This call is being webcast live and the webcast replay will be available for one month. All remarks made during the call are current at the time of the call and will not be updated to reflect subsequent material developments.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 a good first quarter. Our results, both revenue and current accident year income, were right on plan, and then we benefited additionally in positive prior period reserve development and life catastrophe losses. Pricing continued to improve and was in line with or a little better than our expectations. All in all, a strong start to the year. After-tax operating income, as you’ve seen, for the quarter was 701 million or 2.05 per share, and our operating ROE exceeded 12%, a very good return. Book value grew 4.5% and now it stands at $25.4 billion. Book value growth benefited from both strong operating income as well as investment portfolio gains resulting from a narrowing of interest rate spreads and favorable equity markets during the quarter. In addition to the portfolio gains, we also had an improvement to the variable annuity mark on the order of about 230 million. Phil will have more to say about the market’s impact on our investment portfolio and the VA mark. Our underwriting results were simply excellent. We had a combined ratio for the quarter of 89.2 and benefited from both positive prior period reserve development that was flat with last year’s first quarter, and of course low cat losses. What is noteworthy is that our ex-cat current accident year operating income was up over prior year, and that included current accident year underwriting that was flat with prior year. This is a reflection of the excellent health of our current business due to our underwriting discipline and our balance of business between various lines and geographies.
Total company net premiums in the quarter grew 3.7%. Our growth rate was right in line with our plan. Foreign exchange had approximately a 1% adverse impact on our premium growth rate. For the balance of the year, we expect premium growth to pick up continuously quarter by quarter and average mid to upper single digits in constant dollars, excluding agriculture insurance. Crop premiums, as you know, are impacted by commodity prices, and therefore agriculture will likely be down year-over-year about $250 million. Crop premium volume is concentrated in the second and third quarters.Returning to the quarter, in North America growth was impacted by our continued action to shed risk-transfer workers’ comp business. Even with the current price increases being achieved in the market, this class runs at combined ratios significantly over 100% and simply doesn’t meet our standards. We’ve been exiting this business for three years and by the end of the year our volume will be negligible. Adjusting for this reduction, our underlying growth in North America was around 3% with retail insurance up 3.5 and our wholesale and specialty business about flat. For our U.S. retail commercial P&C book, our new business writings grew 20% year-on-year, albeit from a relatively low base. The renewal retention ratio as measured by premium in our U.S. retail was 94% in the quarter, up from 92% prior year; and on a policy count basis, our renewal retention rate is also up two points to 83%. Our increased retention rates are a consequence of some better pricing and the fact that we began more rigorous portfolio management a couple of years ago. In the quarter, some of the areas where we saw our best growth were property and inland marine, risk management casualty, our U.S. brokerage-generated A&H business, and certain specialty casualty lines such as life sciences and foreign casualty. In addition, ACE Westchester, our E&S business, grew for the second consecutive quarter on the strength of property and inland marine in particular.
In our international business, growth in the quarter was quite strong and up about 11% in constant dollars. Retail business through our ACE International division was up 12%. Our wholesale business through our London-based ACE Global Markets franchise was essentially flat. We benefited from double-digit growth in both commercial P&C and A&H in Asia Pacific and Latin America. Our business on the continent was up about 3% while our retail business in the U.K. was down due to competitive market conditions.Read the rest of this transcript for free on seekingalpha.com