(RTTNews) - Insurer ACE Ltd. (ACE: News ) Monday said its second quarter profit declined 28% from last year, hurt by lower premium income, and a drop in net investment income amid the difficult economic conditions.

The Zurich, Switzerland-based company posted net income available to common shareholders of $535 million or $1.58 per share for the second quarter, down 28% from $746 million or $2.18 per share in the prior year quarter.

Income excluding net realized gains/losses fell to $706 million or $2.09 per share from $738 million or $2.16 per share in the year-ago quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to earn $1.94 per share for the second quarter.

Gross premiums written for the second quarter fell 3% to $5.12 billion, while net premiums written dropped 5% to $3.42 billion, and net premiums earned slipped 5% to $3.27 billion over a year earlier.

Evan Greenberg, chairman and chief executive officer of ACE, said, "Recession, a strong U.S. dollar and a competitive pricing environment impacted premium growth."

Combined ration for the quarter was 87.7%, compared to 87.8% in the previous year quarter.

Net investment income decreased 5% to $506 million from $532 million in the prior year quarter.

Insurance-North American net premiums written increased 4%, with combined ratio 90.0%, compared to 89.5% a year ago.
Insurance-Overseas General net premiums written decreased 12% on a reported basis, but grew 2% on a constant rate basis. Combined ratio was 89.8%, compared to 86.9% last year.

Global Reinsurance net premiums written increased 22%, with combined ratio of 48.2%, compared to 68.6% a year earlier. Life net premiums written dropped 2% to $367 million for the quarter.

For the first half of 2009, ACE reported net income available to common shareholders of $1.10 billion or $3.27 per share, compared to $1.10 billion or $3.29 per share in the previous year period.

Income excluding net realized gains/losses dropped to $1.38 billion or $4.08 per share from $1.46 billion or $4.31 per share in the prior year period.

Net premiums written fell 2% to $6.13 billion, and net premiums earned declined 2% to $5.76 billion from the year-ago period.

Looking ahead, Greenberg said, "We remain cautious given current economic and financial market conditions, but we are aggressively focused on execution, and we continue to make investments to expand our capabilities for the future."

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