UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant To Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 2014
ACE LIMITED
(Exact name of registrant as specified in its charter)
Switzerland | 1-11778 | 98-0091805 | ||
(State or other jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Baerengasse 32
CH-8001 Zurich, Switzerland
Telephone: +41 (0)43 456 76 00
(Address of principal executive offices)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On July 22, 2014, ACE Limited issued a Press Release reporting its second quarter 2014 results and the availability of its second quarter 2014 Financial Supplement. The Press Release and the Financial Supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are hereby incorporated herein by reference.
Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits
(d) Exhibits
Exhibit |
Description | |
99.1 | Press Release, Dated July 22, 2014, Reporting Second Quarter 2014 Results | |
99.2 | Second Quarter 2014 Financial Supplement |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ACE LIMITED | ||
By: | /s/ Philip V. Bancroft | |
Philip V. Bancroft | ||
Chief Financial Officer |
DATE: July 22, 2014
EXHIBIT INDEX
Number |
Description |
Method of Filing |
||||
99.1 | Press Release, Dated July 22, 2014, | Furnished herewith | ||||
Reporting Second Quarter 2014 Results | ||||||
99.2 | Second Quarter 2014 Financial Supplement | Furnished herewith |
Exhibit 99.1
|
ACE Limited Bärengasse 32 CH-8001 Zurich Switzerland |
+41 (0)43 456 76 00 main +41 (0)43 456 76 01 fax www.acegroup.com |
![]() | |||
Investor Contact: | Helen M. Wilson | |||||
(441) 299-9283 | ||||||
helen.wilson@acegroup.com | ||||||
Media Contact: | Jeffrey Zack | |||||
(212) 827-4444 | ||||||
jeffrey.zack@acegroup.com |
ACE REPORTS SECOND QUARTER OPERATING INCOME OF $825 MILLION, UP 4.5%,
GLOBAL P&C NET PREMIUMS UP 7% IN CONSTANT DOLLARS;
P&C COMBINED RATIO IS 87.5% AND OPERATING RETURN ON EQUITY IS 11.8%
| P&C underwriting income up 10%, driven by strong current accident year underwriting income excluding catastrophe losses, which was up 12%, and a current accident year combined ratio of 88.7% |
| Net investment income of $556 million, up over 4% |
| Operating cash flow of $846 million |
| Book value per share up 3.8%; book value now exceeds $30 billion. Tangible book value per share up 3.9% in the quarter and 7% for the year. |
ZURICH July 22, 2014 ACE Limited (NYSE: ACE) today reported net income for the quarter ended June 30, 2014, of $2.28 per share, compared with $2.59 per share for the same quarter last year(1). Operating income was $2.42 per share, compared with $2.29 per share for the same quarter last year. Book value and tangible book value per share increased 3.8% and 3.9%, respectively, from March 31, 2014. Book value and tangible book value per share now stand at $90.19 and $73.77, respectively. Operating return on equity for the quarter was 11.8%. The property and casualty (P&C) combined ratio for the quarter was 87.5%.
Second Quarter Summary
(in millions, except per share amounts)
(Unaudited)
(Per Share Diluted) | ||||||||||||||||||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||
Operating income, net of tax |
$ | 825 | $ | 790 | 4.5 | % | $ | 2.42 | $ | 2.29 | 5.7 | % | ||||||||||||
Adjusted net realized gains (losses), net of tax |
(46 | ) | 101 | NM | (0.14 | ) | 0.30 | NM | ||||||||||||||||
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Net income |
$ | 779 | $ | 891 | (12.5 | )% | $ | 2.28 | $ | 2.59 | (12.0 | )% | ||||||||||||
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For the six months ended June 30, 2014, net income was $4.43 per share, compared with $5.36 per share for 2013. Operating income was $4.69 per share, compared with $4.46 per share for 2013. Book value increased $1.5 billion, up 5.2% from December 31, 2013, and tangible book value increased almost $1.4 billion, up 5.9%. The P&C combined ratio for the six months ended June 30, 2014, was 88.2%.
Six Months Ended Summary
(in millions, except per share amounts)
(Unaudited)
(Per Share Diluted) | ||||||||||||||||||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||
Operating income, net of tax |
$ | 1,602 | $ | 1,536 | 4.3 | % | $ | 4.69 | $ | 4.46 | 5.2 | % | ||||||||||||
Adjusted net realized gains (losses), net of tax |
(89 | ) | 308 | NM | (0.26 | ) | 0.90 | NM | ||||||||||||||||
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Net income |
$ | 1,513 | $ | 1,844 | (18.0 | )% | $ | 4.43 | $ | 5.36 | (17.4 | )% | ||||||||||||
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Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, commented: ACEs excellent second quarter results were marked by strong earnings, very good premium revenue growth globally and continued expansion of our business in the majority of markets in which we operate both developed and developing. After-tax operating income of $825 million was driven by strong growth in underwriting and good investment income results, which together produced an operating ROE of about 12%. Per share book value increased nearly 4% in the quarter and over 6% for the year.
P&C underwriting income was up 10% with a combined ratio of 87.5%. The growth in underwriting was driven by current accident year underwriting income before catastrophe losses, which was up nearly 12% as a result of global P&C net earned premium growth of 8.5%, as well as margin improvement in our international business. On the investment side, net investment income was up over 4% a very good result in this environment which benefited from our strong growth in invested assets.
P&C net premiums written excluding agriculture were up 7% in constant dollars. This premium growth was well-distributed across the company by territory, product line and customer segment with double-digit contributions from Asia and Latin America and solid single-digit growth in North America and the continent of Europe. Our ability to generate sustained premium revenue growth reflects our deepening presence and capabilities in important long-term growth markets of the world. In two of these, Thailand and Brazil, we either completed or announced acquisitions in the quarter that meaningfully advance our company strategically. With the addition of Samaggi Insurance, ACE is now the largest foreign-owned P&C insurer in Thailand. Similarly, the combination of our existing business in Brazil and Itaú Seguross corporate P&C business, which we plan to acquire early next year, will make ACE the largest commercial P&C insurer in that country.
Page 2/10
Operating highlights for the quarter ended June 30, 2014, were as follows:
(in millions of U.S. dollars except for percentages) | 2Q 2014 |
2Q 2013 |
Change | |||||||||
P&C |
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Net premiums written |
$ | 4,061 | $ | 3,904 | 4.0 | % | ||||||
Net premiums written constant-dollar |
$ | 3,885 | 4.5 | % | ||||||||
Underwriting income |
$ | 478 | $ | 434 | 10.3 | % | ||||||
GAAP combined ratio |
87.7 | % | 87.9 | % | ||||||||
Combined ratio |
87.5 | % | 87.9 | % | ||||||||
Current accident year underwriting income excluding catastrophe losses |
$ | 432 | $ | 387 | 11.9 | % | ||||||
Current accident year combined ratio excluding catastrophe losses |
88.7 | % | 89.2 | % | ||||||||
Global P&C (excludes Agriculture) |
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Net premiums written |
$ | 3,673 | $ | 3,451 | 6.4 | % | ||||||
Net premiums written constant-dollar |
$ | 3,432 | 7.0 | % | ||||||||
Underwriting income |
$ | 451 | $ | 399 | 13.2 | % | ||||||
Combined ratio |
87.1 | % | 87.7 | % | ||||||||
Current accident year underwriting income excluding catastrophe losses |
$ | 396 | $ | 349 | 13.8 | % | ||||||
Current accident year combined ratio excluding catastrophe losses |
88.7 | % | 89.2 | % | ||||||||
Agriculture |
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Net premiums written |
$ | 388 | $ | 453 | (14.2 | )% | ||||||
Underwriting income |
$ | 27 | $ | 35 | (22.7 | )% | ||||||
Combined ratio |
91.8 | % | 89.9 | % | ||||||||
Current accident year underwriting income excluding catastrophe losses |
$ | 36 | $ | 38 | (5.5 | )% | ||||||
Current accident year combined ratio excluding catastrophe losses |
89.1 | % | 89.1 | % |
| P&C net premiums earned increased 7.1%, or 7.4% on a constant-dollar basis. Global P&C net premiums earned increased 8.5%, or 8.8% on a constant-dollar basis. |
| The P&C expense ratio for the quarter was 29.3% compared with 29.2% last year. The Global P&C expense ratio, which excludes Agriculture, was 31.4% compared with 31.7% last year. |
| Total pre-tax and after-tax catastrophe losses including reinstatement premiums were $80 million (2.1 percentage points of the combined ratio) and $67 million, respectively, compared with $81 million (2.3 percentage points of the combined ratio) and $66 million, respectively, last year. |
| Favorable prior period development pre-tax and after-tax for the quarter were $126 million (3.3 percentage points of the combined ratio) and $106 million, respectively, compared with $128 million (3.6 percentage points of the combined ratio) and $109 million, respectively, last year. |
| Operating cash flow was $846 million for the quarter. |
| Net loss reserves increased $298 million in the quarter and the net paid-to-incurred ratio was 90% for the quarter. |
Page 3/10
| Net investment income for the quarter increased 4.2% to $556 million. |
| Net realized and unrealized gains pre-tax totaled $523 million for the quarter, which included net realized losses of $45 million and net unrealized gains of $568 million. |
| Operating return on equity was 11.8% for the quarter and 11.5% year-to-date. Return on equity computed using net income was 10.4% for the quarter and 10.2% year-to-date. |
| Share repurchases totaled $237 million, or approximately 2.3 million shares, during the quarter. Since the inception of the November 2013 share repurchase authorization, the company has repurchased approximately 7.1 million shares for $699 million through July 21, 2014. |
| Book value per share increased 3.8% to $90.19 from $86.90 at March 31, 2014, and increased 6.3% from $84.83 at December 31, 2013. |
| Tangible book value per share increased 3.9% to $73.77 from $70.97 at March 31, 2014, and increased 7.0% from $68.93 at December 31, 2013. |
Details of financial results by business segment are available in the ACE Limited Financial Supplement. Key segment items for the quarter ended June 30, 2014, include:
| Insurance North American P&C: Net premiums written increased 6.9%. The combined ratio was 87.1% compared with 87.6%. The current accident year combined ratio excluding catastrophe losses was 87.3%, unchanged from last year. |
| Insurance North American Agriculture: Net premiums written decreased 14.2% driven by lower commodity prices. The combined ratio was 91.8% compared with 89.9%. The current accident year combined ratio excluding catastrophe losses was 89.1%, unchanged from last year. |
| Insurance Overseas General: Net premiums written increased 8.0%, or 8.8% on a constant-dollar basis. The combined ratio was 87.1% compared with 88.2%. The current accident year combined ratio excluding catastrophe losses was 89.3% compared with 90.5%. |
| Global Reinsurance: Net premiums written decreased 4.9% for the quarter. The combined ratio was 69.9% compared with 62.2%. The current accident year combined ratio excluding catastrophe losses was 75.4% compared with 70.0%. |
| Life segment: Operating income was $72 million compared with $76 million. Net premiums written and deposits collected, excluding life reinsurance, increased 14.2% on a constant-dollar basis. International life net premiums written increased 17.9% on a constant-dollar basis. |
Page 4/10
Please refer to the ACE Limited Financial Supplement, dated June 30, 2014, which is posted on the companys website in the Investor Information section, and access Financial Reports for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio and capital structure.
ACE will hold its second quarter earnings conference call on Wednesday, July 23, 2014, beginning at 8:30 a.m. Eastern. The earnings conference call will be available via live webcast at www.acegroup.com or by dialing 888-318-7470 (within the United States) or 719-325-2490 (international), passcode 5083653. Please refer to the ACE Group website in the Investor Information section under Calendar of Events for details. A replay of the call will be available until Wednesday, August 6, 2014, and the archived webcast will be available for approximately one month. To listen to the replay, please dial 888-203-1112 (in the United States) or 719-457-0820 (international), passcode 5083653.
ACE Group is one of the worlds largest multiline property and casualty insurers. With operations in 54 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Limited, the parent company of ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index. Additional information can be found at: www.acegroup.com.
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(1) | All comparisons are with the same period last year unless specifically stated. |
Regulation G Non-GAAP Financial Measures
In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).
Adjusted net realized gains (losses), net of tax, includes net realized gains (losses) and net realized gains (losses) recorded in other income (expense) related to unconsolidated subsidiaries, and excludes realized gains and losses from fair value changes on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view changes in the fair value of these derivatives as part of the results of our underwriting operations, and therefore realized gains and losses from these derivatives are reclassified to adjusted losses and loss expenses. The P&C combined ratio includes adjusted losses and loss expenses in the ratio numerator.
Net premiums written on a constant-dollar basis is a financial measure which excludes the impact of foreign exchange. We believe it is useful to evaluate the trends in net premiums written, exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.
Underwriting income, P&C underwriting income, and Global P&C underwriting income are calculated by subtracting losses and loss expenses, policy benefits, policy acquisition costs and administrative expenses from net premiums earned. P&C underwriting income also includes gains (losses) from fair value changes on crop derivatives. We use underwriting income and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other income (expense), interest and income tax expense and adjusted net realized gains (losses). Current accident year underwriting income excluding catastrophe losses is underwriting income adjusted to exclude catastrophe losses and prior period development (PPD). We believe it is useful to exclude catastrophe losses, as they are not predictable as to timing and amount, and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
Operating income or income excluding adjusted net realized gains (losses), net of tax is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude adjusted net realized gains (losses) because the amount of these gains (losses) is heavily influenced by the availability of market opportunities.
P&C combined ratio excluding catastrophe losses and PPD or current accident year P&C combined ratio excluding catastrophe losses exclude impacts of catastrophe losses and PPD. We believe this measure provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property and casualty business that may be obscured by these items.
Global P&C performance metrics comprise consolidated operating results (including corporate) and exclude the operating results of the companys Life and Insurance North American Agriculture segments. We believe that these measures are useful and meaningful to investors as they are used by management to assess the companys global P&C operations which are the most economically similar. We exclude the Insurance North American Agriculture and Life segments because the results of these businesses do not always correlate with the results of our global P&C operations.
Life net premiums written and deposits collected, excluding life reinsurance, is adjusted to include deposits collected on universal life and investment contracts (life deposits) and exclude results from our life reinsurance business. Life deposits are not reflected as revenues in our consolidated statements of operations in accordance with GAAP. We include life deposits in presenting growth in our Life business because new life deposits are an important component of production and key to our efforts to grow our business. We exclude results associated with life reinsurance as there is no new life reinsurance business currently being written.
Operating return on equity (ROE) or ROE calculated using operating income is an annualized financial measure. The ROE numerator includes income adjusted to exclude adjusted net realized gains (losses), net of tax. The ROE denominator includes the average shareholders equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. To annualize a quarterly rate, multiply by four. Annualized ROE calculated using operating income is a useful measure as it enhances the understanding of the return on shareholders equity by highlighting the underlying profitability relative to shareholders equity excluding the effect of unrealized gains and losses on our investments.
Tangible book value per common share is shareholders equity less goodwill and other intangible assets divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful.
See reconciliation of Non-GAAP Financial Measures on pages 21-22 in the Financial Supplement. These measures should not be viewed as a substitute for net income, return on equity, or effective tax rate determined in accordance with GAAP.
