Ace Ltd. (ACE: Quote) Tuesday said its second-quarter profit plunged 45 percent, due mainly to higher net realized losses. On an adjusted basis, which excludes special items, profit for the quarter advanced from a year ago, as catastrophe losses declined significantly and combined ratio improved. The Swiss insurer also lifted its earnings forecast for the full year 2012.
Chief Executive Evan Greenberg said, "ACE had a very strong second quarter, with excellent operating results that were ahead of plan despite a challenging and slowing global economy."
Catastrophe losses for the quarter including reinstatement premiums decreased to $41 million from $101 million a year ago.
ACE said its property and casualty, or P&C, combined ratio for the quarter improved to 88.7 percent from 92.7 percent last year. A ratio above 100 percent indicates that the company is paying out more money in claims than it is receiving from premiums.
Zurich-based Ace's second-quarter net income declined to $328 million or $0.96 per share from $594 million or $1.74 per share last year.
Second-quarter results include net realized losses of $415 million compared to $79 million last year.
Operating profit, which excludes realized gains and losses, improved to $2.17 per share from $1.97 per share last year.
Analysts polled by Thomson Reuters expected earnings of $1.92 per share for the quarter. Analysts' estimates typically exclude special items.
Net premiums earned grew to $3.78 billion from $3.76 billion last year. Net premiums written rose to $4.13 billion from $3.95 billion last year.
Ten analysts had consensus revenue estimate of $3.88 billion for the quarter.
Losses and loss expenses for the quarter dropped to $2.12 billion from $2.23 billion last year.
Ace lifted its full-year 2012 operating income to a range of $7.20 to $7.60 per share, from prior estimate of $7.03 to $7.43 per share. Analysts currently expect earnings of $7.74 per share for full year.
Moving ahead to the second half, Greenberg said, "Drought conditions in the U.S. are impacting our crop insurance business and will affect our earnings in the second half of the year as described in our updated guidance. Crop insurance aside, we are optimistic about our revenue and earnings prospects for the balance of the year and we are well positioned to take advantage of the positive trend in P&C prices globally."
Greenberg also warned about the economic and political headwinds, including the eurozone crisis and the U.S. fiscal cliff, impacting businesses in the U.S., China and rest of the world.
ACE closed Tuesday's trading at $69.17, down $0.72 or 1.03%, on a volume of 2 .1 million shares on the NYSE. In after hours, the stock lost $0.09 or 0.13%.
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by RTT Staff Writer
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