Exhibit 99.1
| ACE LIMITED | PO BOX HM 1015 | |||
| ACE Global Headquarters | Hamilton HM DX | |||
| 17 Woodbourne AvenueBermuda | ||||
| Hamilton HM 08 | ||||
| Bermuda | 441 295-5200main | |||
| 441 292-8675fax | ||||
| www.acelimited.com | ||||
FOR IMMEDIATE RELEASE
Investor Contact: | Helen M. Wilson | |
(441) 299-9283 | ||
Media Contact: | Anna Lowry | |
(441) 278-6683 |
ACE LIMITED REPORTS SECOND QUARTER RESULTS
HAMILTON, Bermuda, July 27, 2004—ACE Limited (NYSE: ACE) today reported net income for the second quarter ended June 30, 2004 of $413 million or $1.41 per share, compared with net income of $371 million or $1.32 per share for the same quarter last year. Income excluding net realized gains (losses) for the second quarter increased 33% to $380 million, or $1.29 per share, compared with $286 million or $1.01 per share for the same quarter of last year.(1)
Evan Greenberg, President and Chief Executive Officer of ACE Limited, commented: “This was an excellent quarter. All of our business segments performed well, which is a reflection of the investments we have made to increase both our product capability and physical presence globally. In light of a softening market, I remain confident in our ability to perform given our underwriting discipline and the diversity of our business opportunities.”
Other second quarter operating highlights were as follows:
| • | Net premiums written increased 19% to $2.9 billion, reflecting P&C net premium growth of 25% over 2003 |
| • | The P&C combined ratio improved to 89.0% for the quarter compared with 91.7% a year ago |
| • | Operating cash flow amounted to approximately $1.1 billion for the quarter |
| • | Cash and invested assets increased by $546 million from March 31, 2004 |
| • | Net investment income increased 12% to $236 million. P&C net investment income increased 24% over 2003 |
| • | Shareholders’ equity decreased 2% from March 31, 2004, principally because unrealized losses on investments exceeded net income |
| • | Tangible equity decreased to $6.6 billion, a reduction from March 31, 2004 of 1% |
| • | Debt to total capital ratio rose to 19.8% from 16.1% at March 31, 2004. In June 2004, the Company sold $500 million of 10-year senior debt with a 5.875% coupon. The proceeds of this debt were used in July to redeem $75 million of callable debt and will be used in August to refinance a maturing $400 million bond. |
| • | Annualized return on ordinary equity for the quarter ended June 30, 2004 was 16.9%; excluding FAS 115, it was 17.7% |
| • | Diluted book value per ordinary share as of June 30, 2004 decreased 3% to $30.46 from March 31, 2004.(2) |
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Financial results improved over the prior year’s results for virtually every business segment. Further details are available in the financial supplement. Key items include:
| • | Insurance-North American: Net premiums written increased 37% and the combined ratio improved to 90.3%. |
| • | Insurance-Overseas General: Net premiums written increased 21% (11% after foreign exchange impact) and the combined ratio improved to 89.3%. |
| • | Global Reinsurance: Net premiums written were up 6% and this segment’s combined ratio improved to 76.1%. |
| • | Financial Services (adjusted for Assured Guaranty): Income excluding realized gains (losses) increased 37% and the combined ratio improved to 80.6%. |
On April 23, 2004, the Company completed the sale of 65.3 percent of its financial and mortgage guaranty reinsurance and insurance businesses through the initial public offering (IPO) of 49 million common shares of Assured Guaranty Ltd. at $18.00 per share. The Company received total proceeds of approximately $1.035 billion. This comprised $835 million of net offering proceeds and a return of capital of $200 million. This was a beneficial transaction for ACE as it enabled capital to be reallocated to higher growth, higher ROE businesses, and reduced its overall credit exposure. As a result of the transaction, the Company’s book value declined by approximately $61 million, comprising an $18 million after tax loss and a $43 million reduction to other comprehensive income, representing a reclassification of previously unrealized investment gains to income.
