News Release

ACE Reports First Quarter 2009 Net Income of $567 Million, Up 50%; Operating Income of $669 Million
Apr 29, 2009

ZURICH, Switzerland--(BUSINESS WIRE)--ACE Limited (NYSE:ACE) today reported net income for the quarter ended March 31, 2009, of $1.69 per share, compared with $1.10 per share for the same quarter last year.(1)Income excluding net realized gains (losses) was $1.99 per share, compared with $2.14 per share.(2) The net realized and unrealized losses after tax were $291 million due to the mark-to-market pricing impact caused by continued widening of credit spreads and the decline in global equity markets. Realized losses due to credit impairment were $27 million. Book value increased $272 million, up 2% from December 31, 2008. Annualized return on average equity was 18.4%.(3) The property and casualty (P&C) combined ratio was 87.5%.

First Quarter Summary

(in millions, except per share amounts)


                                (Per Share - Diluted)
        2009     2008     Change       2009     2008     Change

Net income

      $ 567       $ 377       50 %       $ 1.69       $ 1.10       54 %

Net realized gains (losses), net of tax

      $ (102 )     $ (348 )     -         $ (0.30 )     $ (1.04 )     -  

Income excluding net realized gains (losses), net of tax(2)

      $ 669       $ 725       (8 )%       $ 1.99       $ 2.14       (7 )%

Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, stated: “ACE had a good first quarter, marked by strong operating and net income, with all divisions of the company making a positive contribution to results. Book value grew 2% and our ROE was over 18%.

“The strong U.S. dollar had a substantial and negative impact on our P&C premium revenue, which grew 7% in the quarter after adjusting for foreign exchange. We benefited from a generally firming market, particularly in our P&C reinsurance and global retail P&C insurance businesses. We also continued to benefit from the consolidation of Combined Insurance Company in our results.

“As the year goes on, I expect revenue growth to remain under pressure due to global recessionary conditions and foreign exchange. While many of our customers’ exposures are down due to reduced business activity, and many companies are in search of more affordable insurance alternatives, the quality of our portfolio of risks continues to improve given the firming pricing environment and the client flight to capability of a company like ACE.”

Other operating highlights were as follows:

  • Net premiums written and earned increased 9%. Excluding the impact of foreign exchange, net premiums written and earned increased 15% and 16%, respectively.
  • Net P&C premiums written and earned, which include international accident and health (A&H), increased 1%. Excluding the impact of foreign exchange, net P&C premiums written and earned increased 7%.
  • The P&C combined ratio was 87.5% compared with 84.6%.
  • Prior period favorable development was $67 million compared with $137 million in 2008.
  • P&C pre-tax underwriting income decreased 19% to $357 million compared with $439 million.
  • The P&C expense ratio decreased by 1.2 percentage points. Excluding A&H, the P&C expense ratio decreased 2 percentage points.
  • Operating cash flow was $562 million, down 45%, due to large claim payment activity.
  • Net loss reserves increased $103 million, excluding foreign exchange revaluation.
  • Net investment income increased 3% to $502 million.
  • Return on average equity was 18.4%.(3)
  • Book value increased $272 million, or 2%, from December 31, 2008, while book value per share(4) increased from $43.30 at December 31, 2008, to $43.82, or 1%.
  • Net realized and unrealized losses after tax from our investment portfolio totaled approximately $305 million. This includes $203 million of unrealized losses and $102 million of realized losses. Net realized gains from derivative accounting related to the guaranteed minimum income benefits (GMIBs) of our life reinsurance business were approximately $24 million.

Details of our financial results for our business segments are available in the ACE Limited Financial Supplement. Key segment items include:

  • Insurance-North American: Net premiums written increased 2.5%. The combined ratio was 88.2% compared with 86.0%.
  • Insurance-Overseas General: Net premiums written decreased 1%. Adjusting for the impact of foreign exchange, they increased 10% on a constant-dollar basis. The combined ratio was 88.7% compared with 82.7%.
  • Global Reinsurance: Net premiums written increased 4%. Adjusting for the impact of foreign exchange, they increased 11% on a constant-dollar basis. The combined ratio was 63.0% compared with 70.8%.
  • Life: Net premiums written increased $241 million; excluding the results of Combined Insurance’s North American business, net premiums written increased 4%. Adjusting for the impact of foreign exchange, they increased 6% on a constant-dollar basis. Income excluding net realized gains (losses) was $53 million.

Earnings guidance announced on December 18, 2008, for the ACE Group for the full year 2009 has not changed.

Please refer to the ACE Limited Financial Supplement dated March 31, 2009, which is posted on the company's website in the Investor Information section, and access Financial Reports for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio and capital structure. The URL reference is:

ACE will host its first quarter earnings conference call and webcast on Wednesday, April 29, 2009, beginning at 8:30 a.m. ET. The earnings conference call will be available via live and archived webcast or by dialing 877-718-5111 (within the United States) or 719-325-4786 (international); passcode 4963586. Please refer to the ACE Limited website in the Investor Information section under Calendar of Events for details. A replay of the call will be available for approximately one month. To listen to the replay, dial: 888-203-1112 (in the United States) or 719-457-0820 (international); passcode 4963586.

