July 23, 2014 by Canadian Underwriter
Strong current accident year underwriting income excluding catastrophe losses drove an increase in property and casualty underwriting income in 2014 Q2, contributing to ACE Limited’s 4.5% increase in operating income over the same quarter in 2013.
Operating income (net of tax) for the quarter ended June 30, 2014 was US$825 million compared to US$790 million in 2013 Q2, notes a statement issued Tuesday by ACE, one of the world’s largest multi-line property and casualty insurers with operations in 54 countries.
Comparing second quarter results for 2013 and 2014, ACE reports the following: Insurance (North American P&C) – operating income increased from US$341 million to US$378 million; Insurance (North American Agriculture) – decreased from US$26 million to US$19 million; Insurance (Overseas General) – increased from US$256 million to US$282 million; Global Reinsurance – decreased from US$156 million to US$146 million; Life – fell from US$76 million to US$72 million; and Corporate increased from a loss of US$65 million to a loss of US$72 million.
“P&C underwriting income was up 10% with a combined ratio of 87.5%,” Evan G. Greenberg, chairman and chief executive officer of ACE Limited, says in the statement. “The growth in underwriting was driven by current accident year underwriting income before catastrophe losses, which was up nearly 12% as a result of global P&C net earned premium growth of 8.5%, as well as margin improvement in our international business,” Greenberg reports.
The insurer’s net income was $2.28 per share in 2014 Q2 compared to $2.59 per share in 2013 Q2, while operating income was $2.42 per share compared to $2.29 per share.
“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,” Greenberg says. “After-tax operating income of US$825 million was driven by strong growth in underwriting and good investment income results, which together produced an operating ROE of about 12%,” he adds.
On the property and casualty front, net premiums written climbed 4% from US$3,904 million in 2013 Q2 to US$4,061 million in 2014 Q2; underwriting income increased 10.3% from US$434 million to US$478 million; current accident year underwriting income excluding catastrophe losses rose 11.9% from US$387 million to US$432 million; current accident year combined ratio excluding catastrophe losses fell from 89.2% to 88.7%.
More specific results for 2014 Q2 by segment include the following:
Overall, ACE’s P&C combined ratio in the second quarter of 2014 was 87.5% compared to 87.9% in the second quarter of 2013. For the six months ended June 30, 2014, the P&C combined ratio was 88.2%.
Other results for 2014 Q2 include the following:
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