Reinsurance book shrinks at ACE in Q1
ACE posted a solid set of results for the first quarter of 2015, despite the reinsurance part of its business shrinking and unfavourable currency movements.
Its net profit fell by 7.2 percent to $681 million in the first quarter 2015, compared with $734 in the first quarter of 2014.
ACE’s reinsurance division posted an 11.4 percent decrease in net written premiums to $273 million, compared with $308 million in the first quarter of 2014. Its gross written premiums fell to $292 million in the first quarter of 2015, compared with $333 million in the first quarter of 2014, while its combined ratio deteriorated to 73.2 percent, compared with 72.9 percent in the first quarter of 2014.
According to ACE, its year-over-year results were adversely impacted by foreign exchange movements in the period and a number of favourable items from the prior year that were not repeated.
“In the prior year, North American property and casualty (P&C) underwriting income was favourably impacted by $25 million of premium-related items,” said ACE. “In addition, 2014 benefited from lower taxes of $16 million related to prior period development emerging in lower tax jurisdictions. These items and foreign exchange had a negative impact of $0.18 per share on operating income.”
ACE’s P&C division posted a 2.9 percent decrease in its net written premiums for the first quarter of 2015 to $3.6 billion, compared with $3.7 billion in the first quarter of 2014.
However, on a constant-dollar basis, net written premiums grew by 1.7 percent. Its combined ratio improved minimally to 88.4 percent in the first quarter, compared with 88.8 percent in the first quarter of 2014.
Evan Greenberg, chairman and chief executive officer of ACE, said: “ACE’s first quarter earnings per share were essentially flat with prior year – a good result for a global, dollar-based insurer. We overcame unfavourable foreign exchange movement and a number of favourable items from prior year to produce after-tax operating income of $745 million, or $2.25 per share.
“Global P&C (which excludes agriculture) net premiums written grew 5 percent on a constant-dollar basis with the strong dollar taking about five percentage points off our company’s premium growth. We obviously have the headwinds of foreign exchange, an underwriting environment that continues to grow more competitive for our commercial P&C businesses, as well as low interest rates.
“Given our excellent diversification by product, geography and consumer segment, many areas of our business present attractive growth prospects, particularly in the US, Latin America and Asia, and as a result we expect our premium revenue growth for the balance of the year to be in the mid-single digits on a published basis.”