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NM not meaningful comparison
Cautionary Statement Regarding Forward-Looking Statements:
Forward-looking statements made in this press release, such as those related to economic outlook and insurance market conditions, and company performance including 2014 performance and growth opportunities, reflect our 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 that could cause actual results to differ materially, including without limitation, the following: competition, pricing and policy term trends, the levels of new and renewal business achieved, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, integration activities and performance of acquired companies, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, rating agency action, possible terrorism or the outbreak and effects of war, economic, political, regulatory, insurance and reinsurance business conditions, potential strategic opportunities including acquisitions and our ability to achieve and integrate them, as well as managements response to these factors, and other factors identified in our 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. We undertake 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)
Page 7/10
ACE Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
(Unaudited)
June 30 2014 |
December 31 2013 |
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Assets |
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Investments |
$ | 63,620 | $ | 60,928 | ||||
Cash |
594 | 579 | ||||||
Insurance and reinsurance balances receivable |
5,316 | 5,026 | ||||||
Reinsurance recoverable on losses and loss expenses |
10,768 | 11,227 | ||||||
Other assets |
17,149 | 16,750 | ||||||
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Total assets |
$ | 97,447 | $ | 94,510 | ||||
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Liabilities |
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Unpaid losses and loss expenses |
$ | 37,177 | $ | 37,443 | ||||
Unearned premiums |
8,296 | 7,539 | ||||||
Other liabilities |
21,649 | 20,703 | ||||||
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Total liabilities |
67,122 | 65,685 | ||||||
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Shareholders equity |
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Total shareholders equity |
30,325 | 28,825 | ||||||
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Total liabilities and shareholders equity |
$ | 97,447 | $ | 94,510 | ||||
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Book value per common share |
$ | 90.19 | $ | 84.83 |
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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 |
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Gross premiums written |
$ | 6,006 | $ | 6,030 | $ | 11,380 | $ | 10,993 | ||||||||
Net premiums written |
4,559 | 4,391 | 8,744 | 8,189 | ||||||||||||
Net premiums earned |
4,332 | 4,067 | 8,302 | 7,640 | ||||||||||||
Losses and loss expenses |
2,388 | 2,250 | 4,549 | 4,176 | ||||||||||||
Policy benefits |
144 | 110 | 258 | 241 | ||||||||||||
Policy acquisition costs |
758 | 665 | 1,486 | 1,279 | ||||||||||||
Administrative expenses |
566 | 564 | 1,101 | 1,078 | ||||||||||||
Net investment income |
556 | 534 | 1,109 | 1,065 | ||||||||||||
Net realized gains (losses) |
(73 | ) | 104 | (177 | ) | 310 | ||||||||||
Interest expense |
72 | 73 | 143 | 133 | ||||||||||||
Other income (expense): |
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Gains (losses) from separate account assets |
17 | (11 | ) | 11 | (7 | ) | ||||||||||
Other |
8 | (26 | ) | 31 | (20 | ) | ||||||||||
Income tax expense |
133 | 115 | 226 | 237 | ||||||||||||
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Net income |
$ | 779 | $ | 891 | $ | 1,513 | $ | 1,844 | ||||||||
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Diluted earnings per share: |
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Operating income |
$ | 2.42 | $ | 2.29 | $ | 4.69 | $ | 4.46 | ||||||||
Net income |
$ | 2.28 | $ | 2.59 | $ | 4.43 | $ | 5.36 | ||||||||
Weighted average diluted shares outstanding |
341.1 | 344.1 | 341.6 | 344.0 | ||||||||||||
Loss and loss expense ratio |
58.4 | % | 58.7 | % | 58.0 | % | 58.0 | % | ||||||||
Policy acquisition cost ratio |
16.6 | % | 15.9 | % | 17.1 | % | 16.5 | % | ||||||||
Administrative expense ratio |
12.7 | % | 13.3 | % | 13.1 | % | 13.6 | % | ||||||||
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GAAP combined ratio |
87.7 | % | 87.9 | % | 88.2 | % | 88.1 | % | ||||||||
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P&C underwriting income |
$ | 478 | $ | 434 | $ | 868 | $ | 798 |
Page 9/10
ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
Three Months Ended June 30 |
Six Months Ended June 30 |
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Gross Premiums Written |
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Insurance North American P&C |
$ | 2,347 | $ | 2,327 | $ | 4,371 | $ | 4,146 | ||||||||
Insurance North American Agriculture |
601 | 749 | 835 | 998 | ||||||||||||
Insurance Overseas General |
2,224 | 2,097 | 4,485 | 4,170 | ||||||||||||
Global Reinsurance |
308 | 345 | 641 | 639 | ||||||||||||
Life |
526 | 512 | 1,048 | 1,040 | ||||||||||||
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Total |
$ | 6,006 | $ | 6,030 | $ | 11,380 | $ | 10,993 | ||||||||
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Net Premiums Written |
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Insurance North American P&C |
$ | 1,635 | $ | 1,529 | $ | 3,053 | $ | 2,813 | ||||||||
Insurance North American Agriculture |
388 | 453 | 582 | 566 | ||||||||||||
Insurance Overseas General |
1,760 | 1,630 | 3,531 | 3,250 | ||||||||||||
Global Reinsurance |
278 | 292 | 586 | 571 | ||||||||||||
Life |
498 | 487 | 992 | 989 | ||||||||||||
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Total |
$ | 4,559 | $ | 4,391 | $ | 8,744 | $ | 8,189 | ||||||||
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Net Premiums Earned |
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Insurance North American P&C |
$ | 1,542 | $ | 1,428 | $ | 3,029 | $ | 2,766 | ||||||||
Insurance North American Agriculture |
330 | 351 | 433 | 403 | ||||||||||||
Insurance Overseas General |
1,709 | 1,563 | 3,321 | 3,022 | ||||||||||||
Global Reinsurance |
261 | 245 | 545 | 492 | ||||||||||||
Life |
490 | 480 | 974 | 957 | ||||||||||||
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Total |
$ | 4,332 | $ | 4,067 | $ | 8,302 | $ | 7,640 | ||||||||
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Operating Income (loss) |
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Insurance North American P&C |
$ | 378 | $ | 341 | $ | 789 | $ | 702 | ||||||||
Insurance North American Agriculture |
19 | 26 | (6 | ) | 33 | |||||||||||
Insurance Overseas General |
282 | 256 | 521 | 495 | ||||||||||||
Global Reinsurance |
146 | 156 | 290 | 300 | ||||||||||||
Life |
72 | 76 | 149 | 146 | ||||||||||||
Corporate |
(72 | ) | (65 | ) | (141 | ) | (140 | ) | ||||||||
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Total |
$ | 825 | $ | 790 | $ | 1,602 | $ | 1,536 | ||||||||
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Page 10/10
Exhibit 99.2
Investor Contact Helen M. Wilson Phone: (441) 299-9283 email: investorrelations@acegroup.com |
This report is for informational purposes only. It should be read in conjunction with documents filed by ACE Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
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Cautionary Statement Regarding Forward-Looking Statements:
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Any forward-looking statements made in this financial supplement reflect ACEs 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, our forward-looking statements, such as statements concerning exposures, reserves and recoverables, could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers.
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Our forward-looking statements could also be affected by competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war. 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. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. |
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ACE Limited Financial Supplement Table of Contents |
Page | ||||||
I. | Financial Highlights | |||||
- Consolidated Financial Highlights | 1 | |||||
II. | Consolidated Results | |||||
- Consolidated ResultsConsecutive Quarters | 2 | |||||
- Summary Consolidated Balance Sheets | 3 | |||||
- Consolidated Premiums and Operating Income by Line of Business | 4 | |||||
III. | Global P&C Results | |||||
- Global P&C ResultsConsecutive Quarters | 5 | |||||
IV. | Segment Results | |||||
- InsuranceNorth AmericanFor Reference Only | 6 | |||||
- InsuranceNorth American P&C | 7 | |||||
- InsuranceNorth American Agriculture | 8 | |||||
- InsuranceOverseas General | 9 | |||||
- Global Reinsurance | 10 | |||||
- Life | 11 | |||||
V. | Balance Sheet Details | |||||
- Loss Reserve Rollforward | 12 | |||||
- Reinsurance Recoverable Analysis | 13 | |||||
- Investment Portfolio | 14 - 17 | |||||
- Net Realized and Unrealized Gains (Losses) | 18 | |||||
- Capital Structure | 19 | |||||
- Computation of Basic and Diluted Earnings Per Share | 20 | |||||
VI. | Other Disclosures | |||||
- Non-GAAP Financial Measures | 21 - 22 | |||||
- Book Value and Book Value per Common Share | 23 | |||||
- Glossary | 24 |
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ACE Limited Consolidated Financial Highlights (in millions of U.S. dollars, except share, per share data, and ratios) (Unaudited) |
Note: All dollar amounts in the Financial Supplement are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.
Constant $ | Constant $ | |||||||||||||||||||||||||||||||||||||||
% Change | % Change | % Change | % Change | |||||||||||||||||||||||||||||||||||||
Three months ended June 30 | 2Q-14 vs. | Constant $ | 2Q-14 vs. | Six months ended June 30 | YTD-14 vs. | Constant $ | YTD-14 vs. | |||||||||||||||||||||||||||||||||
2014 | 2013 | 2Q-13 | 2013 (1) | 2Q-13 (1) | 2014 | 2013 | YTD-13 | 2013 (1) | YTD-13 (1) | |||||||||||||||||||||||||||||||
Gross premiums written |
$ | 6,006 | $ | 6,030 | -0.4 | % | $ | 5,990 | 0.3 | % | $ | 11,380 | $ | 10,993 | 3.5 | % | $ | 10,874 | 4.7 | % | ||||||||||||||||||||
Net premiums written |
$ | 4,559 | $ | 4,391 | 3.8 | % | $ | 4,362 | 4.5 | % | $ | 8,744 | $ | 8,189 | 6.8 | % | $ | 8,097 | 8.0 | % | ||||||||||||||||||||
P&C net premiums written (2) |
$ | 4,061 | $ | 3,904 | 4.0 | % | $ | 3,885 | 4.5 | % | $ | 7,752 | $ | 7,200 | 7.7 | % | $ | 7,132 | 8.7 | % | ||||||||||||||||||||
Global P&C net premiums written (3) |
$ | 3,673 | $ | 3,451 | 6.4 | % | $ | 3,432 | 7.0 | % | $ | 7,170 | $ | 6,634 | 8.1 | % | $ | 6,566 | 9.2 | % | ||||||||||||||||||||
Net premiums earned |
$ | 4,332 | $ | 4,067 | 6.5 | % | $ | 4,049 | 7.0 | % | $ | 8,302 | $ | 7,640 | 8.7 | % | $ | 7,550 | 10.0 | % | ||||||||||||||||||||
Net investment income |
$ | 556 | $ | 534 | 4.2 | % | $ | 1,109 | $ | 1,065 | 4.1 | % | ||||||||||||||||||||||||||||
Operating income |
$ | 825 | $ | 790 | 4.5 | % | $ | 1,602 | $ | 1,536 | 4.3 | % | ||||||||||||||||||||||||||||
Net income |
$ | 779 | $ | 891 | -12.5 | % | $ | 1,513 | $ | 1,844 | -18.0 | % | ||||||||||||||||||||||||||||
Comprehensive income (loss) |
$ | 1,348 | $ | (499 | ) | NM | $ | 2,456 | $ | 217 | NM | |||||||||||||||||||||||||||||
Operating cash flow |
$ | 846 | $ | 895 | $ | 2,096 | $ | 1,808 | ||||||||||||||||||||||||||||||||
P&C combined ratio (4) |
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Loss and loss expense ratio |
58.2 | % | 58.7 | % | 58.0 | % | 58.0 | % | ||||||||||||||||||||||||||||||||
Underwriting and administrative expense ratio |
29.3 | % | 29.2 | % | 30.2 | % | 30.1 | % | ||||||||||||||||||||||||||||||||
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Combined ratio |
87.5 | % | 87.9 | % | 88.2 | % | 88.1 | % | ||||||||||||||||||||||||||||||||
Operating return on equity (ROE) |
11.8 | % | 12.3 | % | 11.5 | % | 12.1 | % | ||||||||||||||||||||||||||||||||
ROE |
10.4 | % | 12.9 | % | 10.2 | % | 13.5 | % | ||||||||||||||||||||||||||||||||
Operating effective tax rate |
13.7 | % | 11.2 | % | 12.7 | % | 11.0 | % | ||||||||||||||||||||||||||||||||
Effective tax rate |
14.6 | % | 11.5 | % | 13.0 | % | 11.4 | % | ||||||||||||||||||||||||||||||||
Diluted earnings per share |
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Operating income |
$ | 2.42 | $ | 2.29 | 5.7 | % | $ | 4.69 | $ | 4.46 | 5.2 | % | ||||||||||||||||||||||||||||
Net income |
$ | 2.28 | $ | 2.59 | -12.0 | % | $ | 4.43 | $ | 5.36 | -17.4 | % | ||||||||||||||||||||||||||||
% Change 2Q-14 vs. 2Q-13 |
December 31 2013 |
% Change 2Q-14 vs. 4Q-13 |
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Book value per common share |
$ | 90.19 | $ | 80.26 | 12.4 | % | $ | 84.83 | 6.3 | % | ||||||||||||||||||||||||||||||
Tangible book value per common share |
$ | 73.77 | $ | 64.40 | 14.5 | % | $ | 68.93 | 7.0 | % | ||||||||||||||||||||||||||||||
Tangible book value per common share excluding 2014 acquisition (5) |
$ | 74.15 | $ | 64.40 | 15.1 | % | $ | 68.93 | 7.6 | % | ||||||||||||||||||||||||||||||
Weighted average basic common shares outstanding |
337.8 | 341.0 | 338.4 | 340.9 | ||||||||||||||||||||||||||||||||||||
Weighted average diluted common shares outstanding |
341.1 | 344.1 | 341.6 | 344.0 | ||||||||||||||||||||||||||||||||||||
Debt plus trust preferred securities/ tangible capital |
20.0 | % | 21.6 | % | 20.4 | % |
(1) | Prior periods on a constant dollar basis. |
(2) | P&C net premiums written is defined as consolidated net premiums written excluding net premiums written of the companys Life segment. See non-GAAP financial measures. |
(3) | Global P&C net premiums written is defined as consolidated net premiums written excluding net premiums written of the companys Life and Insurance North American Agriculture segments. See non-GAAP financial measures. |
(4) | Loss and loss expense ratio and combined ratio include the impact of realized gains and losses from fair value changes on crop derivatives. See non-GAAP financial measures. |
(5) | For 2014, tangible book value per common share excludes the impact from goodwill and intangibles relating to the acquisition of The Siam Commercial Samaggi Insurance PCL of $126 million. |
Financial Highlights | Page 1 |
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ACE Limited Consolidated Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
ACE Limited Consolidated
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | YTD 2014 |
YTD 2013 |
Full Year 2013 |
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Consolidated Results (Including Corporate) Excluding Life Segment (1) |
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Gross premiums written |
$ | 5,480 | $ | 4,852 | $ | 4,936 | $ | 5,863 | $ | 5,518 | $ | 10,332 | $ | 9,953 | $ | 20,752 | ||||||||||||||||
Net premiums written |
4,061 | 3,691 | 3,712 | 4,141 | 3,904 | 7,752 | 7,200 | 15,053 | ||||||||||||||||||||||||