Please refer to the ACE Financial Supplement June 30, 2004, which is posted on the Company’s website, for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, loss on sale of Assured Guaranty, investment portfolio and capital structure. ACE’s website reference (url) ishttp://media.corporate-ir.net/media_files/nys/ace/reports/fin_supp_June_30_2004.xls. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser’s URL address field.)
ACE Limited (NYSE: ACE) will host its second quarter 2004 earnings conference call and webcast on Wednesday, July 28, 2004 beginning at 8:30 a.m. EDT. The call is available via live and archived webcast atwww.acelimited.com or by dialing 1-973-582-2745. Please refer to our website in the “Investor Information, Calendar of Events” for details. A replay of the call will be available until Monday, August 30, 2004. To listen to the replay, dial: 1-877-519-4471 (in the United States) or 1-973-341-3080 (international); passcode 4928961.
The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. A component of the Standard & Poor’s 500 stock index, The ACE Group conducts its business on a worldwide basis with operating subsidiaries in approximately 50 countries. Additional information can be found at:www.acelimited.com.
| 1 | Income (loss) excluding net realized gains (losses) on investments and the tax effect of net realized gains (losses) on investments is a common performance measurement. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) on investments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. This measure should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP). |
| 2 | Diluted book value per ordinary share is ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued. |
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Cautionary Statement Regarding Forward-Looking Statements:
Any forward-looking statements made in this press release reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those, set forth in these statements. For example, the Company’s forward-looking statements could be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, market acceptance, changes in demand, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial and legislative developments, litigation tactics, the amount and timing of reinsurance recoverable, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war and economic, political, regulatory, insurance and reinsurance business conditions, as well as management’s response to these factors, and other factors identified in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(tables to follow)
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ACE Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
June 30 2004 | December 31 2003 | |||||
| �� | (Unaudited) | |||||
Assets | ||||||
Total investments and cash | $ | 26,735 | $ | 24,008 | ||
Insurance and reinsurance balances receivable | 3,567 | 2,837 | ||||
Reinsurance recoverable | 14,374 | 14,081 | ||||
Other assets | 8,975 | 8,627 | ||||
Total assets | $ | 53,651 | $ | 49,553 | ||
Liabilities | ||||||
Unpaid losses and loss expenses | $ | 28,224 | $ | 27,155 | ||
Unearned premiums | 6,555 | 6,051 | ||||
Other liabilities | 9,652 | 7,512 | ||||
Total liabilities | $ | 44,431 | $ | 40,718 | ||
Shareholders’ equity | ||||||
Total shareholders’ equity | $ | 9,220 | $ | 8,835 | ||
Total liabilities and shareholders’ equity | $ | 53,651 | $ | 49,553 | ||
Diluted book value per ordinary share (2) | $ | 30.46 | $ | 29.46 | ||
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ACE Limited
Summary Consolidated Financial Data
(in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Gross premiums written | $ | 4,040 | $ | 3,405 | $ | 8,456 | $ | 7,518 | ||||||||
