ACE Limited Reports Second Quarter Earnings
HAMILTON, Bermuda,
April 27, 1999
ACE Limited (NYSE: ACL) today reported income excluding net realized gains for the fiscal 1999 second quarter ended March 31, 1999 of $111.8 million, or $0.57 per share, compared with $102.3 million, or $0.56 per share, for the same quarter in fiscal 1998. Net income for the fiscal 1999 second quarter was $129.0 million, or $0.65 per share, compared with $247.9 million, or $1.37 per share, for the same quarter last year. Earnings per share calculations above are based on the weighted average number of shares calculated in accordance with FAS 128 on a diluted basis. The fully diluted net asset value per share of the company at March 31, 1999 was $20.35.
Brian Duperreault, chairman, president and chief executive officer of ACE commented: "ACE continues to be one of the leaders in developing new and innovative products for our customers while building a truly diversified and global enterprise. These initiatives enable us to report continuing growth in premium volume and earnings per share even in the face of very difficult market conditions.
"As an integral part of the implementation of our global strategy we continue to work towards the completion of the acquisition of CIGNA's property and casualty business, which we anticipate will close by July 1, 1999," said Mr. Duperreault.
Gross premiums written during the quarter increased by 65.4 percent to $435.5 million, compared with $263.3 million for the comparable quarter last year.
Net premiums written during the quarter were $340.7 million compared with $228.6 million for the same quarter last year. Net premiums earned during the quarter were up 28.8 percent to $285.3 million from $221.5 million in the same quarter last year.
Gross premiums written for the first six months of fiscal 1999 were $689.6 million compared to $470.8 million for the same period last year, an increase of 46.5 percent.
For the first six months of fiscal 1999, net premiums written increased 29.6 percent to $494.8 million compared to $381.7 million for the first half of fiscal 1998. Net premiums earned for the six months ended March 31, 1999 were $503.3 million compared with $426.8 million for the same period last year, a 17.9 percent increase.
Net investment income, excluding net realized gains, was $86.5 million for the fiscal 1999 second quarter, compared with $78.3 million for the same period last year, a 10.5 percent increase. For the first six months of fiscal 1999, net investment income, excluding net realized gains was $171.6 million compared with $142.0 million for the same period last year, a 20.9 percent increase. During the 1999 second quarter, ACE had net realized gains of $17.3 million, compared with net realized gains of $145.6 million for the same quarter last year. For the six months ended March 31, 1999, net realized gains were $147.4 million, compared with net realized gains of $173.1 million for the first half of fiscal 1998.
On January 12, 1999, ACE Limited announced it had agreed to acquire the international and domestic property and casualty insurance businesses of CIGNA Corporation for $3.45 billion in cash. The transaction, which is subject to receipt of necessary regulatory approvals and other customary closing conditions, is expected to be completed by July 1, 1999.
The ACE Group of Companies provides insurance and reinsurance for a diverse group of international clients. Operating subsidiaries are based in Bermuda, the United States, the United Kingdom (Lloyd's), and the Republic of Ireland. At March 31, 1999, ACE Limited had approximately $8.9 billion in assets and approximately $4.0 billion in shareholders' equity.
(tables to follow)
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ACE Limited
Summary Consolidated Financial Data
(in thousands of U.S. dollars, except share and per share data)
|
|
|
|
|
Three Months Ended
March 31
|
Six Months Ended
March 31
|
|
|
1999
|
1998
|
1999
|
1998
|
|
Operations Data:
|
|
|
|
|
|
Gross premiums written
|
$435,495
|
$263,337
|
$689,563
|
$
470,793
|
|
Net premiums written
|
340,665
|
228,637
|
494,768
|
381,786
|
|
Net premiums earned
|
285,267
|
221,475
|
503,274
|
426,805
|
|
Net investment income
|
86,484
|
78,283
|
171,580
|
141,955
|
|
Losses and loss expenses
|
156,881
|
129,780
|
268,050
|
252,035
|
|
Acquisition costs
|
34,353
|
27,225
|
62,165
|
52,053
