23 July 2014 Insurance

ACE sees Q2 growth despite decline in reinsurance

ACE posted solid results in the second quarter of 2014 but while its overall net premiums written increased, the reinsurance part of its business shrank slightly, compared with the same period a year earlier.

The company’s net written premiums increased by 4 percent to $4 billion in the second quarter of 2014 compared with from $3.9 billion in the second quarter of 2013. Its reinsurance business, however, shrank by 4.9 percent in the quarter.

Tougher conditions in the reinsurance market were also reflected in the reinsurance business’s combined ratio which rose from 62.2 percent in 2013 to 69.9 percent in 2014.

The company as a whole made a net profit of $779 million in the second quarter of 2014 compared with $891 million in the same quarter a year earlier. Its operating profit for the same periods increased, however, to $825 million compared with $790 million the year before.

The company’s combined ratio improved marginally down to 87.5 percent for the quarter compared with 87.9 percent the year before.

Its insurance business fared well, making up for declines on the reinsurance side. Its North American P&C and international general underwriting businesses wrote 6.9 percent and 8 percent more business respectively than the same period last year.

Evan Greenberg, chairman and CEO of ACE, said: “ACE’s excellent second quarter results were marked by strong earnings, very good premium revenue growth globally and continued expansion of our business in the majority of markets in which we operate – both developed and developing. After-tax operating income of $825 million was driven by strong growth in underwriting and good investment income results, which together produced an operating ROE of about 12 percent. Per share book value increased nearly 4 percent in the quarter and over 6 percent for the year.”

“This premium growth was well distributed across the company by territory, product line and customer segment with double-digit contributions from Asia and Latin America and solid single-digit growth in North America and the continent of Europe. Our ability to generate sustained premium revenue growth reflects our deepening presence and capabilities in important long-term growth markets of the world.

“In two of these, Thailand and Brazil, we either completed or announced acquisitions in the quarter that meaningfully advance our company strategically. With the addition of Samaggi Insurance, ACE is now the largest foreign-owned P&C insurer in Thailand. Similarly, the combination of our existing business in Brazil and Itaú Seguros’s corporate P&C business, which we plan to acquire early next year, will make ACE the largest commercial P&C insurer in that country.”

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