Net premiums written | 2,867 | 2,406 | 6,105 | 5,336 | ||||||||||||
Net premiums earned | 2,788 | 2,306 | 5,388 | 4,378 | ||||||||||||
Losses and loss expenses | 1,725 | 1,459 | 3,267 | 2,742 | ||||||||||||
Life and annuity benefits | 44 | 44 | 86 | 92 | ||||||||||||
Policy acquisition costs | 396 | 334 | 761 | 630 | ||||||||||||
Administrative expenses | 309 | 287 | 624 | 547 | ||||||||||||
Underwriting income | 314 | 182 | 650 | 367 | ||||||||||||
Net investment income | 236 | 211 | 474 | 417 | ||||||||||||
Other income (expense) | (6 | ) | 1 | (23 | ) | (5 | ) | |||||||||
Interest expense | 47 | 43 | 91 | 88 | ||||||||||||
Income tax expense | 117 | 65 | 219 | 126 | ||||||||||||
Income excluding net realized gains (1) | 380 | 286 | 791 | 565 | ||||||||||||
Net realized gains | 43 | 107 | 100 | 67 | ||||||||||||
Tax expense on net realized gains | (10 | ) | (22 | ) | (31 | ) | (14 | ) | ||||||||
Net income | 413 | 371 | 860 | 618 | ||||||||||||
Preference shares dividend | (11 | ) | (4 | ) | (22 | ) | (4 | ) | ||||||||
FELINE PRIDE dividend | — | (3 | ) | — | (10 | ) | ||||||||||
Net income available to holders of ordinary shares | $ | 402 | $ | 364 | $ | 838 | $ | 604 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Income excluding net realized gains (1) | $1.29 | $1.01 | $2.70 | $2.04 | ||||||||||||
Net income | $1.41 | $1.32 | $2.94 | $2.23 | ||||||||||||
Weighted average diluted shares outstanding | 285,371,164 | 275,232,339 | 285,037,944 | 270,718,977 | ||||||||||||
Loss and loss expense ratio | 63.1 | % | 64.5 | % | 61.8 | % | 63.9 | % | ||||||||
Policy acquisition cost ratio | 14.3 | % | 14.6 | % | 14.2 | % | 14.5 | % | ||||||||
Administrative expense ratio | 11.3 | % | 12.6 | % | 11.8 | % | 12.7 | % | ||||||||
Combined ratio | 88.7 | % | 91.7 | % | 87.8 | % | 91.1 | % | ||||||||
Ratios exclude life reinsurance business
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ACE Limited
Consolidated Supplemental Segment Information (in millions of U.S. dollars) (Unaudited)
| ||||
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Gross Premiums Written | ||||||||||||||||
Insurance—North American | $ | 2,102 | $ | 1,648 | $ | 4,007 | $ | 3,312 | ||||||||
Insurance—Overseas General | 1,500 | 1,244 | 3,174 | 2,650 | ||||||||||||
Global Reinsurance* | 423 | 395 | 1,052 | 906 | ||||||||||||
Financial Services | 15 | 118 | 223 | 650 | ||||||||||||
Total | $ | 4,040 | $ | 3,405 | $ | 8,456 | $ | 7,518 | ||||||||
Net Premiums Written | ||||||||||||||||
Insurance—North American | $ | 1,329 | $ | 969 | 2,541 | 1,902 | ||||||||||
Insurance—Overseas General | 1,105 | 916 | 2,303 | 1,897 | ||||||||||||
Global Reinsurance* | 419 | 389 | 1,039 | 879 | ||||||||||||
Financial Services | 14 | 132 | 222 | 658 | ||||||||||||
Total | $ | 2,867 | $ | 2,406 | $ | 6,105 | $ | 5,336 | ||||||||
Net Premiums Earned | ||||||||||||||||
Insurance—North American | $ | 1,178 | $ | 920 | $ | 2,185 | $ | 1,673 | ||||||||
Insurance—Overseas General | 1,076 | 860 | 2,110 | 1,674 | ||||||||||||
Global Reinsurance* | 400 | 311 | 780 | 607 | ||||||||||||
Financial Services | 134 | 215 | 313 | 424 | ||||||||||||
Total | $ | 2,788 | $ | 2,306 | $ | 5,388 | $ | 4,378 | ||||||||
Income (Loss) Excluding Net Realized Gains (Losses)(1) | ||||||||||||||||
Insurance—North American | $ | 153 | $ | 134 | $ | 301 | $ | 254 | ||||||||
Insurance—Overseas General | 107 | 70 | 219 | 135 | ||||||||||||
Global Reinsurance* | 122 | 82 | 244 | 171 | ||||||||||||
Financial Services | 51 | 58 | 136 | 117 | ||||||||||||
Corporate | (53 | ) | (58 | ) | (109 | ) | (112 | ) | ||||||||
Total | $ | 380 | $ | 286 | $ | 791 | $ | 565 | ||||||||
| * | Includes both property and casualty reinsurance and life reinsurance |
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