Net premiums earned |
3,842 | 3,486 | 3,882 | 4,143 | 3,587 | 7,328 | 6,683 | 14,708 | ||||||||||||||||||||||||
Adjusted losses and loss expenses (2) |
2,234 | 2,012 | 2,378 | 2,515 | 2,105 | 4,246 | 3,874 | 8,767 | ||||||||||||||||||||||||
Policy acquisition costs |
637 | 617 | 605 | 592 | 570 | 1,254 | 1,104 | 2,301 | ||||||||||||||||||||||||
Administrative expenses |
493 | 467 | 483 | 478 | 478 | 960 | 907 | 1,868 | ||||||||||||||||||||||||
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Underwriting income |
478 | 390 | 416 | 558 | 434 | 868 | 798 | 1,772 | ||||||||||||||||||||||||
Net investment income |
490 | 489 | 493 | 461 | 471 | 979 | 939 | 1,893 | ||||||||||||||||||||||||
Interest expense |
69 | 68 | 67 | 68 | 69 | 137 | 125 | 260 | ||||||||||||||||||||||||
Other income (expense) - operating (3) |
(26 | ) | (23 | ) | (23 | ) | (29 | ) | (31 | ) | (49 | ) | (53 | ) | (105 | ) | ||||||||||||||||
Income tax expense |
120 | 88 | 81 | 140 | 91 | 208 | 169 | 390 | ||||||||||||||||||||||||
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Operating income (including Corporate) excluding Life segment |
753 | 700 | 738 | 782 | 714 | 1,453 | 1,390 | 2,910 | ||||||||||||||||||||||||
Life segment operating income |
72 | 77 | 86 | 75 | 76 | 149 | 146 | 307 | ||||||||||||||||||||||||
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Consolidated operating income |
825 | 777 | 824 | 857 | 790 | 1,602 | 1,536 | 3,217 | ||||||||||||||||||||||||
Adjusted net realized gains (losses) (2) |
(81 | ) | (102 | ) | 154 | 41 | 104 | (183 | ) | 310 | 505 | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
36 | 51 | 25 | 22 | 12 | 87 | 45 | 92 | ||||||||||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
1 | (8 | ) | 5 | 4 | 15 | (7 | ) | 47 | 56 | ||||||||||||||||||||||
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Consolidated net income |
$ | 779 | $ | 734 | $ | 998 | $ | 916 | $ | 891 | $ | 1,513 | $ | 1,844 | $ | 3,758 | ||||||||||||||||
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% Change versus prior year period (1) |
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Net premiums written as reported |
4.0 | % | 12.0 | % | 18.2 | % | -2.0 | % | 7.1 | % | 7.7 | % | 7.0 | % | 6.8 | % | ||||||||||||||||
Net premiums earned as reported |
7.1 | % | 12.6 | % | 15.5 | % | -1.0 | % | 8.4 | % | 9.6 | % | 7.5 | % | 6.9 | % | ||||||||||||||||
Net premiums written constant $ |
4.5 | % | 13.7 | % | 19.8 | % | -0.9 | % | 8.6 | % | 8.7 | % | 7.8 | % | 7.8 | % | ||||||||||||||||
Net premiums earned constant $ |
7.4 | % | 14.8 | % | 17.0 | % | -0.1 | % | 9.7 | % | 10.8 | % | 8.3 | % | 7.9 | % | ||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written (1) |
74 | % | 76 | % | 75 | % | 71 | % | 71 | % | 75 | % | 72 | % | 73 | % | ||||||||||||||||
Operating effective tax rate |
13.7 | % | 11.5 | % | 9.2 | % | 14.9 | % | 11.2 | % | 12.7 | % | 11.0 | % | 11.6 | % | ||||||||||||||||
P&C combined ratio (4) |
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Loss and loss expense ratio |
58.2 | % | 57.7 | % | 61.3 | % | 60.7 | % | 58.7 | % | 58.0 | % | 58.0 | % | 59.6 | % | ||||||||||||||||
Policy acquisition cost ratio |
16.6 | % | 17.7 | % | 15.6 | % | 14.3 | % | 15.9 | % | 17.1 | % | 16.5 | % | 15.7 | % | ||||||||||||||||
Administrative expense ratio |
12.7 | % | 13.4 | % | 12.4 | % | 11.5 | % | 13.3 | % | 13.1 | % | 13.6 | % | 12.7 | % | ||||||||||||||||
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Combined ratio |
87.5 | % | 88.8 | % | 89.3 | % | 86.5 | % | 87.9 | % | 88.2 | % | 88.1 | % | 88.0 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
88.7 | % | 88.9 | % | 91.5 | % | 89.8 | % | 89.2 | % | 88.8 | % | 89.3 | % | 90.0 | % | ||||||||||||||||
P&C expense ratio |
29.3 | % | 31.1 | % | 28.0 | % | 25.8 | % | 29.2 | % | 30.2 | % | 30.1 | % | 28.4 | % | ||||||||||||||||
P&C expense ratio excluding A&H |
26.0 | % | 27.5 | % | 24.0 | % | 21.9 | % | 25.7 | % | 26.7 | % | 26.5 | % | 24.5 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax |
$ | | $ | | $ | 1 | $ | 2 | $ | | $ | | $ | | $ | 3 | ||||||||||||||||
Catastrophe losses - pre-tax |
$ | 80 | $ | 53 | $ | 37 | $ | 80 | $ | 81 | $ | 133 | $ | 113 | $ | 230 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax (5) |
$ | (126 | ) | $ | (62 | ) | $ | (122 | ) | $ | (210 | ) | $ | (128 | ) | $ | (188 | ) | $ | (198 | ) | $ | (530 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
59.4 | % | 57.5 | % | 63.5 | % | 64.1 | % | 60.0 | % | 58.5 | % | 59.3 | % | 61.8 | % |
(1) | Presented excluding the Life segment. This is a non-GAAP financial measure. |
(2) | (Gains) losses from fair value changes on crop derivatives are reclassified from Adjusted net realized gains (losses) to Adjusted losses and loss expenses for this presentation. Crop derivative gains for Q2 2014 and YTD 2014 were $8 million and $6 million, respectively. |
(3) | Excludes portion of net realized investment gains and losses related to unconsolidated entities. |
(4) | Loss and loss expense ratio and combined ratio include the impact of realized gains and losses from fair value changes on crop derivatives. See non-GAAP financial measures. |
(5) | For YTD 2014, favorable prior period development includes $35 million of favorable net earned premium adjustments, all related to the Insurance North American Agriculture segment. |
Consolidated Results | Page 2 |
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ACE Limited Summary Consolidated Balance Sheets (in millions of U.S. dollars, except per share data) (Unaudited) |
June 30 2014 |
March 31 2014 |
December 31 2013 |
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Assets |
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Fixed maturities available for sale, at fair value |
$ | 51,601 | $ | 49,611 | $ | 49,254 | ||||||
Fixed maturities held to maturity, at amortized cost |
5,774 | 5,887 | 6,098 | |||||||||
Equity securities, at fair value |
907 | 851 | 837 | |||||||||
Short-term investments, at fair value |
2,108 | 2,526 | 1,763 | |||||||||
Other investments |
3,230 | 3,170 | 2,976 | |||||||||
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Total investments |
63,620 | 62,045 | 60,928 | |||||||||
Cash |
594 | 847 | 579 | |||||||||
Securities lending collateral |
1,440 | 1,550 | 1,632 | |||||||||
Insurance and reinsurance balances receivable |
5,316 | 4,761 | 5,026 | |||||||||
Reinsurance recoverable on losses and loss expenses |
10,768 | 10,755 | 11,227 | |||||||||
Deferred policy acquisition costs |
2,562 | 2,402 | 2,313 | |||||||||
Value of business acquired |
514 | 517 | 536 | |||||||||
Prepaid reinsurance premiums |
1,867 | 1,721 | 1,675 | |||||||||
Goodwill and other intangible assets |
5,522 | 5,382 | 5,404 | |||||||||
Deferred tax assets |
234 | 516 | 616 | |||||||||
Investments in partially-owned insurance companies |
470 | 466 | 470 | |||||||||
Other assets |
4,540 | 4,217 | 4,104 | |||||||||
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Total assets |
$ | 97,447 | $ | 95,179 | $ | 94,510 | ||||||
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Liabilities |
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Unpaid losses and loss expenses |
$ | 37,177 | $ | 36,866 | $ | 37,443 | ||||||
Unearned premiums |
8,296 | 7,791 | 7,539 | |||||||||
Future policy benefits |
4,778 | 4,632 | 4,615 | |||||||||
Insurance and reinsurance balances payable |
3,794 | 3,734 | 3,628 | |||||||||
Securities lending payable |
1,441 | 1,551 | 1,633 | |||||||||
Accounts payable, accrued expenses, and other liabilities |
5,419 | 5,218 | 4,810 | |||||||||
Short-term debt |
1,851 | 1,901 | 1,901 | |||||||||
Long-term debt |
4,057 | 3,808 | 3,807 | |||||||||
Trust preferred securities |
309 | 309 | 309 | |||||||||
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Total liabilities |
67,122 | 65,810 | 65,685 | |||||||||
Shareholders equity |
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Total shareholders equity, excl. AOCI |
28,230 | 27,843 | 27,673 | |||||||||
Accumulated other comprehensive income (AOCI) |
2,095 | 1,526 | 1,152 | |||||||||
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Total shareholders equity |
30,325 | 29,369 | 28,825 | |||||||||
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Total liabilities and shareholders equity |
$ | 97,447 | $ | 95,179 | $ | 94,510 | ||||||
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Book value per common share |
$ | 90.19 | $ | 86.90 | $ | 84.83 | ||||||
% change over prior quarter |
3.8 | % | 2.4 | % | 2.2 | % | ||||||
Tangible book value per common share |
$ | 73.77 | $ | 70.97 | $ | 68.93 | ||||||
% change over prior quarter |
3.9 | % | 3.0 | % | 3.0 | % |
Consol Bal Sheet | Page 3 |
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ACE Limited Consolidated Premiums and Operating Income by Line of Business (in millions of U.S. dollars) (Unaudited) |
ACE Limited Consolidated
Constant $ | Constant $ | |||||||||||||||||||||||||||||||||||||||
% Change | % Change | % Change | % Change | |||||||||||||||||||||||||||||||||||||
2Q-14 vs. | Constant $ | 2Q-14 vs. | YTD | YTD | YTD-14 vs. | Constant $ | YTD-14 vs. | |||||||||||||||||||||||||||||||||
2Q-14 | 2Q-13 | 2Q-13 | 2Q-13 (2) | 2Q-13 (2) | 2014 | 2013 | YTD-13 | YTD-13 (2) | YTD-13 (2) | |||||||||||||||||||||||||||||||
Net premiums written |
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Property and all other |
$ | 1,465 | $ | 1,366 | 7.1 | % | $ | 2,837 | $ | 2,588 | 9.6 | % | ||||||||||||||||||||||||||||
Casualty |
1,494 | 1,412 | 5.8 | % | 2,949 | 2,720 | 8.4 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
2,959 | 2,778 | 6.5 | % | $ | 2,770 | 6.7 | % | 5,786 | 5,308 | 9.0 | % | $ | 5,274 | 9.7 | % | ||||||||||||||||||||||||
Agriculture |
388 | 453 | -14.2 | % | 453 | -14.2 | % | 582 | 566 | 3.0 | % | 566 | 3.0 | % | ||||||||||||||||||||||||||
Personal accident (A&H) (1) |
961 | 925 | 3.9 | % | 909 | 5.7 | % | 1,878 | 1,839 | 2.1 | % | 1,795 | 4.6 | % | ||||||||||||||||||||||||||
Life |
251 | 235 | 6.9 | % | 230 | 9.8 | % | 498 | 476 | 4.6 | % | 462 | 8.0 | % | ||||||||||||||||||||||||||
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Total consolidated |
$ | 4,559 | $ | 4,391 | 3.8 | % | $ | 4,362 | 4.5 | % | $ | 8,744 | $ | 8,189 | 6.8 | % | $ | 8,097 | 8.0 | % | ||||||||||||||||||||
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% of Total Consolidated |
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Property and all other |
32 | % | 31 | % | 32 | % | 32 | % | ||||||||||||||||||||||||||||||||
Casualty |
33 | % | 32 | % | 34 | % | 33 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
65 | % | 63 | % | 66 | % | 65 | % | ||||||||||||||||||||||||||||||||
Agriculture |
8 | % | 11 | % | 7 | % | 7 | % | ||||||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
21 | % | 21 | % | 21 | % | 22 | % | ||||||||||||||||||||||||||||||||
Life |
6 | % | 5 | % | 6 | % | 6 | % | ||||||||||||||||||||||||||||||||
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Total consolidated |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||||||||||
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Net premiums earned |
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Property and all other |
$ | 1,282 | $ | 1,158 | 10.6 | % | $ | 2,534 | $ | 2,225 | 13.8 | % | ||||||||||||||||||||||||||||
Casualty |
1,542 | 1,454 | 6.0 | % | 3,022 | 2,807 | 7.7 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
2,824 | 2,612 | 8.1 | % | $ | 2,610 | 8.2 | % | 5,556 | 5,032 | 10.4 | % | $ | 4,994 | 11.2 | % | ||||||||||||||||||||||||
Agriculture |
330 | 351 | -5.7 | % | 351 | -5.7 | % | 433 | 403 | 7.6 | % | 403 | 7.6 | % | ||||||||||||||||||||||||||
Personal accident (A&H) (1) |
934 | 880 | 6.1 | % | 870 | 7.4 | % | 1,828 | 1,754 | 4.2 | % | 1,715 | 6.6 | % | ||||||||||||||||||||||||||
Life |
244 | 224 | 9.2 | % | 218 | 11.9 | % | 485 | 451 | 7.5 | % | 438 | 10.6 | % | ||||||||||||||||||||||||||
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Total consolidated |
$ | 4,332 | $ | 4,067 | 6.5 | % | $ | 4,049 | 7.0 | % | $ | 8,302 | $ | 7,640 | 8.7 | % | $ | 7,550 | 10.0 | % | ||||||||||||||||||||
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% of Total Consolidated |
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Property and all other |
29 | % | 28 | % | 31 | % | 29 | % | ||||||||||||||||||||||||||||||||
Casualty |
36 | % | 36 | % | 36 | % | 37 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
65 | % | 64 | % | 67 | % | 66 | % | ||||||||||||||||||||||||||||||||
Agriculture |
7 | % | 9 | % | 5 | % | 5 | % | ||||||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
22 | % | 22 | % | 22 | % | 23 | % | ||||||||||||||||||||||||||||||||
Life |
6 | % | 5 | % | 6 | % | 6 | % | ||||||||||||||||||||||||||||||||
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Total consolidated |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||||||||||
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Operating income (loss) |
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Property, casualty, and all other |
$ | 647 | $ | 607 | 6.6 | % | $ | 613 | 5.5 | % | $ | 1,292 | $ | 1,188 | 8.8 | % | $ | 1,189 | 8.6 | % | ||||||||||||||||||||
Agriculture |
19 | 26 | -25.4 | % | 26 | -25.4 | % | (6 | ) | 33 | NM | 33 | NM | |||||||||||||||||||||||||||
Personal accident (A&H) (1) |
125 | 123 | 2.0 | % | 121 | 3.7 | % | 239 | 247 | -3.2 | % | 242 | -1.1 | % | ||||||||||||||||||||||||||
Life |
34 | 34 | 0.0 | % | 34 | 0.0 | % | 77 | 68 | 13.2 | % | 68 | 13.2 | % | ||||||||||||||||||||||||||
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Total consolidated |
$ | 825 | $ | 790 | 4.5 | % | $ | 794 | 3.9 | % | $ | 1,602 | $ | 1,536 | 4.3 | % | $ | 1,532 | 4.6 | % | ||||||||||||||||||||
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% of Total Consolidated |
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Property, casualty, and all other |
79 | % | 77 | % | 80 | % | 77 | % | ||||||||||||||||||||||||||||||||
Agriculture |
2 | % | 3 | % | 0 | % | 2 | % | ||||||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
15 | % | 16 | % | 15 | % | 17 | % | ||||||||||||||||||||||||||||||||
Life |
4 | % | 4 | % | 5 | % | 4 | % | ||||||||||||||||||||||||||||||||
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Total consolidated |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||||||||||
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(1) | For purposes of this schedule only, A&H results from our Combined North American and International businesses, normally included in the Life and Insurance Overseas General segments, respectively, are included in the Personal Accident (A&H) line items above. |
(2) | Prior periods on a constant-dollar basis. |
Line of Business | Page 4 |
![]() |
ACE Limited Global P&C Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
Global P&C includes the companys Insurance North American P&C segment (refer to page 7), Insurance Overseas General segment (refer to page 9), Global Reinsurance segment (refer to page 10), and Corporate (not separately disclosed in the Financial Supplement). Global P&C excludes the Insurance North American Agriculture and Life segments.
