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ACE Q3 Earnings In Line; Posts Record Underwriting Income

ACE LimitedACE posted third-quarter 2015 operating earnings of $2.40 per share, on par with the Zacks Consensus Estimate. Earnings however declined 9% year over year.

Including net realized losses, net of tax, of $1.10 per share and The Chubb Corp. CB integration expense of 2 cents a share, ACE Limited reported net income of $1.62 per share, down 30.2% year over year.

Operational Performance

Gross premiums written by ACE Limited were $6.3 billion, up 1.3% year over year. Net premiums earned inched down 0.2% year over year to $4.7 billion.

Net investment income was $549 million, down 3% year over year on unfavorable foreign currency movement and a decrease in call activity in the company's corporate bond portfolio.

Underwriting income at ACE Limited was a record $597 million, up 1.9% year over year. Combined ratio improved 40 basis points (bps) year over year to 85.9%.

Segment Update

Insurance-North American P&C : The segment recorded 10.8% year-over-year growth in net premium earned of $1.7 billion in the quarter. Operating income decreased 3.3% year over year to $326 million. Combined ratio improved 90 bps to 90.5%.

Insurance-North American Agriculture : Net earned premium declined 3.5% year over year to $739 million. Operating income was $56 million, down 1.8% year over year. Combined ratio deteriorated 70 bps to 90.8%.

Insurance-Overseas General : Net premium earned declined 6.4% year over year to $1.6 billion. Operating income was $240 million, down 5.2% year over year. Combined ratio deteriorated 190 bps to 82%.

Global Reinsurance : Net premium decreased nearly 20.4% year over year to $203 million. Operating income of $190 million increased 31% on a year-over-year basis. Combined ratio improved 2,900 bps to 41.2%.

Life : Net premium earned of $480 million decreased 1.8% from the year-ago quarter. Operating income declined 21% year over year to $57 million.

Financial Update

ACE Limited exited the quarter with cash of $1.04 billion, up 58% from the 2014-end level.

Book value per share, as of Sep 30, 2015, was $89.88, down 0.2% from $90.02 as of Dec 31, 2014.

Operating cash flow was $808 million in the quarter. Operating return on equity was 12.9%.

Zacks Rank and Performance by Other P&Cs Insurers

ACE Limited currently carries a Zacks Rank #3 (Hold).

The bottom line at The Travelers Companies Inc. TRV and Progressive Corp. PGR outperformed their respective Zacks Consensus Estimate in the third quarter.

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PROGRESSIVE COR (PGR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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