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) October 20, 2015
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 October 20, 2015, ACE Limited issued a Press Release reporting its third quarter 2015 results and the availability of its third quarter 2015 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 October 20, 2015, Reporting Third Quarter 2015 Results | |
99.2 | Third Quarter 2015 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: October 20, 2015
EXHIBIT INDEX
Number |
Description |
Method of Filing |
||||
99.1 | Press Release, Dated October 20, 2015, | Furnished herewith | ||||
Reporting Third Quarter 2015 Results | ||||||
99.2 | Third Quarter 2015 Financial Supplement | Furnished herewith |
Exhibit 99.1
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ACE Limited Bärengasse 32 CH-8001 Zurich Switzerland |
acegroup.com @ACEGroup |
NEWS RELEASE |
Ace Reports Record Operating Income per Share of $2.74 for
Third Quarter, P&C Combined Ratio of 85.9%
and Operating Return on Equity of 12.9%
| Record after-tax operating income of $897 million for the quarter |
| Record P&C underwriting income of $597 million |
| Global P&C net premiums written up 7.8% in constant dollars |
| Net investment income of $549 million |
| Operating cash flow of $808 million |
| Unfavorable foreign currency movement negatively impacted operating income by $36 million, or $0.11 per share, reduced Global P&C net premiums written growth by $240 million, or 7.5%, and reduced book value by $548 million and tangible book value by $345 million in the quarter |
| Chubb acquisition on track to close first quarter 2016; integration planning proceeding well |
ZURICH October 20, 2015 ACE Limited (NYSE: ACE) today reported net income for the quarter ended September 30, 2015, of $1.62 per share, compared with $2.32 per share for the same quarter last year.(1) Operating income was $2.74 per share, compared with $2.64 per share for the same quarter last year. The property and casualty (P&C) combined ratio for the quarter was 85.9%. Book value and tangible book value per share declined 1.5% and 0.8%, respectively, from June 30, 2015, reflecting unfavorable foreign currency movement of $548 million, after-tax, and realized and unrealized losses in the companys investment and variable annuity reinsurance portfolios of $622 million, after-tax, as a result of global equity and interest rate movements. Book value and tangible book value per share now stand at $89.88 and $72.25, respectively.
ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. | 1 |
ACE LIMITED NEWS RELEASE
Third Quarter Summary
(in millions, except per share amounts)
(Unaudited)
(Per Share Diluted) | ||||||||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||||
Operating income, net of tax |
$ | 897 | $ | 891 | 0.8 | % | $ | 2.74 | $ | 2.64 | 3.8 | % | ||||||||||||
Chubb integration expenses, net of tax |
(7 | ) | | NM | (0.02 | ) | | NM | ||||||||||||||||
Adjusted net realized gains (losses), net of tax |
(362 | ) | (106 | ) | NM | (1.10 | ) | (0.32 | ) | NM | ||||||||||||||
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Net income |
$ | 528 | $ | 785 | (32.7 | )% | $ | 1.62 | $ | 2.32 | (30.2 | )% | ||||||||||||
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For the nine months ended September 30, 2015, net income was $6.53 per share, compared with $6.75 per share for 2014. Operating income was $7.38 per share, compared with $7.32 per share for 2014. The P&C combined ratio for the nine months ended September 30, 2015, was 87.2% versus 87.5% prior year. Book value and tangible book value per share declined 0.2% and 0.5%, respectively, from December 31, 2014. Book value and tangible book value per share were negatively impacted by unfavorable foreign currency movement of $885 million, after-tax, net realized and unrealized losses in the investment portfolio of $542 million, after-tax, and realized losses of $268 million, after-tax in the companys variable annuity reinsurance portfolio during the year. Tangible book value per share was also negatively impacted by the addition of $474 million of goodwill and other intangibles related to the Firemans Fund acquisition that closed during the year.