Global P&C (Including Corporate)
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 4,879 | $ | 4,618 | $ | 4,719 | $ | 4,417 | $ | 4,769 | $ | 9,497 | $ | 8,955 | $ | 18,091 | ||||||||||||||||
Net premiums written |
3,673 | 3,497 | 3,456 | 3,336 | 3,451 | 7,170 | 6,634 | 13,426 | ||||||||||||||||||||||||
Net premiums earned |
3,512 | 3,383 | 3,456 | 3,294 | 3,236 | 6,895 | 6,280 | 13,030 | ||||||||||||||||||||||||
Losses and loss expenses |
1,955 | 1,884 | 1,925 | 1,768 | 1,812 | 3,839 | 3,549 | 7,242 | ||||||||||||||||||||||||
Policy acquisition costs |
614 | 612 | 608 | 560 | 550 | 1,226 | 1,080 | 2,248 | ||||||||||||||||||||||||
Administrative expenses |
492 | 466 | 485 | 473 | 475 | 958 | 899 | 1,857 | ||||||||||||||||||||||||
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Underwriting income |
451 | 421 | 438 | 493 | 399 | 872 | 752 | 1,683 | ||||||||||||||||||||||||
Net investment income |
484 | 482 | 486 | 455 | 464 | 966 | 926 | 1,867 | ||||||||||||||||||||||||
Interest expense |
69 | 68 | 66 | 68 | 69 | 137 | 125 | 259 | ||||||||||||||||||||||||
Other income (expense)operating (1) |
(17 | ) | (15 | ) | (15 | ) | (21 | ) | (23 | ) | (32 | ) | (37 | ) | (73 | ) | ||||||||||||||||
Income tax expense |
115 | 95 | 85 | 127 | 83 | 210 | 159 | 371 | ||||||||||||||||||||||||
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Global P&C operating income |
734 | 725 | 758 | 732 | 688 | 1,459 | 1,357 | 2,847 | ||||||||||||||||||||||||
Net realized gains (losses) |
(9 | ) | (26 | ) | | (3 | ) | 67 | (35 | ) | 146 | 143 | ||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
38 | 53 | 27 | 24 | 8 | 91 | 36 | 87 | ||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
1 | (5 | ) | 6 | 4 | 14 | (4 | ) | 45 | 55 | ||||||||||||||||||||||
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Global P&C net income |
$ | 762 | $ | 757 | $ | 779 | $ | 749 | $ | 749 | $ | 1,519 | $ | 1,494 | $ | 3,022 | ||||||||||||||||
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% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written as reported |
6.4 | % | 9.9 | % | 13.1 | % | 8.9 | % | 9.5 | % | 8.1 | % | 8.5 | % | 9.7 | % | ||||||||||||||||
Net premiums earned as reported |
8.5 | % | 11.2 | % | 11.6 | % | 9.1 | % | 10.7 | % | 9.8 | % | 8.8 | % | 9.6 | % | ||||||||||||||||
Net premiums written constant $ |
7.0 | % | 11.6 | % | 14.7 | % | 10.6 | % | 11.2 | % | 9.2 | % | 9.3 | % | 11.0 | % | ||||||||||||||||
Net premiums earned constant $ |
8.8 | % | 13.4 | % | 13.1 | % | 10.5 | % | 12.2 | % | 11.0 | % | 9.7 | % | 10.8 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written |
75 | % | 76 | % | 73 | % | 76 | % | 72 | % | 75 | % | 74 | % | 74 | % | ||||||||||||||||
Combined ratio |
||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
55.7 | % | 55.7 | % | 55.7 | % | 53.7 | % | 56.0 | % | 55.7 | % | 56.5 | % | 55.6 | % | ||||||||||||||||
Policy acquisition cost ratio |
17.5 | % | 18.1 | % | 17.6 | % | 17.0 | % | 17.0 | % | 17.8 | % | 17.2 | % | 17.3 | % | ||||||||||||||||
Administrative expense ratio |
13.9 | % | 13.8 | % | 14.1 | % | 14.3 | % | 14.7 | % | 13.9 | % | 14.3 | % | 14.2 | % | ||||||||||||||||
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Combined ratio |
87.1 | % | 87.6 | % | 87.4 | % | 85.0 | % | 87.7 | % | 87.4 | % | 88.0 | % | 87.1 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
88.7 | % | 89.0 | % | 89.9 | % | 88.9 | % | 89.2 | % | 88.8 | % | 89.4 | % | 89.4 | % | ||||||||||||||||
Expense ratio |
31.4 | % | 31.9 | % | 31.7 | % | 31.3 | % | 31.7 | % | 31.7 | % | 31.5 | % | 31.5 | % | ||||||||||||||||
Expense ratio excluding A&H |
28.2 | % | 28.4 | % | 27.9 | % | 27.6 | % | 28.3 | % | 28.3 | % | 28.0 | % | 27.9 | % | ||||||||||||||||
Catastrophe reinstatement premiums collectedpre-tax |
$ | | $ | | $ | 1 | $ | 2 | $ | | $ | | $ | | $ | 3 | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 71 | $ | 52 | $ | 35 | $ | 78 | $ | 78 | $ | 123 | $ | 110 | $ | 223 | ||||||||||||||||
Favorable prior period development (PPD)pre-tax (2) |
$ | (126 | ) | $ | (100 | ) | $ | (122 | ) | $ | (200 | ) | $ | (128 | ) | $ | (226 | ) | $ | (195 | ) | $ | (517 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
57.3 | % | 57.1 | % | 58.3 | % | 57.7 | % | 57.6 | % | 57.2 | % | 57.9 | % | 58.0 | % |
(1) | Excludes portion of net realized investment gains and losses related to unconsolidated entities. |
(2) | For Q2 2014 and YTD 2014, favorable prior period development is net of $1 million and $3 million, respectively, of profit-sharing commissions that are included in the expense ratio. |
Global P&C | Page 5 |
![]() |
ACE Limited Insurance - North American (in millions of U.S. dollars, except ratios) (Unaudited) |
The table below combines the companys Insurance North American P&C segment (refer to page 7) and Insurance North American Agriculture segment (refer to page 8) into total Insurance North American business presentation for reference purposes only.
Insurance - North American
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 2,948 | $ | 2,258 | $ | 2,656 | $ | 3,581 | $ | 3,076 | $ | 5,206 | $ | 5,144 | $ | 11,381 | ||||||||||||||||
Net premiums written |
2,023 | 1,612 | 1,858 | 2,305 | 1,982 | 3,635 | 3,379 | 7,542 | ||||||||||||||||||||||||
Net premiums earned |
1,872 | 1,590 | 1,937 | 2,293 | 1,779 | 3,462 | 3,169 | 7,399 | ||||||||||||||||||||||||
Losses and loss expenses (1) |
1,295 | 1,068 | 1,438 | 1,710 | 1,243 | 2,363 | 2,153 | 5,301 | ||||||||||||||||||||||||
Policy acquisition costs |
175 | 164 | 150 | 191 | 162 | 339 | 309 | 650 | ||||||||||||||||||||||||
Administrative expenses |
176 | 162 | 162 | 158 | 162 | 338 | 292 | 612 | ||||||||||||||||||||||||
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Underwriting income |
226 | 196 | 187 | 234 | 212 | 422 | 415 | 836 | ||||||||||||||||||||||||
Net investment income |
271 | 277 | 273 | 260 | 257 | 548 | 514 | 1,047 | ||||||||||||||||||||||||
Interest expense |
2 | 3 | 2 | 3 | 3 | 5 | 1 | 6 | ||||||||||||||||||||||||
Other income (expense)operating |
(4 | ) | (8 | ) | (7 | ) | (11 | ) | (12 | ) | (12 | ) | (19 | ) | (37 | ) | ||||||||||||||||
Income tax expense |
94 | 76 | 69 | 88 | 87 | 170 | 174 | 331 | ||||||||||||||||||||||||
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Operating income |
397 | 386 | 382 | 392 | 367 | 783 | 735 | 1,509 | ||||||||||||||||||||||||
Net realized gains (losses) (1) |
(11 | ) | (9 | ) | 9 | 10 | 29 | (20 | ) | 55 | 74 | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
19 | 20 | 19 | 16 | 14 | 39 | 28 | 63 | ||||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
2 | | 10 | 5 | 12 | 2 | 21 | 36 | ||||||||||||||||||||||||
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Net income |
$ | 403 | $ | 397 | $ | 400 | $ | 413 | $ | 398 | $ | 800 | $ | 797 | $ | 1,610 | ||||||||||||||||
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Combined ratio |
||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
69.2 | % | 67.2 | % | 74.2 | % | 74.6 | % | 69.9 | % | 68.3 | % | 67.9 | % | 71.6 | % | ||||||||||||||||
Policy acquisition cost ratio |
9.3 | % | 10.3 | % | 7.7 | % | 8.4 | % | 9.1 | % | 9.8 | % | 9.7 | % | 8.8 | % | ||||||||||||||||
Administrative expense ratio |
9.4 | % | 10.2 | % | 8.5 | % | 6.8 | % | 9.1 | % | 9.7 | % | 9.3 | % | 8.3 | % | ||||||||||||||||
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Combined ratio |
87.9 | % | 87.7 | % | 90.4 | % | 89.8 | % | 88.1 | % | 87.8 | % | 86.9 | % | 88.7 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
87.6 | % | 87.2 | % | 91.1 | % | 90.1 | % | 87.7 | % | 87.4 | % | 87.7 | % | 89.3 | % | ||||||||||||||||
Catastrophe reinstatement premiums expensedpre-tax |
$ | | $ | | $ | | $ | | $ | (1 | ) | $ | | $ | (1 | ) | $ | (1 | ) | |||||||||||||
Catastrophe lossespre-tax |
$ | 45 | $ | 33 | $ | 14 | $ | 23 | $ | 53 | $ | 78 | $ | 64 | $ | 101 | ||||||||||||||||
Favorable prior period development (PPD)pre-tax |
$ | (39 | ) | $ | (30 | ) | $ | (28 | ) | $ | (29 | ) | $ | (47 | ) | $ | (69 | ) | $ | (90 | ) | $ | (147 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
68.9 | % | 66.2 | % | 75.0 | % | 75.0 | % | 69.7 | % | 67.7 | % | 68.9 | % | 72.4 | % | ||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written |
2.1 | % | 15.5 | % | 22.5 | % | -9.1 | % | 6.6 | % | 7.6 | % | 7.1 | % | 4.6 | % | ||||||||||||||||
Net premiums earned |
5.2 | % | 14.4 | % | 20.4 | % | -7.2 | % | 7.7 | % | 9.2 | % | 7.8 | % | 5.4 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written |
69 | % | 71 | % | 70 | % | 64 | % | 64 | % | 70 | % | 66 | % | 66 | % |
(1) | (Gains) losses from fair value changes on crop derivatives are reclassified from Net realized gains (losses) for this presentation. |
Insurance - North American | Page 6 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
Insurance - North American P&C
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 2,347 | $ | 2,024 | $ | 2,439 | $ | 2,135 | $ | 2,327 | $ | 4,371 | $ | 4,146 | $ | 8,720 | ||||||||||||||||
Net premiums written |
1,635 | 1,418 | 1,602 | 1,500 | 1,529 | 3,053 | 2,813 | 5,915 | ||||||||||||||||||||||||
Net premiums earned |
1,542 | 1,487 | 1,511 | 1,444 | 1,428 | 3,029 | 2,766 | 5,721 | ||||||||||||||||||||||||
Losses and loss expenses |
1,016 | 940 | 985 | 963 | 950 | 1,956 | 1,828 | 3,776 | ||||||||||||||||||||||||
Policy acquisition costs |
152 | 159 | 153 | 159 | 142 | 311 | 285 | 597 | ||||||||||||||||||||||||
Administrative expenses |
175 | 161 | 164 | 153 | 159 | 336 | 284 | 601 | ||||||||||||||||||||||||
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Underwriting income |
199 | 227 | 209 | 169 | 177 | 426 | 369 | 747 | ||||||||||||||||||||||||
Net investment income |
265 | 270 | 266 | 254 | 250 | 535 | 501 | 1,021 | ||||||||||||||||||||||||
Interest expense |
2 | 3 | 1 | 3 | 3 | 5 | 1 | 5 | ||||||||||||||||||||||||
Other income (expense)operating |
5 | | 1 | (3 | ) | (4 | ) | 5 | (3 | ) | (5 | ) | ||||||||||||||||||||
Income tax expense |
89 | 83 | 73 | 75 | 79 | 172 | 164 | 312 | ||||||||||||||||||||||||
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Operating income |
378 | 411 | 402 | 342 | 341 | 789 | 702 | 1,446 | ||||||||||||||||||||||||
Net realized gains (losses) |
(11 | ) | (9 | ) | 9 | 9 | 28 | (20 | ) | 54 | 72 | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
19 | 20 | 19 | 16 | 14 | 39 | 28 | 63 | ||||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
2 | | 10 | 4 | 12 | 2 | 21 | 35 | ||||||||||||||||||||||||
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Net income |
$ | 384 | $ | 422 | $ | 420 | $ | 363 | $ | 371 | $ | 806 | $ | 763 | $ | 1,546 | ||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
66.0 | % | 63.2 | % | 65.2 | % | 66.7 | % | 66.6 | % | 64.6 | % | 66.1 | % | 66.0 | % | ||||||||||||||||
Policy acquisition cost ratio |
9.8 | % | 10.7 | % | 10.1 | % | 11.1 | % | 9.9 | % | 10.3 | % | 10.3 | % | 10.4 | % | ||||||||||||||||
Administrative expense ratio |
11.3 | % | 10.8 | % | 10.9 | % | 10.5 | % | 11.1 | % | 11.0 | % | 10.3 | % | 10.5 | % | ||||||||||||||||
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Combined ratio |
87.1 | % | 84.7 | % | 86.2 | % | 88.3 | % | 87.6 | % | 85.9 | % | 86.7 | % | 86.9 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
87.3 | % | 87.1 | % | 87.2 | % | 88.3 | % | 87.3 | % | 87.2 | % | 87.6 | % | 87.6 | % | ||||||||||||||||
Catastrophe reinstatement premiums expensedpre-tax |
$ | | $ | | $ | | $ | | $ | (1 | ) | $ | | $ | (1 | ) | $ | (1 | ) | |||||||||||||
Catastrophe lossespre-tax |
$ | 36 | $ | 32 | $ | 12 | $ | 21 | $ | 50 | $ | 68 | $ | 61 | $ | 94 | ||||||||||||||||
Favorable prior period development (PPD)pre-tax (1) |
$ | (39 | ) | $ | (68 | ) | $ | (28 | ) | $ | (19 | ) | $ | (47 | ) | $ | (107 | ) | $ | (87 | ) | $ | (134 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
66.2 | % | 65.7 | % | 66.3 | % | 66.9 | % | 66.5 | % | 65.9 | % | 67.1 | % | 66.8 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written |
6.9 | % | 10.5 | % | 11.8 | % | 9.3 | % | 11.8 | % | 8.5 | % | 10.7 | % | 10.6 | % | ||||||||||||||||
Net premiums earned |
7.9 | % | 11.2 | % | 12.3 | % | 10.6 | % | 12.7 | % | 9.5 | % | 10.8 | % | 11.1 | % | ||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
70 | % | 70 | % | 66 | % | 70 | % | 66 | % | 70 | % | 68 | % | 68 | % |
(1) | For YTD 2014, favorable prior period development is net of $2 million of profit-sharing commissions that are included in the expense ratio. |
Insurance - North American P&C | Page 7 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
Insurance - North American Agriculture
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 601 | $ | 234 | $ | 217 | $ | 1,446 | $ | 749 | $ | 835 | $ | 998 | $ | 2,661 | ||||||||||||||||
Net premiums written |
388 | 194 | 256 | 805 | 453 | 582 | 566 | 1,627 | ||||||||||||||||||||||||
Net premiums earned |
330 | 103 | 426 | 849 | 351 | 433 | 403 | 1,678 | ||||||||||||||||||||||||
Losses and loss expenses (1) |
279 | 128 | 453 | 747 | 293 | 407 | 325 | 1,525 | ||||||||||||||||||||||||
