) delivered a healthy positive surprise, with its first-quarter
2014 earnings surpassing the Zacks Consensus Estimate by 6.6%.
Operating earnings of $2.27 per share also improved 4.5% year
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Including net realized losses, net of tax, of 13 cents per share,
ACE Limited reported net income of $2.14 per share, down 22.7%
year over year.
Solid underwriting performances coupled with improved investment
results aided the better-than-expected results. Premium revenue
witnessed improvement globally, witnessing double-digit growth.
Gross premiums written by ACE Limited in the first quarter were
$5.37 billion, up 8.3% year over year. Net premiums earned
improved 11.1% year over year to $3.97 billion in the quarter.
Net investment income in the quarter totaled $553 million, up
5.3% year over year.
Underwriting income at ACE Limited was $390 million, up 7% year
over year on the back of solid current accident year underwriting
income. However, P&C combined ratio deteriorated 60 basis
points (bps) year over year to 88.8%.
Insurance-North American P&C
: The segment recorded 11.1% year-over-year growth in net earned
premiums in the quarter.
Operating income rose 13.9% to $411 million.
Combined ratio improved 100 bps to 84.7% in the quarter under
Insurance-North American Agriculture
: Net earned premium nearly doubled to $103 million.
Operating loss of $25 million compared unfavorably with an income
of $7 million earned in the year-ago quarter.
Combined ratio deteriorated 5100 bps to 130.3% in the quarter.
: Net premiums earned in the quarter improved 10.5% year over
Operating income was $239 million, flat year over year.
Combined ratio was 90.1%, improving 50 bps year over year.
: Net premiums increased nearly 15% year over year.
Operating income of nearly $144 million was flat on a
Combined ratio deteriorated 560 bps to 72.9% in the quarter.
: Net premiums earned increased 1.5% from the year-ago quarter.
Operating income escalated 10% year over year to $77 million.
ACE Limited exited the quarter with cash of $847 million, up
46.3% from the 2013-end level.
Book value per share, as of Mar 31, 2014, was $86.90, up 2.4%
from $84.43 as of Dec 31, 2013.
Operating cash flow was $1.25 billion in the reported quarter.
Return on equity was 11.2%.
Share Repurchase Update
ACE Limited spent $332 million to buy back 3.5 million shares in
the quarter. The company has spent about $436 million to
repurchase 4.5 million shares since the inception of share
repurchase authorization in Nov 2013, through Apr 28, 2014.
Performance of Other Property and Casualty
) posted first-quarter 2014 operating earnings of 57 cents per
share, exceeding the Zacks Consensus Estimate by 5.6% and the
year-ago quarter's earnings by 9.6%.
The Travelers Companies Inc
) first-quarter net income of $2.95 per share outperformed the
Zacks Consensus Estimate by 38% and improved 28% year over year.
W.R. Berkley Corp
) reported first-quarter 2014 core operating earnings of $1.00
per share, handily beating the Zacks Consensus Estimate of 79
cents. Earnings also surged 35.1% year over year.
ACE Limited has kept up its trend of delivering impressive
The company continues to benefit from better commercial P&C
pricing environment in the U.S., enjoying another quarter of rate
Its inorganic story also seems impressive with continued
acquisitions. The company acquired a 60.9% stake in The Siam
Commercial Samaggi Insurance PCL, a general insurance company in
Thailand, from Siam Commercial Bank to consolidate its foothold
in Thailand - the second-largest economy in Southeast Asia.
In addition, the company remains committed toward returning value
to its shareholders. The board intends to increase its quarterly
dividend by 3%. ACE Limited has $2 billion worth of share
repurchase authorization through Dec 31, 2014. It intends to buy
back $1.5 billion worth of shares by 2014-end.
The company also scores strongly with credit rating agencies.
Currently, ACE Limited is retaining its focus on launching
products to strengthen its portfolio. We are optimistic that all
these efforts taken together will strengthen the company's
position going forward.
ACE Limited currently carries a Zacks Rank #2 (Buy).