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ACE Reports Record Quarterly Operating Income Of $790 Million, Net Income Of $891 Million And P&C Combined Ratio Of 87.9%; Operating Return On Equity Is 12.3%

Stocks in this article: ACE

ACE Limited (NYSE: ACE) today reported net income for the quarter ended June 30, 2013, of $2.59 per share, compared with $0.96 per share for the same quarter last year. (1) Operating income was $2.29 per share, compared with $2.17 per share for the same quarter last year. Book value per share declined 2.3% from March 31, 2013, to $80.26 due to rising interest rates. Tangible book value per share decreased 4.9% to $64.40, primarily due to rising interest rates and the impact of goodwill and intangibles relating to acquisitions closed during the quarter. Operating return on equity for the quarter was 12.3%. The property and casualty (P&C) combined ratio for the quarter was 87.9%.

Second Quarter Summary
(in millions, except per share amounts)
(Per Share - Diluted)
2013   2012   Change 2013 2012   Change
Net income $ 891 $ 328 171.2 % $ 2.59 $ 0.96 169.8 %
Net realized gains (losses), net of tax 101     (415 )   NM   0.30   (1.21 )   NM  
Operating income, net of tax $ 790     $ 743     6.3 % $ 2.29   $ 2.17     5.5 %

For the six months ended June 30, 2013, net income was $5.36 per share, compared with $3.80 per share for 2012. Operating income was $4.46 per share, compared with $4.22 per share for 2012. Book value decreased $236 million, down 0.9% from December 31, 2012, and tangible book value decreased $656 million, down 2.9%. The P&C combined ratio for the six months ended June 30, 2013, was 88.1%.

Six Months Ended Summary
(in millions, except per share amounts)

(Per Share – Diluted)

2013   2012   Change 2013   2012   Change
Net income $ 1,844   $ 1,301 41.7 %   $ 5.36 $ 3.80   41.1 %
Net realized gains (losses), net of tax 308     (143 )   NM   0.90    



Operating income, net of tax $ 1,536       $ 1,444     6.4 %   $ 4.46     $ 4.22     5.7 %

Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, commented: “ACE had record earnings in the quarter that were driven, in particular, by excellent current accident year underwriting results and strong investment income. We produced $790 million in after-tax operating income and our operating ROE was 12.3%. Book value declined 2.3% due to the rise in interest rates, which reduced unrealized gains in our investment portfolio. However, future investment income will benefit over time from the rise in interest rates.

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