ACE's Earnings Get Clubbed

Investment write-downs and losses cause ACE's profit to dwindle.
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On Feb. 3, 2009,



reported that its Q4 FY08 earnings plunged 96.4%, hurt by investment write-downs and other-than-temporary impairment losses. Net income available to shareholders declined to $20.00 million or $0.06 per share from $560.00 million or $1.69 per share in Q4 FY07. Excluding one-time items, the company earned $624.00 million or $1.87 per share, which beat the most recent consensus estimate of $1.80 per share.

Gross premiums written rose 4.2% to $4.32 billion from $4.14 billion a year ago. Furthermore, net premiums written grew 8.0% to $3.05 billion, while net premiums earned edged up 5.5% to $3.23 billion. Net investment income advanced 3.4% year over year to $521.00 million from $504.00 million. On the flip side, net realized investment losses widened to $644.00 million from $66.00 million, hurt by mark-to-market pricing due to continued widening of credit spreads and the decline in global equity markets.

Net premiums written from the Insurance-North American segment fell 5.0% to $1.30 billion, while its net premium earned inched down 2.9% to $1.38 billion. However, Insurance-Overseas General net premiums written spiked 7.0% to $1.25 billion, while the segment's net premium earned ascended 1.7% to $1.25 billion. Moreover, Global Reinsurance's net premiums written plunged 27.6% to $126.00 million, whereas its net premium earned shrunk 23.1% to $240.00 million. Net premiums written from the Life segment more than tripled to $371.00 million, while its net premium earned swelled more the three-fold to $359.00 million.

The combined ratio for the property and casualty business was down to 86.90% from 88.10%, while total invested assets plunged 4.9% to $39.72 billion as of Dec. 31, 2008.

For FY08, ACE's net income declined 53.7% to $1.17 billion or $3.53 per share from $2.53 billion or $7.66 per share, while net premium earned augmented 7.4% to $13.20 billion from $12.30 billion in FY07.

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