Policy acquisition costs |
23 | 5 | (3 | ) | 32 | 20 | 28 | 24 | 53 | |||||||||||||||||||||||
Administrative expenses |
1 | 1 | (2 | ) | 5 | 3 | 2 | 8 | 11 | |||||||||||||||||||||||
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Underwriting income (loss) (2) |
27 | (31 | ) | (22 | ) | 65 | 35 | (4 | ) | 46 | 89 | |||||||||||||||||||||
Net investment income |
6 | 7 | 7 | 6 | 7 | 13 | 13 | 26 | ||||||||||||||||||||||||
Interest expense |
| | 1 | | | | | 1 | ||||||||||||||||||||||||
Other income (expense)operating |
(9 | ) | (8 | ) | (8 | ) | (8 | ) | (8 | ) | (17 | ) | (16 | ) | (32 | ) | ||||||||||||||||
Income tax expense (benefit) |
5 | (7 | ) | (4 | ) | 13 | 8 | (2 | ) | 10 | 19 | |||||||||||||||||||||
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Operating income (loss) |
19 | (25 | ) | (20 | ) | 50 | 26 | (6 | ) | 33 | 63 | |||||||||||||||||||||
Net realized gains (losses) excluding gains (losses) from fair value changes on crop derivatives (1) |
| | | 1 | 1 | | 1 | 2 | ||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
| | | | | | | | ||||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
| | | 1 | | | | 1 | ||||||||||||||||||||||||
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Net income (loss) |
$ | 19 | $ | (25 | ) | $ | (20 | ) | $ | 50 | $ | 27 | $ | (6 | ) | $ | 34 | $ | 64 | |||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
84.4 | % | 124.6 | % | 106.3 | % | 88.0 | % | 83.4 | % | 93.9 | % | 80.6 | % | 90.9 | % | ||||||||||||||||
Policy acquisition cost ratio |
7.0 | % | 4.5 | % | -0.5 | % | 3.8 | % | 5.6 | % | 6.4 | % | 5.8 | % | 3.2 | % | ||||||||||||||||
Administrative expense ratio |
0.4 | % | 1.2 | % | -0.6 | % | 0.5 | % | 0.9 | % | 0.6 | % | 2.2 | % | 0.6 | % | ||||||||||||||||
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Combined ratio |
91.8 | % | 130.3 | % | 105.2 | % | 92.3 | % | 89.9 | % | 100.9 | % | 88.6 | % | 94.7 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
89.1 | % | 88.9 | % | 104.8 | % | 93.3 | % | 89.1 | % | 89.1 | % | 88.7 | % | 95.1 | % | ||||||||||||||||
Catastrophe reinstatement premiumspre-tax |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 9 | $ | 1 | $ | 2 | $ | 2 | $ | 3 | $ | 10 | $ | 3 | $ | 7 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD)pre-tax (3) |
$ | | $ | 38 | $ | | $ | (10 | ) | $ | | $ | 38 | $ | (3 | ) | $ | (13 | ) | |||||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
81.8 | % | 78.3 | % | 105.8 | % | 88.9 | % | 82.6 | % | 81.2 | % | 80.7 | % | 91.3 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written |
-14.2 | % | 72.1 | % | 203.6 | % | -30.8 | % | -8.0 | % | 3.0 | % | -7.4 | % | -12.5 | % | ||||||||||||||||
Net premiums earned |
-5.7 | % | 96.8 | % | 62.3 | % | -27.2 | % | -8.8 | % | 7.6 | % | -9.1 | % | -10.4 | % | ||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
65 | % | 83 | % | 118 | % | 56 | % | 60 | % | 70 | % | 57 | % | 61 | % |
(1) | (Gains) losses from fair value changes on crop derivatives are reclassified from Net realized gains (losses) for this presentation. |
(2) | We assess the performance of our Insurance North American Agriculture segment based on underwriting income which includes (gains) losses from fair value changes on crop derivatives. |
(3) | For YTD 2014, unfavorable prior period development is net of $35 million of favorable net earned premium adjustments and $1 million of favorable profit-sharing commissions. |
Insurance - North American Agriculture | Page 8 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
Insurance - Overseas General
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 2,224 | $ | 2,261 | $ | 2,126 | $ | 2,018 | $ | 2,097 | $ | 4,485 | $ | 4,170 | $ | 8,314 | ||||||||||||||||
Net premiums written |
1,760 | 1,771 | 1,699 | 1,571 | 1,630 | 3,531 | 3,250 | 6,520 | ||||||||||||||||||||||||
Net premiums earned |
1,709 | 1,612 | 1,700 | 1,611 | 1,563 | 3,321 | 3,022 | 6,333 | ||||||||||||||||||||||||
Losses and loss expenses |
830 | 817 | 835 | 712 | 768 | 1,647 | 1,515 | 3,062 | ||||||||||||||||||||||||
Policy acquisition costs |
402 | 386 | 405 | 349 | 360 | 788 | 699 | 1,453 | ||||||||||||||||||||||||
Administrative expenses |
256 | 250 | 258 | 263 | 251 | 506 | 487 | 1,008 | ||||||||||||||||||||||||
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Underwriting income |
221 | 159 | 202 | 287 | 184 | 380 | 321 | 810 | ||||||||||||||||||||||||
Net investment income |
136 | 132 | 143 | 128 | 136 | 268 | 268 | 539 | ||||||||||||||||||||||||
Interest expense |
1 | 1 | 1 | 1 | 2 | 2 | 3 | 5 | ||||||||||||||||||||||||
Other income (expense)operating |
(17 | ) | (9 | ) | (13 | ) | (16 | ) | (14 | ) | (26 | ) | (19 | ) | (48 | ) | ||||||||||||||||
Income tax expense |
57 | 42 | 52 | 78 | 48 | 99 | 72 | 202 | ||||||||||||||||||||||||
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Operating income |
282 | 239 | 279 | 320 | 256 | 521 | 495 | 1,094 | ||||||||||||||||||||||||
Net realized gains (losses) |
14 | (10 | ) | (16 | ) | (8 | ) | 8 | 4 | 42 | 18 | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
9 | 15 | 4 | 2 | (3 | ) | 24 | 3 | 9 | |||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
(2 | ) | (5 | ) | (4 | ) | | 2 | (7 | ) | 24 | 20 | ||||||||||||||||||||
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Net income |
$ | 307 | $ | 249 | $ | 271 | $ | 314 | $ | 259 | $ | 556 | $ | 516 | $ | 1,101 | ||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
48.6 | % | 50.7 | % | 49.2 | % | 44.2 | % | 49.1 | % | 49.6 | % | 50.1 | % | 48.4 | % | ||||||||||||||||
Policy acquisition cost ratio |
23.5 | % | 23.9 | % | 23.8 | % | 21.6 | % | 23.0 | % | 23.7 | % | 23.1 | % | 22.9 | % | ||||||||||||||||
Administrative expense ratio |
15.0 | % | 15.5 | % | 15.1 | % | 16.4 | % | 16.1 | % | 15.3 | % | 16.2 | % | 15.9 | % | ||||||||||||||||
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Combined ratio |
87.1 | % | 90.1 | % | 88.1 | % | 82.2 | % | 88.2 | % | 88.6 | % | 89.4 | % | 87.2 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
89.3 | % | 90.5 | % | 91.6 | % | 89.4 | % | 90.5 | % | 89.9 | % | 90.6 | % | 90.5 | % | ||||||||||||||||
Catastrophe reinstatement premiumspre-tax |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 26 | $ | 17 | $ | 17 | $ | 33 | $ | 17 | $ | 43 | $ | 38 | $ | 88 | ||||||||||||||||
Favorable prior period development (PPD)pre-tax |
$ | (63 | ) | $ | (23 | ) | $ | (76 | ) | $ | (149 | ) | $ | (52 | ) | $ | (86 | ) | $ | (74 | ) | $ | (299 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
50.8 | % | 51.1 | % | 52.6 | % | 51.4 | % | 51.3 | % | 50.9 | % | 51.3 | % | 51.7 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written as reported |
8.0 | % | 9.3 | % | 15.1 | % | 13.5 | % | 10.5 | % | 8.7 | % | 8.2 | % | 11.2 | % | ||||||||||||||||
Net premiums earned as reported |
9.4 | % | 10.4 | % | 13.5 | % | 12.5 | % | 10.1 | % | 9.9 | % | 7.5 | % | 10.3 | % | ||||||||||||||||
Net premiums written constant $ |
8.8 | % | 12.3 | % | 18.2 | % | 17.4 | % | 13.7 | % | 10.5 | % | 9.9 | % | 13.7 | % | ||||||||||||||||
Net premiums earned constant $ |
9.8 | % | 14.6 | % | 16.5 | % | 15.4 | % | 13.0 | % | 12.1 | % | 9.3 | % | 12.7 | % | ||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
79 | % | 78 | % | 80 | % | 78 | % | 78 | % | 79 | % | 78 | % | 78 | % |
Insurance - Overseas General | Page 9 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
Global Reinsurance
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 308 | $ | 333 | $ | 154 | $ | 264 | $ | 345 | $ | 641 | $ | 639 | $ | 1,057 | ||||||||||||||||
Net premiums written |
278 | 308 | 155 | 265 | 292 | 586 | 571 | 991 | ||||||||||||||||||||||||
Net premiums earned |
261 | 284 | 245 | 239 | 245 | 545 | 492 | 976 | ||||||||||||||||||||||||
Losses and loss expenses |
109 | 126 | 104 | 93 | 93 | 235 | 199 | 396 | ||||||||||||||||||||||||
Policy acquisition costs |
60 | 67 | 49 | 52 | 48 | 127 | 96 | 197 | ||||||||||||||||||||||||
Administrative expenses |
14 | 14 | 14 | 12 | 12 | 28 | 24 | 50 | ||||||||||||||||||||||||
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Underwriting income |
78 | 77 | 78 | 82 | 92 | 155 | 173 | 333 | ||||||||||||||||||||||||
Net investment income |
80 | 77 | 71 | 66 | 71 | 157 | 143 | 280 | ||||||||||||||||||||||||
Interest expense |
2 | 1 | 1 | 2 | 1 | 3 | 2 | 5 | ||||||||||||||||||||||||
Other income (expense) - operating |
| 1 | 2 | 1 | 1 | 1 | 1 | 4 | ||||||||||||||||||||||||
Income tax expense |
10 | 10 | 5 | 16 | 7 | 20 | 15 | 36 | ||||||||||||||||||||||||
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Operating income |
146 | 144 | 145 | 131 | 156 | 290 | 300 | 576 | ||||||||||||||||||||||||
Net realized gains (losses) |
(15 | ) | (8 | ) | 7 | (5 | ) | 31 | (23 | ) | 51 | 53 | ||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
10 | 18 | 4 | 6 | (3 | ) | 28 | 5 | 15 | |||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
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Net income |
$ | 141 | $ | 154 | $ | 156 | $ | 132 | $ | 184 | $ | 295 | $ | 356 | $ | 644 | ||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
41.7 | % | 44.4 | % | 42.5 | % | 38.9 | % | 37.7 | % | 43.1 | % | 40.3 | % | 40.5 | % | ||||||||||||||||
Policy acquisition cost ratio |
23.1 | % | 23.5 | % | 20.4 | % | 21.7 | % | 19.9 | % | 23.3 | % | 19.6 | % | 20.3 | % | ||||||||||||||||
Administrative expense ratio |
5.1 | % | 5.0 | % | 5.5 | % | 5.2 | % | 4.6 | % | 5.1 | % | 4.9 | % | 5.1 | % | ||||||||||||||||
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Combined ratio |
69.9 | % | 72.9 | % | 68.4 | % | 65.8 | % | 62.2 | % | 71.5 | % | 64.8 | % | 65.9 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
75.4 | % | 75.1 | % | 73.6 | % | 71.0 | % | 70.0 | % | 75.2 | % | 69.6 | % | 70.9 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax |
$ | | $ | | $ | 1 | $ | 2 | $ | 1 | $ | | $ | 1 | $ | 4 | ||||||||||||||||
Catastrophe losses - pre-tax |
$ | 9 | $ | 3 | $ | 6 | $ | 24 | $ | 11 | $ | 12 | $ | 11 | $ | 41 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (24 | ) | $ | (9 | ) | $ | (18 | ) | $ | (32 | ) | $ | (29 | ) | $ | (33 | ) | $ | (34 | ) | $ | (84 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
47.2 | % | 46.5 | % | 47.7 | % | 44.6 | % | 45.3 | % | 46.8 | % | 45.1 | % | 45.6 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written as reported |
-4.9 | % | 10.3 | % | 5.5 | % | -13.6 | % | -5.3 | % | 2.5 | % | -0.1 | % | -3.3 | % | ||||||||||||||||
Net premiums earned as reported |
6.1 | % | 15.5 | % | -3.7 | % | -15.0 | % | 3.6 | % | 10.8 | % | 5.4 | % | -2.6 | % | ||||||||||||||||
Net premiums written constant $ |
-5.0 | % | 10.5 | % | 5.3 | % | -13.5 | % | -4.2 | % | 2.5 | % | 0.0 | % | -3.3 | % | ||||||||||||||||
Net premiums earned constant $ |
5.5 | % | 15.4 | % | -3.6 | % | -14.9 | % | 4.3 | % | 10.4 | % | 5.6 | % | -2.5 | % | ||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
90 | % | 92 | % | 101 | % | 100 | % | 85 | % | 91 | % | 89 | % | 94 | % |
Global Reinsurance |
Page 10 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars) (Unaudited) |
Life
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Gross premiums written |
$ | 526 | $ | 522 | $ | 526 | $ | 510 | $ | 512 | $ | 1,048 | $ | 1,040 | $ | 2,076 | ||||||||||||||||
Net premiums written |
498 | 494 | 504 | 479 | 487 | 992 | 989 | 1,972 | ||||||||||||||||||||||||
Net premiums earned |
490 | 484 | 481 | 467 | 480 | 974 | 957 | 1,905 | ||||||||||||||||||||||||
Losses and loss expenses |
146 | 151 | 139 | 141 | 145 | 297 | 302 | 582 | ||||||||||||||||||||||||
Policy benefits (1) |
144 | 114 | 136 | 138 | 110 | 258 | 241 | 515 | ||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets (1) |
(17 | ) | 6 | (9 | ) | (14 | ) | 11 | (11 | ) | 7 | (16 | ) | |||||||||||||||||||
Policy acquisition costs |
121 | 111 | 97 | 86 | 95 | 232 | 175 | 358 | ||||||||||||||||||||||||
Administrative expenses |
73 | 68 | 87 | 85 | 86 | 141 | 171 | 343 | ||||||||||||||||||||||||
Net investment income |
66 | 64 | 64 | 61 | 63 | 130 | 126 | 251 | ||||||||||||||||||||||||
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Life underwriting income (2) |
89 | 98 | 95 | 92 | 96 | 187 | 187 | 374 | ||||||||||||||||||||||||
Interest expense |
3 | 3 | 3 | 4 | 4 | 6 | 8 | 15 | ||||||||||||||||||||||||
Other income (expense) - operating (1) |
(2 | ) | (5 | ) | (4 | ) | (2 | ) | (7 | ) | (7 | ) | (12 | ) | (18 | ) | ||||||||||||||||
Income tax expense |
12 | 13 | 2 | 11 | 9 | 25 | 21 | 34 | ||||||||||||||||||||||||
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Operating income |
72 | 77 | 86 | 75 | 76 | 149 | 146 | 307 | ||||||||||||||||||||||||
Net realized gains (losses): |
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Mark-to-market on guaranteed living benefits derivative (net of related hedges) |
(70 | ) | (67 | ) | 149 | 39 | 33 | (137 | ) | 111 | 299 | |||||||||||||||||||||
Foreign exchange gains (losses) and all other |
(2 | ) | (9 | ) | 5 | 4 | 3 | (11 | ) | 52 | 61 | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
