ACE enjoys strong Q1 growth but profits dip
ACE posted healthy growth in its first quarter results driven largely by its property/casualty book, especially in North America where rate increases were also achieved. But its profits for the quarter dipped substantially.
The company made a net profit of $734 million in the quarter, a 23 percent decline on the $953 million it made last year. However, its operating income improved to £777 million compared with $746 million the year before.
Its combined ratio for the quarter was 88.8 percent compared with 88.2 percent a year earlier while its net investment income also improved by 4 percent reaching $553 million in the quarter.
Its gross written premiums hit $5.37 billion in the quarter compared with $4.96 billion the year before, an increase of 8 percent on the period in 2013. Its net written premiums increased to $4.18 billion compared with $3.78 billion in the first quarter of 2013.
Evan Greenberg, chairman and chief executive of ACE, said he was pleased with the results. He highlighted the growth in the property/casualty segment and especially rate increases that had been achieved in North America while also warning that this market globally was getting tougher.
“ACE had an excellent first quarter and a very good start to the year. After-tax operating income of $777 million was driven by both strong underwriting and investment income results, which generated an operating ROE of 11.2 percent. Per share book and tangible book value grew 2.4 percent and 3 percent, respectively,” Greenberg said.
“Underwriting results were particularly strong in the quarter, with underwriting income up 7 percent and a P&C combined ratio of 88.8 percent. Underwriting income benefited from excellent current accident year underwriting income growth before catastrophe losses of 17 percent as a result of double-digit growth in earned premium and improved margin.
“Premium revenue growth across the company was exceptionally strong, with total P&C net premiums up 12 percent, or nearly 14 percent in constant dollars. In North America, our P&C business grew 11 percent in the quarter and continued to achieve positive rate increases with overall pricing up in casualty-related lines and down in property-related.
“Internationally, where our P&C business grew more than 12 percent in constant dollars, pricing was generally flat. Commercial P&C market conditions globally are stable but growing more competitive. This is not a surprise – we are a disciplined organization and prepared. Given our excellent diversification by product, geography and distribution, many areas of our business have attractive growth prospects, and as a result we are confident in our ability to outperform.”
