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ACE Reports Fourth Quarter Operating Income Of $492 Million After Superstorm Sandy Losses Of $393 Million After-Tax; Book Value Up 2.1% In Quarter With Operating ROE Of 8%

Stocks in this article: ACE

ACE Limited (NYSE: ACE) today reported net income for the quarter ended December 31, 2012, of $2.22 per share, compared with $2.15 per share for the same quarter last year. (1) Income excluding net realized gains (losses) was $1.43 per share, compared with $1.90 per share for the same quarter last year. (2) After-tax catastrophe losses for the fourth quarter 2012 were $400 million, net of reinsurance and including reinstatement premiums, or $1.16 per share, compared with $137 million, or $0.40 per share, for the same quarter last year. Book value and tangible book value increased 2.1% and 2.7%, respectively, from September 30, 2012. Book value and tangible book value per share now stand at $80.90 and $66.28, respectively. Operating return on equity (ROE) for the quarter was 8.0%. (2) The property and casualty (P&C) combined ratio for the quarter was 105.5%, which includes net pre-tax losses from Superstorm Sandy of $502 million ($393 million after-tax) and a pre-tax charge for asbestos and environmental and other run-off business of $140 million ($90 million after-tax). Operating income includes a tax benefit of $121 million from the favorable resolution of prior years’ tax matters.

Fourth Quarter Summary
(in millions, except per share amounts)
(Per Share - Diluted)
2012   2011   Change 2012   2011   Change
Net income $ 765 $ 735 4 % $ 2.22 $ 2.15 3 %
Net realized gains (losses), net of tax 273     87     214 % 0.79     0.25     216 %
Income excluding net realized gains

(losses), net of tax (2)

$ 492 $ 648 (24 )% $ 1.43 $ 1.90 (25 )%

For the year ended December 31, 2012, net income was $7.89 per share, compared with $4.52 per share for 2011. Income excluding net realized gains (losses) was $7.65 per share, compared with $6.84 per share for 2011. Book value increased $3.2 billion, up 13.1% from December 31, 2011, and tangible book value increased $3.0 billion, up 15.5%. The P&C combined ratio for the year was 93.9%.

Full Year Summary
(in millions, except per share amounts)
(Per Share - Diluted)
2012   2011   Change 2012   2011   Change
Net income $ 2,706 $ 1,540 76 % $ 7.89 $ 4.52 75 %
Net realized gains (losses), net of tax 82     (791 )   NM 0.24     (2.32 )   NM
Income excluding net realized gains
(losses), net of tax (2) $ 2,624     $ 2,331     13 % $ 7.65     $ 6.84     12 %

Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, commented: “ACE had a good fourth quarter, which contributed to an excellent year. Even with the impact of Superstorm Sandy, we produced over $490 million of operating income and increased book value per share 2%. These results continue to demonstrate the strength of our underwriting culture and balance sheet, and the benefits of our globally diversified business.

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