(2 | ) | (2 | ) | (2 | ) | (2 | ) | 4 | (4 | ) | 9 | 5 | |||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
| (3 | ) | (1 | ) | (1 | ) | 1 | (3 | ) | 2 | | ||||||||||||||||||||
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|
|||||||||||||||||
Net income (loss) |
$ | (2 | ) | $ | 2 | $ | 239 | $ | 117 | $ | 115 | $ | | $ | 316 | $ | 672 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written as reported |
2.2 | % | -1.6 | % | -2.6 | % | -1.9 | % | 0.2 | % | 0.2 | % | 1.6 | % | -0.4 | % | ||||||||||||||||
Net premiums earned as reported |
2.2 | % | 1.3 | % | -1.5 | % | -2.7 | % | 0.9 | % | 1.8 | % | 1.0 | % | -0.6 | % | ||||||||||||||||
Net premiums written constant $ (3) |
4.4 | % | 1.1 | % | -1.4 | % | -1.0 | % | 0.4 | % | 2.7 | % | 1.5 | % | 0.2 | % | ||||||||||||||||
Net premiums earned constant $ |
4.2 | % | 4.0 | % | -0.4 | % | -1.9 | % | 1.0 | % | 4.1 | % | 0.9 | % | -0.1 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP are reclassified from Other income (expense) for purposes of presenting Life underwriting income. The offsetting movement in the separate account liabilities is included in Policy benefits. |
(2) | We assess the performance of our Life business based on Life underwriting income which includes Net investment income and (Gains) losses from fair value changes in separate account assets. |
(3) | Net premiums written and deposits breakdown: |
Constant $ | Constant $ | |||||||||||||||||||||||
% Change | % Change | |||||||||||||||||||||||
Constant $ | 2Q-14 vs. | Constant $ | YTD-14 vs. | |||||||||||||||||||||
2Q-14 | 2Q-13 | 2Q-13 | YTD-14 | YTD-2013 | YTD-13 | |||||||||||||||||||
Life excluding life reinsurance (4) |
$ | 715 | $ | 625 | 14.2 | % | $ | 1,344 | $ | 1,235 | 8.8 | % | ||||||||||||
Life reinsurance including variable annuity |
65 | 72 | -8.0 | % | 132 | 146 | -9.2 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Life |
$ | 780 | $ | 697 | 11.9 | % | $ | 1,476 | $ | 1,381 | 6.9 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(4) | Includes deposits collected on universal life and investment contracts of $282 million for Q2 2014 and $219 million for Q2 2013 on a constant-dollar basis. For the year-to-date period, includes deposits of $484 million for 2014 and $415 million for 2013 on a constant-dollar basis. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues. |
Life |
Page 11 |
![]() |
ACE Limited Loss Reserve Rollforward (in millions of U.S. dollars, except ratios) (Unaudited) |
Unpaid Losses | Net Paid to | |||||||||||||||
Gross | Ceded | Net | Incurred Ratio | |||||||||||||
Balance at December 31, 2012 |
$ | 37,946 | $ | 11,399 | $ | 26,547 | ||||||||||
Losses and loss expenses incurred |
2,483 | 557 | 1,926 | |||||||||||||
Losses and loss expenses paid |
(2,987 | ) | (932 | ) | (2,055 | ) | 107 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(360 | ) | (106 | ) | (254 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Balance at March 31, 2013 |
$ | 37,082 | $ | 10,918 | $ | 26,164 | ||||||||||
Losses and loss expenses incurred |
3,007 | 757 | 2,250 | |||||||||||||
Losses and loss expenses paid |
(2,797 | ) | (941 | ) | (1,856 | ) | 83 | % | ||||||||
Other (incl. foreign exch. revaluation) |
51 | 4 | 47 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2013 |
$ | 37,343 | $ | 10,738 | $ | 26,605 | ||||||||||
Losses and loss expenses incurred |
3,617 | 962 | 2,655 | |||||||||||||
Losses and loss expenses paid |
(3,285 | ) | (942 | ) | (2,343 | ) | 88 | % | ||||||||
Other (incl. foreign exch. revaluation) |
207 | 61 | 146 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Balance at September 30, 2013 |
$ | 37,882 | $ | 10,819 | $ | 27,063 | ||||||||||
Losses and loss expenses incurred |
3,322 | 805 | 2,517 | |||||||||||||
Losses and loss expenses paid |
(3,716 | ) | (993 | ) | (2,723 | ) | 108 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(45 | ) | (19 | ) | (26 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2013 |
$ | 37,443 | $ | 10,612 | $ | 26,831 | ||||||||||
Losses and loss expenses incurred |
2,462 | 301 | 2,161 | |||||||||||||
Losses and loss expenses paid |
(3,059 | ) | (762 | ) | (2,297 | ) | 106 | % | ||||||||
Other (incl. foreign exch. revaluation) |
20 | 16 | 4 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Balance at March 31, 2014 |
$ | 36,866 | $ | 10,167 | $ | 26,699 | ||||||||||
Losses and loss expenses incurred |
3,004 | 616 | 2,388 | |||||||||||||
Losses and loss expenses paid |
(2,878 | ) | (729 | ) | (2,149 | ) | 90 | % | ||||||||
Other (incl. foreign exch. revaluation) |
185 | 56 | 129 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2014 |
$ | 37,177 | $ | 10,110 | $ | 27,067 | ||||||||||
|
|
|
|
|
|
|||||||||||
Add net recoverable on paid losses |
| 658 | (658 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Balance including net recoverable on paid losses |
$ | 37,177 | $ | 10,768 | $ | 26,409 | ||||||||||
|
|
|
|
|
|
Loss Reserve Rollforward |
Page 12 |
![]() |
ACE Limited Reinsurance Recoverable Analysis (in millions of U.S. dollars) (Unaudited) |
Net Reinsurance Recoverable by Division
June 30 | March 31 | December 31 | ||||||||||
2014 | 2014 | 2013 | ||||||||||
Reinsurance recoverable on paid losses and loss expenses |
|
|||||||||||
Active operations |
$ | 418 | $ | 351 | $ | 376 | ||||||
Brandywine and Other Run-off |
353 | 357 | 356 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 771 | $ | 708 | $ | 732 | ||||||
|
|
|
|
|
|
|||||||
Reinsurance recoverable on unpaid losses and loss expenses |
||||||||||||
Active operations |
$ | 9,193 | $ | 9,184 | $ | 9,576 | ||||||
Brandywine and Other Run-off |
1,192 | 1,249 | 1,309 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 10,385 | $ | 10,433 | $ | 10,885 | ||||||
|
|
|
|
|
|
|||||||
Gross reinsurance recoverable |
||||||||||||
Active operations |
$ | 9,611 | $ | 9,535 | $ | 9,952 | ||||||
Brandywine and Other Run-off |
1,545 | 1,606 | 1,665 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 11,156 | $ | 11,141 | $ | 11,617 | ||||||
|
|
|
|
|
|
|||||||
Provision for uncollectible reinsurance (1) |
||||||||||||
Active operations |
$ | (251 | ) | $ | (249 | ) | $ | (251 | ) | |||
Brandywine and Other Run-off |
(137 | ) | (137 | ) | (139 | ) | ||||||
|
|
|
|
|
|
|||||||
Total |
$ | (388 | ) | $ | (386 | ) | $ | (390 | ) | |||
|
|
|
|
|
|
|||||||
Net reinsurance recoverable |
||||||||||||
Active operations |
$ | 9,360 | $ | 9,286 | $ | 9,701 | ||||||
Brandywine and Other Run-off |
1,408 | 1,469 | 1,526 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 10,768 | $ | 10,755 | $ | 11,227 | ||||||
|
|
|
|
|
|
(1) | The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance recoverables, net of approximately $2.4 billion of collateral. |
Reinsurance Recoverable |
Page 13 |
![]() |
ACE Limited Investment Portfolio (in millions of U.S. dollars) (Unaudited) |
June 30 2014 |
March 31 2014 |
December 31 2013 |
||||||||||||||||||||||
Market Value |
||||||||||||||||||||||||
Fixed maturities available for sale |
$ | 51,601 | $ | 49,611 | $ | 49,254 | ||||||||||||||||||
Fixed maturities held to maturity |
6,015 | 6,080 | 6,263 | |||||||||||||||||||||
Short-term investments |
2,108 | 2,526 | 1,763 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total fixed maturities |
$ | 59,724 | $ | 58,217 | $ | 57,280 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Asset Allocation by Market Value |
||||||||||||||||||||||||
Treasury |
$ | 2,386 | 4 | % | $ | 2,411 | 4 | % | $ | 2,327 | 4 | % | ||||||||||||
Agency |
1,278 | 2 | % | 1,349 | 2 | % | 1,454 | 3 | % | |||||||||||||||
Corporate and asset-backed |
19,959 | 33 | % | 19,650 | 34 | % | 19,475 | 34 | % | |||||||||||||||
Mortgage-backed |
12,659 | 21 | % | 12,277 | 21 | % | 12,273 | 21 | % | |||||||||||||||
Municipal |
4,872 | 8 | % | 4,599 | 8 | % | 4,500 | 8 | % | |||||||||||||||
Non-U.S. |
16,462 | 28 | % | 15,405 | 27 | % | 15,488 | 27 | % | |||||||||||||||
Short-term investments |
2,108 | 4 | % | 2,526 | 4 | % | 1,763 | 3 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fixed maturities |
$ | 59,724 | 100 | % | $ | 58,217 | 100 | % | $ | 57,280 | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Credit Quality by Market Value |
||||||||||||||||||||||||
AAA |
$ | 9,073 | 15 | % | $ | 9,410 | 16 | % | $ | 8,677 | 15 | % | ||||||||||||
AA |
22,470 | 38 | % | 21,652 | 37 | % | 21,520 | 38 | % | |||||||||||||||
A |
11,400 | 19 | % | 11,112 | 19 | % | 11,168 | 19 | % | |||||||||||||||
BBB |
7,996 | 13 | % | 7,306 | 12 | % | 7,193 | 12 | % | |||||||||||||||
BB |
4,435 | 7 | % | 4,451 | 8 | % | 4,418 | 8 | % | |||||||||||||||
B |
4,126 | 7 | % | 3,965 | 7 | % | 3,940 | 7 | % | |||||||||||||||
Other |
224 | 1 | % | 321 | 1 | % | 364 | 1 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fixed maturities |
$ | 59,724 | 100 | % | $ | 58,217 | 100 | % | $ | 57,280 | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cost/Amortized Cost |
||||||||||||||||||||||||
Fixed maturities available for sale |
$ | 49,719 | $ | 48,282 | $ | 48,406 | ||||||||||||||||||
Fixed maturities held to maturity |
5,774 | 5,887 | 6,098 | |||||||||||||||||||||
Short-term investments |
2,108 | 2,526 | 1,763 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Subtotal fixed maturities |
57,601 | 56,695 | 56,267 | |||||||||||||||||||||
Equity securities |
874 | 845 | 841 | |||||||||||||||||||||
Other investments |
2,876 | 2,823 | 2,671 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total investment portfolio |
$ | 61,351 | $ | 60,363 | $ | 59,779 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Avg. duration of fixed maturities |
4.0 years | 4.0 years | 4.0 years | |||||||||||||||||||||
Avg. market yield of fixed maturities |
2.6 | % | 2.8 | % | 3.0 | % | ||||||||||||||||||
Avg. credit quality |
A/Aa | A/Aa | A/Aa | |||||||||||||||||||||
Avg. yield on invested assets |
3.7 | % | 3.7 | % | 3.8 | % |
Investments | Page 14 |
![]() |
ACE Limited Investment Portfolio - 2 (in millions of U.S. dollars) (Unaudited) |
Mortgage-backed Fixed Income Portfolio
Mortgage-backed securities
S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
Market Value at June 30, 2014 |
||||||||||||||||||||||||
Agency residential mortgage-backed (RMBS) |
$ | | $ | 10,563 | $ | | $ | | $ | | $ | 10,563 | ||||||||||||
Non-agency RMBS |
51 | 7 | 21 | 14 | 51 | 144 | ||||||||||||||||||
Commercial mortgage-backed |
1,923 | 14 | 12 | 3 | | 1,952 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total mortgage-backed securities at market value |
$ | 1,974 | $ | 10,584 | $ | 33 | $ | 17 | $ | 51 | $ | 12,659 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Corporate and Asset-backed Fixed Income Portfolios
Market Value at June 30, 2014
S&P Credit Rating | ||||||||||||||||||||
Investment Grade | ||||||||||||||||||||
AAA | AA | A | BBB | Total | ||||||||||||||||
Asset-backed |
$ | 463 | $ | 92 | $ | | $ | | $ | 555 | ||||||||||
Banks |
| | 2,232 | 347 | 2,579 | |||||||||||||||
Basic Materials |
| | 90 | 363 | 453 | |||||||||||||||
Communications |
| 51 | 510 | 852 | 1,413 | |||||||||||||||
Consumer, Cyclical |
| 96 | 314 | 433 | 843 | |||||||||||||||
Consumer, Non-Cyclical |
51 | 589 | 940 | 689 | 2,269 | |||||||||||||||
Diversified Financial Services |
| 79 | 269 | 92 | 440 | |||||||||||||||
Energy |
32 | 36 | 189 | 758 | 1,015 | |||||||||||||||
Industrial |
| 347 | 362 | 319 | 1,028 | |||||||||||||||
Utilities |
| 11 | 611 | 466 | 1,088 | |||||||||||||||
All Others |
55 | 138 | 611 | 532 | 1,336 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 601 | $ | 1,439 | $ | 6,128 | $ | 4,851 | $ | 13,019 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Market Value at June 30, 2014
S&P Credit Rating | ||||||||||||||||
Below Investment Grade | ||||||||||||||||
BB | B | CCC | Total | |||||||||||||
Asset-backed |
$ | | $ | 3 | $ | 12 | $ | 15 | ||||||||
Banks |
1 | 4 | | 5 | ||||||||||||
Basic Materials |
145 | 140 | 8 | 293 | ||||||||||||
Communications |
551 | 462 | 5 | 1,018 | ||||||||||||
Consumer, Cyclical |
447 | 656 | 31 | 1,134 | ||||||||||||
Consumer, Non-Cyclical |
551 | 898 | 33 | 1,482 | ||||||||||||
Diversified Financial Services |
133 | 87 | 4 | 224 | ||||||||||||
Energy |
695 | 319 | 27 | 1,041 | ||||||||||||
Industrial |
371 | 360 | 12 | 743 | ||||||||||||
Utilities |
275 | 23 | | 298 | ||||||||||||
All Others |
259 | 416 | 12 | 687 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 3,428 | $ | 3,368 | $ | 144 | $ | 6,940 | ||||||||
|
|
|
|
|
|
|
|
Investments 2 | Page 15 |
![]() |
ACE Limited Investment Portfolio - 3 (in millions of U.S. dollars) (Unaudited) |
Non-U.S. Fixed Income Portfolio
June 30, 2014
Non-U.S. Government Securities
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
United Kingdom |
$ | 1,123 | $ | | $ | | $ | | $ | | $ | 1,123 | ||||||||||||
Republic of Korea |
| 764 | 48 | | | 812 | ||||||||||||||||||
Canada |
560 | | | | | 560 | ||||||||||||||||||
United Mexican States |
| 2 | 333 | 127 | | 462 | ||||||||||||||||||
Kingdom of Thailand |
| | 311 | 66 | | 377 | ||||||||||||||||||
Province of Ontario |
| 359 | | | | 359 | ||||||||||||||||||
Japan |