|
|
Administrative expenses
|
54,650
|
23,872
|
95,869
|
43,674
|
|
Amortization of goodwill
|
4,420
|
1,974
|
8,855
|
4,245
|
|
Interest expense
|
4,530
|
5,192
|
9,271
|
6,553
|
|
Income tax expense
|
5,152
|
9,430
|
10,494
|
13,198
|
|
|
|
|
|
|
|
Income excluding net realized gains
|
111,765
|
102,285
|
220,150
|
197,002
|
|
Net realized gains
|
17,254
|
145,616
|
147,408
|
173,109
|
|
Net income
|
129,019
|
247,901
|
367,558
|
370,111
|
|
|
|
|
|
|
|
(Basic EPS under FAS 128):
|
|
|
|
|
|
Earnings per share excluding net realized gains
|
$0.58
|
$
0.58
|
$
1.14
|
$
1.11
|
|
Earnings per share
|
$
0.67
|
$
1.40
|
$
1.90
|
$
2.08
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
193,758,050
|
177,188,338
|
193,678,770
|
178,093,744
|
|
|
|
|
|
|
|
(Diluted EPS under FAS 128):
|
|
|
|
|
|
Earnings per share excluding net realized gains
|
$
0.57
|
$
0.56
|
$
1.12
|
$
1.08
|
|
Earnings per share
|
$
0.65
|
$
1.37
|
$
1.86
|
$
2.03
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
197,180,787
|
181,312,726
|
197,211,710
|
182,106,190
|
|
|
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ACE Limited
Consolidated Supplementary Information
(in millions of U.S. dollars)
|
|
|
Three Months Ended
March 31
|
Six Months Ended
March 31
|
|
|
1999
|
1998
|
1999
|
1998
|
|
Gross Premiums Written
|
|
|
|
|
|
|
|
|
|
|
|
ACE Bermuda
|
$
129.8
|
$98.4
|
$
255.4
|
$225.9
|
|
ACE Global Markets
|
139.9
|
74.4
|
227.8
|
154.4
|
|
Tempest Re
|
115.6
|
51.8
|
123.0
|
51.8
|
|
ACE USA
|
50.2
|
38.7
|
83.4
|
38.7
|
|
Total
|
$435.5
|
$263.3
|
$689.6
|
$470.8
|
|
|
|
|
|
|
|
Net Premiums Written
|
|
|
|
|
|
|
|
|
|
|
|
ACE Bermuda
|
$ 97.8
|
$83.8
|
$
185.5
|
$
178.6
|
|
ACE Global Markets
|
104.9
|
76.6
|
146.4
|
134.9
|
|
Tempest Re
|
115.6
|
47.6
|
119.9
|
47.6
|
|
ACE USA
|
22.4
|
20.6
|
43.0
|
20.6
|
|
Total
|
$
340.7
|
$
228.6
|
$
494.8
|
$
381.7
|
|
|
|
|
|
|
|
Net Premiums Earned
|
|
|
|
|
|
|
|
|
|
|
|
ACE Bermuda
|
$
115.1
|
$
105.9
|
$
197.7
|
$
219.2
|
|
ACE Global Markets
|
108.2
|
69.7
|
173.3
|
133.3
|
|
Tempest Re
|
38.3
|
21.1
|
86.7
|
49.5
|
|
ACE USA
|
23.7
|
24.8
|
45.6
|
24.8
|
|
Total
|
$
285.3
|
$
221.5
|
$
503.3
|
$
426.8
|
|
|
|
|
|
|
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ACE Limited
Summary Consolidated Financial Data
(in thousands of U.S. dollars, except per share data)
|
|
|
March 31,
1999
|
September 30,
1998
|
|
Balance Sheet Data:
|
|
|
|
Investments and cash:
|
|
|
|
Fixed maturities, at fair value
(amortized cost $4,910,571 and $4,910,792)
|
$
4,922,33
3
|
$
5,056,807
|
|
Equity securities, at fair value
(cost $206,973 and $198,447)
|
232,498
|
189,717
|
|
Short-term investments, at fair
value
(amortized cost $502,038 and $480,236)
|
502,038
|
480,190
|
|
Other investments, at fair value
(cost $146,434 and $156,758)
|
147,549
|
156,646
|
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Cash
|
266,018
|
317,714
|
|
Total investments and cash
|
$6,070,436
|
$
6,201,074
|
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Total assets
|
8,876,389
|
8,788,753
|
|
Net unpaid losses and loss expenses
|
2,375,447
|
2,621,116
|
|
Net unrealized appreciation on investments
(net of deferred taxes of $1,490 and $9,282)
|
36,912
|
127,845
|
|
Total shareholders' equity
|
3,956,216
|
3,714,270
|
|
Fully diluted net asset value per share
|
$
20.35
|
$
19.14
|
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ACE Limited
Consolidated Supplementary Information
(in millions of U.S. dollars)
|
|
|
|
|
March 31, 1999
|
September 30, 1998
|
|
|
Gross
|
Net
|
Gross
|
Net
|
|
Unpaid losses and loss expenses:
|
|
|
|
|
|
Case and loss expense reserves
|
$1,426.2
|
$
1,138.6
|
$
1,406.4
|
$
1,213.5
|
|
IBNR loss reserves
|
2,183.3
|
1,333.9
|
2,331.5
|
1,464.9
|
|
|
$
3,609.5
|
$2,472.5
|
$
3,737.9
|
$
2,678.4
|
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Reinsurance recoverables on paid losses
|
|
(97.1)
|
|
(57.3)
|
|
Total
|
|
$
2,375.4
|
|
$
2,621.1
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ACE CORPORATE ANNOUNCEMENTS
SECOND QUARTER, 1999:
March 30, 1999 - ACE Global Markets Appointment
ACE Global Markets, a subsidiary of ACE Limited, announced the appointment of Malcolm Brett to the position of Senior Underwriter Syndicate 960. Mr. Brett was Aviation Underwriting Manager for CIGNA's Aerospace Department in London. Prior to joining CIGNA, he was with the Ariel Syndicate for 16 years.
