) reported fourth-quarter 2012 operating income of $1.43 per
share, up 14 cents from the Zacks Consensus Estimate. However, it
declined 25% from $1.90 earned in the year-ago quarter. Operating
income was $492 million, down 24% from $648 million in the
ACE LIMITED (ACE): Free Stock Analysis Report
FIDELITY NAT FI (FNF): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis
To read this article on Zacks.com click here.
The results were hugely affected by cat losses incurred due to
Including net realized loss, net of tax, of $273 million or 79
cents per share, ACE Limited reported net income of $765 million
or $2.22 per share, which compared favorably with $735 million or
$2.15 per share in the prior-year quarter. ACE Limited had
registered net realized loss, net of tax, of $87 million or 25
cents per share in the fourth quarter of 2011.
Gross premiums written by ACE Limited in the fourth quarter were
$5.1 billion, up 5.8% year over year.
Net premiums earned improved 0.4% year over year to $3.8 billion
in the quarter.
Net investment income in the quarter totaled $567 million, up
0.4% year over year.
Underwriting loss at ACE Limited was $166 million in fourth
quarter 2012, compared with a profit of $263 million in the
Property & Casualty combined ratio deteriorated 1250 basis
points (bps) year over year to 105.5% in the quarter. Total
after-tax catastrophe losses including reinstatement premiums
were $400 million, compared with $137 million in the year-ago
quarter. Cat losses in the reported quarter included a loss of
$393 million due to Superstorm Sandy.
Full Year Highlights
Full year 2012 operating income was $7.65 per share, which
substantially surpassed the Zacks Consensus Estimate by 2% and
improved 12% year over year.
Including net realized investment gains of 24 cents, the company
reported net income of $7.89 per share, up from $4.52 a share
earned in 2011.
Investment income declined 2.8% year over year to $2.2 billion.
Underwriting income improved 11% year over year to $1.2 billion.
Combined ratio improved 80 basis points year over year to 93.9%.
: The segment recorded a 3.2% year-over-year decline in net
earned premium in the quarter.
Operating income plunged 50% year over year to $170 million in
the quarter under review.
The combined ratio deteriorated by 2090 basis points to 111.9% in
General: Net premiums earned in the quarter improved 3.2% year
Operating income was $246 million in the quarter, up 45% from the
The combined ratio was 95.4%, deteriorating 90 bps from the
: Net premiums earned increased 2.0% year over year in the
quarter under review.
Operating income was $74 million, down 41% from $145 million in
the year-ago period.
The combined ratio deteriorated 2460 basis points to 101.7% in
: In this segment, net premiums earned during the reported
quarter increased 4% year over year.
Operating income decreased 6.3% year over year to $74 million.
ACE Limited exited the quarter with cash of $615 million, up 0.2%
from the 2011-end level.
Book value per share, as of Dec 31, 2012, was $80.90, up 12% from
$72.22 as of Dec 31, 2011.
Operating cash flow was $970 million for the fourth quarter and
$4.0 billion for 2012.
ACE Limited guided operating earnings to a band of $6.60-$7.00
per share. The guidance includes catastrophe loss of $450
Other Property and Casualty Insurers
The Travelers Companies
) reported earnings of 72 cents per share in the fourth quarter
of 2012, which surpassed the Zacks Consensus Estimate of 4 cents
per share. However, results plunged 51% from $1.48 earned in the
The year-over-year downside was largely attributable to higher
catastrophe losses mostly due to Hurricane Sandy. However, higher
underlying underwriting margins and higher net favorable
prior-year reserve development limited the downside to some
Total revenues in the quarter under review were $6.5 billion,
increasing 2% year over year, driven by the augmentation in
premiums earned and net investment income. Revenues surpassed the
Zacks Consensus Estimate of $6.3 billion.
) reported fourth-quarter 2012 operating earnings of 89 cents per
share. The result surpassed the Zacks Consensus Estimate of 44
cents by 107% but missed the year-ago level of $1.13 by 32.1%.
Operating earnings in the quarter were $19.2 million, down 31.9%
year over year.
Lower underwriting results led to the year-over-year downfall.
Revenue in the quarter under review totaled $171.4 million,
improving 4.5% from $163.9 million in the prior-year quarter,
attributable to higher premiums earned and augmentation in net
realized investment gains. Revenue was in line with the Zacks
ACE Limited has successfully maintained the trend of delivering
positive earnings surprise.
Though its exposure to cat loss weighs on the results, prudent
underwriting practices, international presence, diversified
product offering, and a sturdy balance sheet managed to limit the
The company continues to expand its international footprint with
acquisitions in Indonesia and Mexico. In October, ACE Limited
agreed to buy Mexico's sixth-largest P&C insurer ABA Seguros
from Ally Financial Inc. for $865 million, thereby strengthening
its personal lines and agency businesses in particular. ACE
Limited expects the acquisitions to meet or exceed its long-term
return on equity (ROE) goal of 15% within 2-3 years.
ACE Limited remains focused on enhancing its earnings, ROE and
book value per share.
ACE Limited currently carries a Zacks Rank #3 (Hold). Among other
property & casualty insurers carrying a favorable Zacks Rank
#1 (Strong Buy),
Fidelity National Financial, Inc
) is slated to report on Feb 19, after the closing bell.