| 302 | | | | 302 | ||||||||||||||||||
Federative Republic of Germany |
281 | 4 | | | | 285 | ||||||||||||||||||
Province of Quebec |
| | 270 | | | 270 | ||||||||||||||||||
Federative Republic of Brazil |
| | | 264 | | 264 | ||||||||||||||||||
Other Non-U.S. Government Securities |
712 | 1,144 | 247 | 303 | 367 | 2,773 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 2,676 | $ | 2,575 | $ | 1,209 | $ | 760 | $ | 367 | $ | 7,587 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Non-U.S. Corporate Securities
|
Market Value by S&P Credit Rating | |||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
United Kingdom |
$ | 127 | $ | 57 | $ | 806 | $ | 391 | $ | 207 | $ | 1,588 | ||||||||||||
Canada |
157 | 125 | 295 | 409 | 164 | 1,150 | ||||||||||||||||||
Australia |
79 | 118 | 288 | 115 | 63 | 663 | ||||||||||||||||||
United States |
2 | 127 | 100 | 225 | 166 | 620 | ||||||||||||||||||
France |
62 | 62 | 223 | 133 | 101 | 581 | ||||||||||||||||||
Netherlands |
33 | 273 | 125 | 96 | 22 | 549 | ||||||||||||||||||
Germany |
166 | 31 | 135 | 112 | 33 | 477 | ||||||||||||||||||
Switzerland |
50 | 17 | 61 | 118 | 51 | 297 | ||||||||||||||||||
Euro Supranational |
237 | 52 | | | | 289 | ||||||||||||||||||
Brazil |
| | 29 | 180 | 26 | 235 | ||||||||||||||||||
Other Non-U.S. Corporate Securities |
133 | 394 | 924 | 534 | 441 | 2,426 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 1,046 | $ | 1,256 | $ | 2,986 | $ | 2,313 | $ | 1,274 | $ | 8,875 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S. Corporate Investment Portfolio
Countries represent the ultimate parent companys country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations.
Investments 3 | Page 16 |
![]() |
ACE Limited Investment Portfolio - 4 (in millions of U.S. dollars) (Unaudited) |
Fixed Maturity Investment Portfolio
Top 10 Global Corporate Exposures
June 30, 2014 |
Market Value | Rating | ||||||
1 | JP Morgan Chase & Co | $ | 481 | A | ||||
2 | General Electric Co | 407 | AA+ | |||||
3 | Goldman Sachs Group Inc | 360 | A- | |||||
4 | Wells Fargo & Co | 291 | A+ | |||||
5 | Verizon Communications Inc | 274 | BBB+ | |||||
6 | HSBC Holdings Plc | 260 | A+ | |||||
7 | Morgan Stanley | 256 | A- | |||||
8 | Citigroup Inc | 251 | A- | |||||
9 | Bank of America Corp | 239 | A- | |||||
10 | AT&T INC | 235 | A- |
Investments 4 | Page 17 |
![]() |
ACE Limited Net Realized and Unrealized Gains (Losses) (in millions of U.S. dollars) (Unaudited) |
Three months ended June 30, 2014 | Six months ended June 30, 2014 | |||||||||||||||||||||||
Net Realized | Net Unrealized | Net Realized | Net Unrealized | |||||||||||||||||||||
Gains | Gains | Net | Gains | Gains | Net | |||||||||||||||||||
(Losses) (1) | (Losses) | Impact | (Losses) (1) | (Losses) | Impact | |||||||||||||||||||
Fixed maturities |
$ | 20 | $ | 538 | $ | 558 | $ | 31 | $ | 999 | $ | 1,030 | ||||||||||||
Fixed income derivatives |
(15 | ) | | (15 | ) | (40 | ) | | (40 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fixed maturities |
5 | 538 | 543 | (9 | ) | 999 | 990 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Public equity |
1 | 24 | 25 | (4 | ) | 34 | 30 | |||||||||||||||||
Private equity |
36 | 6 | 42 | 92 | 48 | 140 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total equity |
37 | 30 | 67 | 88 | 82 | 170 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Mark-to-market losses from derivative transactions (2) |
(69 | ) | | (69 | ) | (136 | ) | | (136 | ) | ||||||||||||||
Foreign exchange losses (2) |
(14 | ) | | (14 | ) | (23 | ) | | (23 | ) | ||||||||||||||
Other |
(1 | ) | | (1 | ) | (8 | ) | | (8 | ) | ||||||||||||||
Partially-owned entities (3) |
(3 | ) | | (3 | ) | (8 | ) | | (8 | ) | ||||||||||||||
Income tax expense (benefit) |
1 | 115 | 116 | (7 | ) | 208 | 201 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net gains (losses) |
$ | (46 | ) | $ | 453 | $ | 407 | $ | (89 | ) | $ | 873 | $ | 784 | ||||||||||
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(1) | Other-than-temporary impairments for the quarter includes $8 million for fixed maturities, $3 million for private equity, and $1 million for public equity. Year to date other-than-temporary impairments includes $13 million for fixed maturities, $3 million for private equity, and $7 million for public equity. |
(2) | Includes $70 million of realized losses from variable annuity reinsurance for the quarter which comprises $2 million in mark-to-market gains from derivative transactions, net of $72 million of losses on applicable hedges. For the year, the $137 million of realized losses from variable annuity reinsurance comprises $46 million in mark-to-market losses from derivative transactions and $91 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange losses for the year were $2 million. |
(3) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investees shares. The net income or loss is included in other income (expense). |
Three months ended June 30, 2013 | Six months ended June 30, 2013 | |||||||||||||||||||||||
Net Realized | Net Unrealized | Net Realized | Net Unrealized | |||||||||||||||||||||
Gains | Gains | Net | Gains | Gains | Net | |||||||||||||||||||
(Losses) (4) | (Losses) | Impact | (Losses) (4) | (Losses) | Impact | |||||||||||||||||||
Fixed maturities |
$ | 31 | $ | (1,466 | ) | $ | (1,435 | ) | $ | 67 | $ | (1,657 | ) | $ | (1,590 | ) | ||||||||
Fixed income derivatives |
40 | | 40 | 58 | | 58 | ||||||||||||||||||
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Total fixed maturities |
71 | (1,466 | ) | (1,395 | ) | 125 | (1,657 | ) | (1,532 | ) | ||||||||||||||
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Public equity |
7 | (57 | ) | (50 | ) | 6 | (43 | ) | (37 | ) | ||||||||||||||
Private equity |
8 | 15 | 23 | 36 | 40 | 76 | ||||||||||||||||||
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Total equity |
15 | (42 | ) | (27 | ) | 42 | (3 | ) | 39 | |||||||||||||||
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Mark-to-market gains from derivative transactions (5) |
32 | | 32 | 110 | | 110 | ||||||||||||||||||
Foreign exchange gains (5) |
(5 | ) | | (5 | ) | 71 | | 71 | ||||||||||||||||
Other |
| | | | 1 | 1 | ||||||||||||||||||
Partially-owned entities (6) |
3 | | 3 | 7 | | 7 | ||||||||||||||||||
Income tax expense (benefit) |
15 | (288 | ) | (273 | ) | 47 | (344 | ) | (297 | ) | ||||||||||||||
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Net gains (losses) |
$ | 101 | $ | (1,220 | ) | $ | (1,119 | ) | $ | 308 | $ | (1,315 | ) | $ | (1,007 | ) | ||||||||
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(4) | Other-than-temporary impairments for the quarter includes $6 million for fixed maturities and $1 million for private equity.Year to date other-than-temporary impairments includes $7 million for fixed maturities, $2 million for private equity, and $1 million for public equity. |
(5) | Includes $33 million of realized gains from variable annuity reinsurance for the quarter which comprises $101 million in mark-to-market gains from derivative transactions, net of $68 million of losses on applicable hedges. For the year, the $111 million of realized gains from variable annuity reinsurance comprises $429 million in mark-to-market gains from derivative transactions, net of $318 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange gains for the year were $41 million. |
(6) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investees shares. The net income or loss is included in other income (expense). |
Investment Gains (Losses) | Page 18 |
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ACE Limited Capital Structure (in millions of U.S. dollars, except ratios) (Unaudited) |
June 30 | March 31 | December 31 | December 31 | |||||||||||||
2014 | 2014 | 2013 | 2012 | |||||||||||||
Total short-term debt (1) (2) |
$ | 1,851 | $ | 1,901 | $ | 1,901 | $ | 1,401 | ||||||||
Total long-term debt (3) |
4,057 | 3,808 | 3,807 | 3,360 | ||||||||||||
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Total debt |
$ | 5,908 | $ | 5,709 | $ | 5,708 | $ | 4,761 | ||||||||
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Total trust preferred securities |
$ | 309 | $ | 309 | $ | 309 | $ | 309 | ||||||||
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Total shareholders equity |
$ | 30,325 | $ | 29,369 | $ | 28,825 | $ | 27,531 | ||||||||
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Total capitalization |
$ | 36,542 | $ | 35,387 | $ | 34,842 | $ | 32,601 | ||||||||
Tangible capital (4) |
$ | 31,020 | $ | 30,005 | $ | 29,438 | $ | 27,626 | ||||||||
Leverage ratios |
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Debt/ total capitalization |
16.2 | % | 16.1 | % | 16.4 | % | 14.6 | % | ||||||||
Debt plus trust preferred securities/ total capitalization |
17.0 | % | 17.0 | % | 17.3 | % | 15.6 | % | ||||||||
Debt/ tangible capital |
19.0 | % | 19.0 | % | 19.4 | % | 17.2 | % | ||||||||
Debt plus trust preferred securities/ tangible capital |
20.0 | % | 20.1 | % | 20.4 | % | 18.4 | % |
Note: As of June 30, 2014, there was $0.6 billion usage of credit facilities on a total commitment of $1.4 billion. We did not renew our $500 million bilateral letter of credit facility that expired in June 2014. We elected instead to satisfy our collateral obligations primarily with insurance trusts supported by our investment portfolio.
(1) | Repurchase agreements in the amount of $551 million matured during the quarter, and there were new repurchase agreements in the amount of $551 million. |
(2) | In May 2014, we reclassified $450 million of 5.6 percent senior notes, due to mature in less than one year (May 2015), from Long-term debt to Short-term debt. In June 2014, $500 million of 5.875 percent senior notes matured and were fully paid. |
(3) | During Q2 2014, we issued $700 million par value of 3.35 percent senior notes due May 2024. |
(4) | Tangible capital is equal to total capitalization less goodwill and other intangible assets. |
Capital Structure | Page 19 |
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ACE Limited Computation of Basic and Diluted Earnings Per Share (in millions of U.S. dollars, except share and per share data) (Unaudited) |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator |
||||||||||||||||
Operating income to common shares |
$ | 825 | $ | 790 | $ | 1,602 | $ | 1,536 | ||||||||
Adjusted net realized gains (losses), net of income tax |
(46 | ) | 101 | (89 | ) | 308 | ||||||||||
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Net income |
$ | 779 | $ | 891 | $ | 1,513 | $ | 1,844 | ||||||||
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Rollforward of Common Shares Outstanding |
||||||||||||||||
Shares - beginning of period |
337,974,644 | 340,045,256 | 339,793,935 | 340,321,534 | ||||||||||||
Repurchase of shares (1) |
(2,306,000 | ) | (654,776 | ) | (5,793,882 | ) | (2,463,076 | ) | ||||||||
Shares issued, excluding option exercises |
135,079 | 117,445 | 1,311,675 | 1,064,981 | ||||||||||||
Issued for option exercises |
421,866 | 578,344 | 913,861 | 1,162,830 | ||||||||||||
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Shares - end of period |
336,225,589 | 340,086,269 | 336,225,589 | 340,086,269 | ||||||||||||
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Denominator |
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Weighted average shares outstanding |
337,846,228 | 341,047,290 | 338,353,260 | 340,913,450 | ||||||||||||
Effect of other dilutive securities |
3,286,359 | 3,053,975 | 3,267,499 | 3,120,263 | ||||||||||||
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Adj. wtd. avg. shares outstanding and assumed conversions |
341,132,587 | 344,101,265 | 341,620,759 | 344,033,713 | ||||||||||||
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Basic earnings per share |
||||||||||||||||
Operating income |
$ | 2.44 | $ | 2.31 | $ | 4.73 | $ | 4.50 | ||||||||
Adjusted net realized gains (losses), net of income tax |
(0.14 | ) | 0.30 | (0.26 | ) | 0.91 | ||||||||||
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Net income |
$ | 2.30 | $ | 2.61 | $ | 4.47 | $ | 5.41 | ||||||||
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Diluted earnings per share |
||||||||||||||||
Operating income |
$ | 2.42 | $ | 2.29 | $ | 4.69 | $ | 4.46 | ||||||||
Adjusted net realized gains (losses), net of income tax |
(0.14 | ) | 0.30 | (0.26 | ) | 0.90 | ||||||||||
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Net income |
$ | 2.28 | $ | 2.59 | $ | 4.43 | $ | 5.36 | ||||||||
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(1) | For the period July 1, 2014 through July 21, 2014 we repurchased 700 thousand shares totaling $73 million, pursuant to a plan adopted under SEC Rule 10b5-1 and in accordance with the provisions of SEC Rule 10b-18. |
Earnings Per Share |
Page 20 |
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ACE Limited Non-GAAP Financial Measures (in millions of U.S. dollars) (Unaudited) |
Regulation G - Non-GAAP Financial Measures
In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).