The ACE Group is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited, the ACE Group conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries. Additional information can be found at:

(1) All comparisons are with the same period last year unless specifically stated.

(2) Non-GAAP Financial Measures:

Operating Income or Income excluding net realized gains (losses), net of tax is a common performance measurement for insurance companies. 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) and net realized gains (losses) included in Other (income) expense related to partially-owned insurance companies because the amount of these gains (losses) do not relate to their respective operations.

Underwriting income is calculated by subtracting losses and loss expenses, policy 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.

Tangible shareholders’ equity is shareholders’ equity less goodwill and other intangible assets. See reconciliation of Non-GAAP Financial Measures on page 28 in the financial supplement.

These measures should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

(3) Calculated using income excluding net realized gains (losses) less perpetual preferred securities divided by average common shareholders' equity for the period. To annualize a quarterly rate, multiply by four.

(4) Book value per common share is common shareholders’ equity divided by the shares outstanding. Tangible book value per common share is common shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.

Combined Insurance – Combined Insurance Company of America and certain of its subsidiaries.

NM – not meaningful comparison

Cautionary Statement Regarding Forward-Looking Statements:

Forward-looking statements made in this press release, such as those related to premium revenue, client behavior, economic and insurance market conditions, and company performance 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, integration activities and unexpected financial or operational performance with respect to acquired companies, unexpected effects or difficulties relating to the company’s re-domestication to Switzerland, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, 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)


      March 31   December 31
      2009   2008
Investments   $ 40,240   $ 39,715
Cash     844     867
Insurance and reinsurance balances receivable     3,853     3,453
Reinsurance recoverable on losses and loss expenses     13,713     13,917
Other assets     14,477     14,105
  Total assets   $ 73,127   $ 72,057
Unpaid losses and loss expenses   $ 36,931   $ 37,176
Unearned premiums     6,186     5,950
Other liabilities     15,292     14,485
  Total liabilities     58,409     57,611
Shareholders' equity            
  Total shareholders' equity     14,718     14,446
  Total liabilities and shareholders' equity   $ 73,127   $ 72,057
Book value per common share (4)   $ 43.82   $ 43.30

ACE Limited

Summary Consolidated Financial Data

(in millions of U.S. dollars, except share, per share data, and ratios)


    Three Months Ended
    March 31
    2009   2008
Gross premiums written   $ 4,535     $ 4,409  
Net premiums written     3,424       3,154  
Net premiums earned     3,194       2,940  
Losses and loss expenses     1,816       1,579  
Policy benefits     99       63  
Policy acquisition costs     481       468  
Administrative expenses     420       375  
Underwriting income (2)     378       455  
Net investment income     502       489  
Net realized gains (losses)     (121 )     (353 )
Interest expense     53       46  
Other income (expense)     (14 )     (15 )
Income tax expense     125       153  
Net income     567       377  
Preference share dividend     -       (11 )
Net income available to holders of common shares   $ 567     $ 366  
Diluted earnings per share:            
Income excluding net realized gains (losses) (2)   $ 1.99     $ 2.14  
Net income   $ 1.69     $ 1.10  
Weighted average diluted shares outstanding     336.1       333.0  
Loss and loss expense ratio     59.7 %     55.6 %
Policy acquisition cost ratio     15.2 %     16.2 %
Administrative expense ratio     12.6 %     12.8 %
Combined ratio     87.5 %     84.6 %

ACE Limited

Consolidated Supplemental Segment Information

(in millions of U.S. dollars)


    Three Months Ended
    March 31
    2009   2008

Gross Premiums Written

Insurance - North American   $ 2,078     $ 2,181  
Insurance - Overseas General     1,693       1,778  
Global Reinsurance     379       345  
Life     385       105  
Total   $ 4,535     $ 4,409  



Net Premiums Written

Insurance - North American   $ 1,392     $ 1,360  
Insurance - Overseas General     1,327       1,345  
Global Reinsurance     359       344  
Life     346       105  
Total   $ 3,424     $ 3,154  

Net Premiums Earned

Insurance - North American   $ 1,437     $ 1,354  
Insurance - Overseas General     1,184       1,223  
Global Reinsurance     238       263  
Life     335       100  
Total   $ 3,194     $ 2,940  



Income Excluding Net Realized Gains (Losses) (2)

Insurance - North American   $ 321     $ 327  
Insurance - Overseas General     209       256  
Global Reinsurance     144       144  
Life     53       33  
Corporate     (58 )     (35 )
Total   $ 669     $ 725  



ACE Limited
Investor Contact:
Helen M. Wilson, 441-299-9283
Media Contact:
Stephen M. Wasdick, 212-827-4444