ACE sees Q3 investment loss; income between $1.44-1.48 per share

**CLARIFICATION**: The following news brief, originally posted on Oct. 14, contains information about the company’s operating income and investment loss that was omitted from the previous publication.

ACE Limited estimates its 2008 Q3 net investment loss will be approximately US$1.5 billion.
In addition, it sees its operating income for the third quarter ended Sept. 30, 2008 as between $1.44 and $1.48 per common share.
Of the estimated US$1.5 billion in realized and unrealized investment losses, approximately US$1.3 billion relates to the fixed income and equity portfolios and is largely due to the widening of credit spreads in its high quality corporate bond portfolio, an ACE release says.
“The company did not and does not invest in CDOs, CLOs or complex credit structures and does not employ leverage, and as such, has no transactions that require the posting of collateral,” the release says.
Approximately US$220 million of the company’s estimated net losses for the third quarter relate to the guaranteed minimum income benefit liabilities of the company’s variable annuity reinsurance book, it adds.
“These losses resulted from an increase in the fair market value of the liabilities related to these annuities,” the company says. “This does not present any liquidity exposures. Cash flow in this business is positive and is within our original expectations.”
The company’s Q3 earnings and statement will be available on Oct. 28 after the market closes.
The company said it pre-announced its loss in light of “extraordinary market conditions and questions of investor confidence in financial institutions generally.”
“We have decided to provide an estimate of our Q3 results in an effort to give greater clarity and certainty about our company, whose financial performance and balance sheet remain strong,” said Evan G. Greenberg, chairman and CEO of ACE Limited.