We provide financial measures such as gross premiums written, net premiums written, net premiums earned, and operating income on a constant-dollar basis. We believe it is useful to evaluate the trends in these measures exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.
Adjusted net realized gains (losses) is a non-GAAP financial measure that excludes realized gains and losses from fair value changes on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view changes in the fair value of these derivatives as part of the results of our underwriting operations and therefore realized gains and losses from these derivatives are reclassified to Adjusted losses and loss expenses (a non-GAAP financial measure). Adjusted losses and loss expenses include gains and losses from fair value changes on crop derivatives. P&C loss and loss expense ratio and P&C combined ratio (both non-GAAP financial measures) include adjusted losses and loss expenses in the ratio numerator. For the three months ended June 30, 2014, the GAAP combined ratio is 87.7% and the P&C combined ratio is 87.5%, including the impact of fair value changes on crop derivatives.
In presenting our segment operating results, we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting losses and loss expenses, policy benefits, policy acquisition costs, and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense, and net realized gains (losses). P&C underwriting income is a non-GAAP financial measure which includes Adjusted losses and loss expenses. Insurance North American Agriculture underwriting income includes gains (losses) from fair value changes on crop derivatives. Life underwriting income includes net investment income and gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.
Operating income or income excluding adjusted net realized gains (losses), net of tax, is a common performance measurement for insurance companies and non-GAAP financial measure. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude adjusted net realized gains (losses) and net realized gains (losses) included in other income (expense) related to partially owned entities because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. Operating income or income excluding adjusted net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with GAAP.
Other income (expense) operating is a non-GAAP financial measure and excludes the portion of net realized gains and losses related to unconsolidated entities from other income (expense). These gains and losses are reported as Net realized gains (losses) and represent the non-operating activities of entities where we hold more than an insignificant percentage of the investees shares. We exclude these gains and losses from other income (expense) to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.
P&C combined ratio excluding catastrophe losses and prior period development (PPD) is a non-GAAP financial measure. The ratio numerator includes adjusted losses and loss expenses, policy acquisition costs, and administrative expenses adjusted to exclude catastrophe losses and PPD. The ratio denominator includes net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected and net earned premium adjustments on loss sensitive policies. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.
P&C loss and loss expense ratio excluding the impact of catastrophe losses and PPD is a non-GAAP financial measure. The loss ratio numerator includes adjusted losses and loss expenses adjusted to exclude catastrophe losses and PPD. The loss ratio denominator includes Net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net earned premiums when calculating this ratio. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.
P&C expense ratio excluding accident and health (A&H) is a non-GAAP financial measure and excludes the impact of our A&H business from our consolidated expense ratio. The expense ratio for the A&H business is typically higher than our traditional P&C business, and we believe that this measure provides better comparison to our peer companies that may not have a significant A&H block of business.
Global P&C performance metrics are non-GAAP financial measures and comprise consolidated operating results (including corporate) and exclude the operating results of the companys Life and Insurance North American Agriculture segments. We believe that these measures are useful and meaningful to investors as they are used by management to assess the companys global P&C operations which are the most economically similar. We exclude the Insurance North American Agriculture and Life segments because the results of these businesses do not always correlate with the results of our global P&C operations.
Life net premiums written and deposits collected, excluding life reinsurance, is a non-GAAP financial measure. Deposits collected on universal life and investment contracts (life deposits) are not reflected as revenues in our consolidated statements of operations in accordance with GAAP. However, we include life deposits in presenting growth in our Life business because new life deposits are an important component of production and key to our efforts to grow our business. However, we exclude results associated with life reinsurance as there is no new life reinsurance business currently being written.
Operating return on equity (ROE) or ROE calculated using operating income is an annualized non-GAAP financial measure and is calculated as operating income divided by average shareholders equity, as adjusted, for the period. To annualize a quarterly rate, multiply by four. Operating ROE is a useful measure as it enhances the understanding of the return on shareholders equity by highlighting the underlying profitability relative to shareholders equity excluding the effect of unrealized gains and losses on our investments.
Operating effective tax rate is a non-GAAP financial measure. The numerator excludes tax on adjusted net realized gains (losses). The denominator excludes adjusted net realized gains (losses), before tax. We exclude adjusted net realized gains (losses) and the related tax impact because these amounts are heavily influenced by, and fluctuate in part according to, the availability of market opportunities. Operating effective tax rate should not be viewed as a substitute for effective tax rate determined in accordance with GAAP.
Tangible book value per common share is a non-GAAP financial measure and is shareholders equity less goodwill and other intangible assets divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful. A reconciliation of tangible book value per share is provided on page 23. Tangible book value per common share excluding 2014 acquisition is shareholders equity less goodwill and other intangible assets divided by the shares outstanding. The numerator adds back the goodwill and other intangible assets related to the 2014 acquisition of The Siam Commercial Samaggi Insurance PCL in order to adjust for the distortive effect of acquisitions.
Reconciliation Non-GAAP |
Page 21 |
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ACE Limited Non-GAAP Financial Measures - 2 (in millions of U.S. dollars, except ratios) (Unaudited) |
Regulation G - Non-GAAP Financial Measures (continued)
The following table presents the reconciliation of Net income to Operating income:
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Net income, as reported |
$ | 779 | $ | 734 | $ | 998 | $ | 916 | $ | 891 | $ | 1,513 | $ | 1,844 | $ | 3,758 | ||||||||||||||||
Adjusted net realized gains (losses) |
(81 | ) | (102 | ) | 154 | 41 | 104 | (183 | ) | 310 | 505 | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities (1) |
36 | 51 | 25 | 22 | 12 | 87 | 45 | 92 | ||||||||||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
1 | (8 | ) | 5 | 4 | 15 | (7 | ) | 47 | 56 | ||||||||||||||||||||||
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Operating income |
$ | 825 | $ | 777 | $ | 824 | $ | 857 | $ | 790 | $ | 1,602 | $ | 1,536 | $ | 3,217 | ||||||||||||||||
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(1) | Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investees shares. The net income or loss is included in other income (expense). |
The following table presents the reconciliation of effective tax rate to the operating effective tax rate:
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
2Q-14 | 1Q-14 | 4Q-13 | 3Q-13 | 2Q-13 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
Tax expense, as reported |
$ | 133 | $ | 93 | $ | 88 | $ | 155 | $ | 115 | $ | 226 | $ | 237 | $ | 480 | ||||||||||||||||
Tax expense (benefit) on adjusted net realized gains (losses) |
1 | (8 | ) | 5 | 4 | 15 | (7 | ) | 47 | 56 | ||||||||||||||||||||||
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Tax expense, adjusted |
$ | 132 | $ | 101 | $ | 83 | $ | 151 | $ | 100 | $ | 233 | $ | 190 | $ | 424 | ||||||||||||||||
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Income before tax, as reported |
$ | 912 | $ | 827 | $ | 1,086 | $ | 1,071 | $ | 1,006 | $ | 1,739 | $ | 2,081 | $ | 4,238 | ||||||||||||||||
Less: adjusted realized gains (losses) |
(81 | ) | (102 | ) | 154 | 41 | 104 | (183 | ) | 310 | 505 | |||||||||||||||||||||
Less: realized gains (losses) related to unconsolidated entities |
36 | 51 | 25 | 22 | 12 | 87 | 45 | 92 | ||||||||||||||||||||||||
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Operating income before tax |
$ | 957 | $ | 878 | $ | 907 | $ | 1,008 | $ | 890 | $ | 1,835 | $ | 1,726 | $ | 3,641 | ||||||||||||||||
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Effective tax rate |
14.6 | % | 11.3 | % | 8.1 | % | 14.4 | % | 11.5 | % | 13.0 | % | 11.4 | % | 11.3 | % | ||||||||||||||||
Adjustment for tax impact of adjusted net realized gains (losses) |
-0.9 | % | 0.2 | % | 1.1 | % | 0.5 | % | -0.3 | % | -0.3 | % | -0.4 | % | 0.3 | % | ||||||||||||||||
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Operating effective tax rate |
13.7 | % | 11.5 | % | 9.2 | % | 14.9 | % | 11.2 | % | 12.7 | % | 11.0 | % | 11.6 | % | ||||||||||||||||
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The following table presents the reconciliation of ROE to Operating ROE:
YTD | YTD | Full Year | ||||||||||||||||||
2Q-14 | 2Q-13 | 2014 | 2013 | 2013 | ||||||||||||||||
Net income |
$ | 779 | $ | 891 | $ | 1,513 | $ | 1,844 | $ | 3,758 | ||||||||||
Operating income |
$ | 825 | $ | 790 | $ | 1,602 | $ | 1,536 | $ | 3,217 | ||||||||||
Equity - beginning of period, as reported |
$ | 29,369 | $ | 27,942 | $ | 28,825 | $ | 27,531 | $ | 27,531 | ||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax |
1,594 | 2,538 | 1,174 | 2,633 | 2,633 | |||||||||||||||
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Equity - beginning of period, as adjusted |
$ | 27,775 | $ | 25,404 | $ | 27,651 | $ | 24,898 | $ | 24,898 | ||||||||||
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Equity - end of period, as reported |
$ | 30,325 | $ | 27,295 | $ | 30,325 | $ | 27,295 | $ | 28,825 | ||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax |
2,047 | 1,318 | 2,047 | 1,318 | 1,174 | |||||||||||||||
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Equity - end of period, as adjusted |
$ | 28,278 | $ | 25,977 | $ | 28,278 | $ | 25,977 | $ | 27,651 | ||||||||||
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Average equity, as reported |
$ | 29,847 | $ | 27,619 | $ | 29,575 | $ | 27,413 | $ | 28,178 | ||||||||||
Average equity, as adjusted |
$ | 28,027 | $ | 25,691 | $ | 27,965 | $ | 25,438 | $ | 26,275 | ||||||||||
Operating ROE |
11.8 | % | 12.3 | % | 11.5 | % | 12.1 | % | 12.2 | % | ||||||||||
ROE |
10.4 | % | 12.9 | % | 10.2 | % | 13.5 | % | 13.3 | % |
Reconciliation Non-GAAP 2 |
Page 22 |
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ACE Limited Book Value and Book Value per Common Share (in millions of U.S. dollars, except share and per share data) (Unaudited) |
Reconciliation of Book Value per Common Share
June 30 | March 31 | December 31 | June 30 | |||||||||||||
2014 | 2014 | 2013 | 2013 | |||||||||||||
Shareholders equity |
$ | 30,325 | $ | 29,369 | $ | 28,825 | $ | 27,295 | ||||||||
Less: goodwill and other intangible assets |
5,522 | 5,382 | 5,404 | 5,395 | ||||||||||||
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Numerator for tangible book value per share |
$ | 24,803 | $ | 23,987 | $ | 23,421 | $ | 21,900 | ||||||||
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Book value - % change over prior quarter (1) |
3.3 | % | 1.9 | % | 2.2 | % | -2.3 | % | ||||||||
Tangible book value - % change over prior quarter (1) |
3.4 | % | 2.4 | % | 2.9 | % | -4.9 | % | ||||||||
Denominator |
336,225,589 | 337,974,644 | 339,793,935 | 340,086,269 | ||||||||||||
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Book value per common share |
$ | 90.19 | $ | 86.90 | $ | 84.83 | $ | 80.26 | ||||||||
Tangible book value per common share |
$ | 73.77 | $ | 70.97 | $ | 68.93 | $ | 64.40 | ||||||||
Reconciliation of Book Value |
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Shareholders equity, beginning of quarter |
$ | 29,369 | $ | 28,825 | $ | 28,218 | $ | 27,942 | ||||||||
Operating income |
825 | 777 | 824 | 790 | ||||||||||||
Adjusted net realized gains (losses), net of tax |
(46 | ) | (43 | ) | 174 | 101 | ||||||||||
Net unrealized gains (losses), net of tax |
453 | 420 | (145 | ) | (1,220 | ) | ||||||||||
Repurchase of shares |
(237 | ) | (332 | ) | (57 | ) | (58 | ) | ||||||||
Dividend declared on common shares (2) |
(223 | ) | (256 | ) | (174 | ) | (174 | ) | ||||||||
Cumulative translation, net of tax |
119 | (41 | ) | (66 | ) | (168 | ) | |||||||||
Pension liability |
(3 | ) | (5 | ) | (11 | ) | (2 | ) | ||||||||
Other (3) |
68 | 24 | 62 | 84 | ||||||||||||
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$ | 30,325 | $ | 29,369 | $ | 28,825 | $ | 27,295 | |||||||||
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(1) | At June 30, 2014, book value increased 5.2% and tangible book value increased 5.9% from December 31, 2013. |
(2) | The March 31, 2014 amount includes a $0.12 per share increase related to the Q4 2013 dividend installment approved by our shareholders on January 10, 2014. |
(3) | Other primarily includes proceeds from exercise of stock options and stock compensation. |
Reconciliation Book Value |
Page 23 |
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ACE Limited Glossary |
ACE Limited Consolidated comprises all segments including Corporate.
Operating return on equity (ROE) or ROE calculated using income excluding adjusted net realized gains (losses): Operating income or income excluding adjusted net realized gains (losses), net of tax, divided by average shareholders equity for the period excluding unrealized gains (losses) on investments, net of tax. To annualize a quarterly rate multiply by four.
Book value per common share: Shareholders equity divided by the shares outstanding.
Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business.
Operating effective tax rate: Income tax expense excluding tax expense (benefit) on adjusted net realized gains (losses) divided by income excluding adjusted net realized gains (losses) before tax.
Life underwriting income: Net premiums earned and net investment income less losses and loss expenses, policy benefits, acquisition costs, and administrative expenses. In addition, Life underwriting income includes gains/losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.
Tangible book value per common share: Shareholders equity less goodwill and other intangible assets divided by the shares outstanding.
Average market yield of fixed maturities: Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.
Average yield on invested assets: Net investment income divided by average cost of fixed maturities and other investments, and average market value of equity securities.
Tangible capital: Total capitalization less goodwill and other intangible assets.
Total capitalization: Short-term debt, long-term debt, trust preferreds, and shareholders equity.
NM: Not meaningful.
Glossary |
Page 24 |
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