March 19, 1999 - ACE Establishes Programme for Academic Excellence in Madeline Joell's Memory
ACE Limited announced that it would be establishing a fund for academic excellence in Bermuda's public primary schools in memory of Madeline Joell, ACE Bermuda's Vice President, Marketing who passed away suddenly in February.
March 15, 1999 - ACE Bermuda Appoints Senior Vice President and Claims Counsel
ACE Bermuda, a subsidiary of ACE Limited, announced the appointment of Frank A. Lattal to the position of Senior Vice President and Claims Counsel. Mr. Lattal is responsible for all legal functions of the Claims Department including coverage analysis and determinations, litigation and arbitration. Mr. Lattal brings to ACE Bermuda 14 years' experience providing counseling, litigation and arbitration services to insurers throughout the United States.
February 24, 1999 - ACE Global Markets Appoints Claims Director
ACE Global Markets, a subsidiary of ACE Limited, announced the appointment of Peter Murray to the position of Claims Director. Mr. Murray's appointment will be effective as of May 10, 1999. Mr. Murray joins ACE from the Lloyd's Claims Office (LCO) where he was head of Non-Marine Claims.
February 22, 1999 - MIGA Signs Treaty Reinsurance Agreement with ACE and XL: Further Increases Insurance Coverage to Meet Growing Demand
The Multilateral Investment Guarantee Agency (MIGA) announced the signing of treaty reinsurance agreements with two Bermuda-based private insurance companies ACE Bermuda Insurance Limited (ACE) and XL Insurance Company Ltd. (XL). The agreements will substantially increase the availability of insurance coverage for foreign investments in developing countries.
The agreements build on an earlier agreement signed in 1997 between MIGA and ACE. The agreement with ACE was groundbreaking in the political risk insurance industry, in terms of being the first time a private insurer provided long-term (up to 20 years) reinsurance to a public insurer. Under the new agreement, ACE and XL separately provide treaty reinsurance to MIGA.
February 17, 1999 - Dennis Reding to run ACE's US Operations After CIGNA P&C Acquisition Closes; Gerry Isom to Retire at Closing
ACE Limited announced that Dennis Reding, currently President and Chief Executive Officer of ACE USA, will assume the position of President and Chief Executive Officer of the company's US operations following the closing of ACE's acquisition of the property and casualty operations of CIGNA Corporation.
The company also announced that Gerry Isom, current President of CIGNA's domestic P&C operations, has decided to retire at the time of closing.
February 10, 1999 - Tempest Re Writes First Equity and Catastrophe Linked Protection
California State Automobile Association Inter-Insurance Bureau (CSAA), Carvill, Inc., and Tempest Reinsurance Company Limited, a wholly-owned subsidiary of ACE Limited, have completed the market's first reinsurance contract to protect against the combination of a property catastrophe loss and negative returns on an equity portfolio.
Called "Asset-Linked Catastrophe Protection," the policy was written to protect CSAA from the combined impact of a catastrophe, such as an earthquake, and a negative return from their equity market investments.
Asset-Linked Catastrophe Protection manages traditional catastrophe exposures by more efficiently matching reinsurance coverage to a client's balance sheet fluctuations.
February 9, 1999 - ACE Global Markets Announces Entry Into Nuclear Risk
ACE Global Markets, the UK subsidiary of ACE Limited, has agreed to provide through its managed syndicates £60 million of capacity to the British Insurance (Atomic Energy) Committee (British Nuclear Pool). This comprises 12% of the £500 million of capacity currently assumed by pool member companies and syndicates. The agreement will result in coverage for Nuclear Liability and Material Damage on a worldwide basis. ACE Global Markets representative, David Furby, has been appointed to the Management Committee of the British Nuclear Pool.
January 29, 1999 - ACE USA Introduces New Primary D&O Policy
ACE Limited announced that the Directors & Officers Division of ACE USA has introduced a new primary policy. The policy is a comprehensive blended form that will include coverage beyond just Directors, Officers and Entity Securities Liability. This form supplements ACE USA's previously announced excess policy form and integrated policy forms for Directors and Officers and related coverages released late last year.
Contact Information
Investor Contact:
Helen M. Wilson
(441) 299-9283
Media Contact:
Wendy Davis Johnson
(441) 299-9347
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