Now I’d like to introduce our speakers. First, we have Evan Greenburg, Chairman and Chief Executive Officer, followed by Phil Bancroft, our Chief Financial Officer; then we’ll take your questions. Also with us to assist with your questions are several members of our management team.And now it’s my pleasure to turn the call over to Evan. Evan Greenburg Good morning. ACE had very good fourth quarter and full-year results, particularly considering the environment, Euro crisis, slow economic growth in developed markets, challenging insurance market conditions, and of course the costliest catastrophe year on record for the industries. After-tax operating income for the quarter was 663 million or $1.94 per share. The combined ratio for the quarter was 92.9, and this includes 155 million pre-tax catastrophe losses, the overwhelming majority of which came from the Thailand floods. The ex-cat accident year combined ratio was 92, a very good current underwriting year result. Net premiums in the quarter grew 6% and our operating ROE was nearly 12%. Growth came predominantly from A&H, crop, personal lines, and P&C commercial lines, particularly in Asia and Latin America. Insurance prices in the U.S. continued to firm through the quarter and into January, particularly in classes where industry underwriting results are suffering the most. The balance of classes was flat to up modest single digits with the exception of professional lines where rates declined, but at the slowest pace we’ve seen in a long time. I’ll come back to market conditions later. Earlier this month, shareholders approved a 34% increase in the common stock dividend. Raising the dividend this amount was, in our judgment, a good use of capital while signaling our confidence in the Company’s strong balance sheet and earnings generation power. This did not compromise or change our view of strategy in any way.
We made a small acquisition at the end of December, Rio Guayas, the fourth largest non-life insurer in Ecuador. The addition will complement our existing business in that country in terms of geographic presence, product and distribution. By the way, we also closed on Penn Millers in the fourth quarter, a quarter earlier than we had estimated.Let me talk about the full year and put ACE’s performance for the year in perspective. Full-year net operating income was nearly 2.4 billion, down 11% from 2010. The composition of our operating income was quite good with about one-third coming from underwriting income and two-thirds from investment income. Our results included almost 500 million more in pre-tax catastrophe losses, or twice as much as we experienced in 2010. Excluding the impact of cats from both years, operating income was actually up 5% over prior year. Both years included roughly the same amount of prior period reserve development, so that underlying growth in income came from current accident year results, predominantly from the acquisitions we made as well as our A&H business and improved P&C portfolio management in the U.S. In 2011, the expense ratio declined over two points year-over-year, and we finished with a P&C combined ratio of 94.6, a very good result when compared to the industry which ran well in excess of 100% in the worst cat year in history globally for the industry. Per share book value grew 6% for the year, bringing three-year growth to almost 19% and five-year growth to over 11.5. We concluded the year with a very strong capital position. Total capital at December 31, stands at 29.4 billion and shareholder equity at 24.5, both up about 1.5 billion for the year. Our operating ROE for the year was almost 11%, a good result given the cat losses we incurred.
Turning to the growth, net premiums grew 12% during the year. You will recall back in the first quarter we said full-year premium growth would range between upper single digit to low double-digit. Revenue and earnings during the year benefited from three acquisitions at the end of ’10, the largest being Rain and Hail. We had a good year in agriculture, including crop insurance, and this contributed 1.4 billion in premium revenue growth and produced a combined ratio of 91%.Read the rest of this transcript for free on seekingalpha.com