastrophes around the world, and a fourth quarter reserve charge to our run-off operations, we produced a combined ratio of 96.6%. Our P&C premium growth exceeded 20%, and our investment income and book value grew to record levels while we substantially added to our loss reserve position. We are entering 2005 with a strong balance sheet, and we are well positioned throughout the world to continue our growth in earnings and book value."

Other 2004 operating highlights were as follows:

-- P&C net premiums written increased 22.3% for the year

-- The combined ratio was 96.6% for the year compared with 91.5% a year ago

-- Operating cash flow amounted to a record $4.8 billion for the year

-- Cash and invested assets increased by $5 billion in 2004

-- Net investment income increased 16% for the year to $1 billion

-- Shareholders' equity increased 11.3% for the year to $9.8 billion

-- Tangible equity rose to $7.2 billion, a gain of 18% from year-end 2003

-- Debt to total capital ratio improved to 16.3% from 16.9% at year-end 2003

-- Return on equity for 2004 was 10.7%(2); excluding FAS 115, it was 11.6%

-- Book value per share as of December 31, 2004 increased 10% in 2004 to $32.48(3)

Financial results by business segment follow. Further details are available in the financial supplement. Key items include:

-- Insurance-North American: Net premiums written increased 27% for the year and the combined ratio was 90.4% excluding the A&E and catastrophe losses.(1)

-- Insurance-Overseas General: Net premiums written increased 17% for the year. The segment's combined ratio improved to 87.5%.

-- Global Reinsurance: Net premiums written were up 24% for the year. This segment had a combined ratio of 93.7%. Adjusted for catastrophes the combined ratio was 72.4% compared to 68.2% for 2003.

-- Financial Services: Income excluding net realized gains (losses) decreased 9% for the year.

Please refer to the ACE Financial Supplement December 31, 2004, which is posted on the Company's website, for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, catastrophe loss charges by segment, investment portfolio and capital structure. ACE's website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports/fin_supp_december_31_2004.xls. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.)

ACE Limited (NYSE:ACE) will host its fourth quarter year-end earnings conference call and webcast on Thursday, February 3, 2005 beginning at 8:30 a.m. EST. The call is available via live and archived webcast athttp://www.acelimited.com. Please refer to our website in "Investor Information, Calendar of Events" for details.

If you are unable to listen to the live webcast, a replay of the call will be available from approximately 11:30 a.m. EST on Thursday, February 3, 2005 until Thursday, March 3, 2005. To listen to the replay, dial: 1-877-519-4471 (in the United States) or 1-973-341-3080 (international); passcode 5527078.

The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. A component of the Standard & Poor's 500 stock index, The ACE Group conducts its business on a worldwide basis with operating subsidiaries in approximately 50 countries. Additional information can be found at: www.acelimited.com.

 (1) Non-GAAP Financial Measures:  Income (loss) excluding net realized gains (losses) and the tax effect of net realized gains (losses) 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) because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. Underwriting income is calculated by subtracting losses and loss expenses, life and annuity benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting income and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other (income) expense, interest and income tax expense and net realized gains (losses). We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. Income (loss) excluding net realized gains (losses), A&E and catastrophe losses is presented because those losses are deemed to be significant to the quarter and the year end. The separate presentation is useful to understand the impact of these factors on our financial results and how management evaluates the Company's financial performance. These measures should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).  (2) Calculated using income excluding net realized gains (losses).  (3) Diluted book value per ordinary share is ordinary shareholders' equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued. 

 

Cautionary Statement Regarding Forward-Looking Statements:

Any forward-looking statements 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, new theories of liability, judicial, legislative and other governmental developments, 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, except per share data) ----------------------------------------------------------------------                                               December 31  December 31                                                  2004         2003                                               ------------ -----------                                               (Unaudited) Assets Total investments                            $     28,506  $   23,446 Cash                                                  534         562 Insurance and reinsurance balances  receivable                                         3,272       2,837 Reinsurance recoverable                            15,254      14,081 Other assets                                        8,776       8,628                                               ------------  ----------    Total assets                              $     56,342  $   49,553                                               ============  ==========  Liabilities Unpaid losses and loss expenses              $     31,513  $   27,155 Unearned premiums                                   5,923       6,051 Other liabilities                                   9,070       7,512                                               ------------  ----------    Total liabilities                         $     46,506  $   40,718                                               ------------  ----------  Shareholders' equity    Total shareholders' equity                $      9,836  $    8,835                                               ------------  ----------    Total liabilities and shareholders'     equity                                   $     56,342  $   49,553                                               ============  ==========  Diluted book value per ordinary share (3)    $      32.48  $    29.46 
                              ACE Limited   Summary Consolidated Financial Data (in millions of U.S. dollars,                except share, per share data, and ratios)                              (Unaudited) ----------------------------------------------------------------------                  Three Months Ended                Years Ended                      December 31                   December 31              ---------------------------   ---------------------------                   2004           2003           2004           2003              ------------   ------------   ------------   ------------  Gross  premiums  written      $    3,659     $    3,668     $   16,097      $  14,637 Net premiums  written           2,655          2,573         11,528         10,215 Net premiums  earned            2,895          2,827         11,136          9,602  Losses and  loss  expenses          2,213          1,857          7,714          6,118 Life and  annuity  benefits             38             44            172            181 Policy  acquisition  costs               411            384          1,558          1,357 Admin-  istrative  expenses            338            320          1,288          1,160               ------------   ------------   ------------    ---------- Underwriting  income  (loss) (1)         (105)           222            404            786  Net  investment  income              275            228          1,001            861 Net realized  gains  (losses)            128            128            195            252 Interest  expense              44             44            183            177 Other  expense               -             19              2             27 Income tax  expense  (benefit)           (28)            71            276            278               ------------   ------------   ------------    ---------- Net income           282            444          1,139          1,417 Preference  shares  dividend            (12)           (11)           (45)           (26) FELINE PRIDE  dividend              -              -              -            (10)               ------------   ------------   ------------    ---------- Net income  available  to holders  of ordinary  shares       $      270     $      433     $    1,094      $   1,381               ============   ============   ============    ==========  Diluted  earnings  per share: Income  excluding  net  realized  gains  (losses)  (1)                0.54           1.12           3.30           4.21 Net income          0.94           1.53           3.83           5.01  Weighted  average  diluted  shares  outstanding 286,048,064    282,647,642    285,487,854    275,655,969  Loss and  loss  expense  ratio              77.9%          66.8%          70.7%          65.0% Policy  acquisition  cost ratio         14.3%          13.6%          14.1%          14.2% Admin-  istrative  expense  ratio              11.8%          11.5%          11.8%          12.3% Combined  ratio             104.0%          91.9%          96.6%          91.5%  Ratios exclude life reinsurance business  
                              ACE Limited             Consolidated Supplemental Segment Information                     (in millions of U.S. dollars)                              (Unaudited) ---------------------------------------------------------------------                                   Three Months           Years                                       Ended               Ended                                    December 31         December 31                                 -----------------   -----------------                                  2004       2003      2004      2003                                 ------     ------   -------   -------  Gross Premiums Written ----------------------  Insurance - North American    $ 1,898    $ 1,764  $  8,124  $  6,895 Insurance - Overseas General    1,392      1,341     5,858     5,191 Global Reinsurance(a)             340        274     1,795     1,505 Financial Services                 29        289       320     1,046                                 ------     ------   -------   ------- Total                         $ 3,659    $ 3,668  $ 16,097  $ 14,637                                 ------     ------   -------   -------  Net Premiums Written --------------------  Insurance - North American    $ 1,208    $ 1,048  $  5,098  $  4,015 Insurance - Overseas General    1,087        982     4,370     3,751 Global Reinsurance(a)             334        267     1,744     1,410 Financial Services                 26        276       316     1,039                                 ------     ------   -------   ------- Total                         $ 2,655    $ 2,573  $ 11,528  $ 10,215                                 ------     ------   -------   -------   Net Premiums Earned -------------------  Insurance - North American    $ 1,259    $   991  $  4,678  $  3,654 Insurance - Overseas General    1,126      1,007     4,322     3,563 Global Reinsurance(a)             414        357     1,616     1,284 Financial Services                 96        472       520     1,101                                 ------     ------   -------   ------- Total                         $ 2,895    $ 2,827  $ 11,136  $  9,602                                 ------     ------   -------   -------   Income (Loss) Excluding Net  Realized Gains (Losses)(1) ---------------------------  Insurance - North American    $  (126)   $   153  $    242  $    532 Insurance - Overseas General      192         94       523       315 Global Reinsurance(a)             120         95       254       361 Financial Services                 39         57       211       231 Corporate                         (59)       (71)     (242)     (242)                                 ------     ------   -------   ------- Total                         $   166    $   328  $    988  $  1,197                                 ------     ------   -------   -------  (a) Includes both property and casualty reinsurance and life reinsurance  

Contact:

ACE Limited, Hamilton
Investor Contact:
Helen M. Wilson, 441-299-9283
or
Media Contact:
Robert T. Grieves, 212-621-8684


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