Nine Months Ended Summary
(in millions, except per share amounts)
(Unaudited)
(Per Share Diluted) | ||||||||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||||
Operating income, net of tax |
$ | 2,430 | $ | 2,493 | (2.5 | )% | $ | 7.38 | $ | 7.32 | 0.8 | % | ||||||||||||
Chubb integration expenses, net of tax |
(7 | ) | | NM | (0.02 | ) | | NM | ||||||||||||||||
Adjusted net realized gains (losses), net of tax |
(272 | ) | (195 | ) | 39.5 | % | (0.83 | ) | (0.57 | ) | 45.6 | % | ||||||||||||
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Net income |
$ | 2,151 | $ | 2,298 | (6.4 | )% | $ | 6.53 | $ | 6.75 | (3.3 | )% | ||||||||||||
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
2 |
ACE LIMITED NEWS RELEASE
Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, commented: ACE had a great quarter. Volatility in the credit, equity and foreign exchange markets impacted our results but did not prevent us from producing record earnings, record underwriting results and good revenue growth in constant dollars. After-tax operating income was $897 million, or $2.74 per share, leading to an operating ROE of about 13%.
Our earnings growth was driven by a world-class underwriting performance, highlighted by record underwriting income and a P&C combined ratio of 85.9%. We benefited from very strong current underwriting year results, positive development in our reserves and relatively low catastrophe losses. Year to date, even with foreign exchange headwinds, weve produced over $2.4 billion in operating income, which is essentially flat with prior year.
Book value declined 1.5% due to the impact of foreign exchange and financial market volatility in our investment and variable annuity reinsurance portfolios. Foreign exchange also continued to impact our premium revenue. Global P&C net premiums, which exclude Agriculture, were flat in the quarter but grew nearly 8% in constant currency, with double-digit contributions from our U.S. and Latin American operations. For the year, Global P&C premiums have grown about 2.5% or nearly 9% in constant dollars.
We are on track to close our acquisition of Chubb in the first quarter of 2016 and expect a very positive response from both companies shareholders at Thursdays shareholder meetings. We are making good progress with integration planning and will be ready to hit the ground running when we close.
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
3 |
ACE LIMITED NEWS RELEASE
Operating highlights for the quarter ended September 30, 2015, were as follows:
3Q | 3Q | |||||||||||
(in millions of U.S. dollars except for percentages) | 2015 | 2014 | Change | |||||||||
P&C |
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Net premiums written |
$ | 4,217 | $ | 4,232 | (0.4 | )% | ||||||
Net premiums written constant-dollar |
$ | 3,992 | 5.6 | % | ||||||||
Underwriting income |
$ | 597 | $ | 586 | 1.9 | % | ||||||
Underwriting income constant-dollar |
$ | 551 | 8.4 | % | ||||||||
Combined ratio |
85.9 | % | 86.3 | % | ||||||||
Current accident year underwriting income excluding catastrophe losses |
$ | 459 | $ | 440 | 4.5 | % | ||||||
Current accident year underwriting income excluding catastrophe losses constant-dollar |
$ | 404 | 13.7 | % | ||||||||
Current accident year combined ratio excluding catastrophe losses |
89.2 | % | 89.8 | % | ||||||||
Global P&C (excludes Agriculture) |
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Net premiums written |
$ | 3,480 | $ | 3,468 | 0.3 | % | ||||||
Net premiums written constant-dollar |
$ | 3,229 | 7.8 | % | ||||||||
Underwriting income |
$ | 524 | $ | 505 | 3.8 | % | ||||||
Underwriting income constant-dollar |
$ | 470 | 11.5 | % | ||||||||
Combined ratio |
85.0 | % | 85.6 | % | ||||||||
Current accident year underwriting income excluding catastrophe losses |
$ | 391 | $ | 360 | 8.8 | % | ||||||
Current accident year underwriting income excluding catastrophe losses constant-dollar |
$ | 324 | 20.7 | % | ||||||||
Current accident year combined ratio excluding catastrophe losses |
88.8 | % | 89.8 | % | ||||||||
Agriculture |
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Net premiums written |
$ | 737 | $ | 764 | (3.5 | )% | ||||||
Underwriting income |
$ | 73 | $ | 81 | (9.6 | )% | ||||||
Combined ratio |
90.2 | % | 89.5 | % | ||||||||
Current accident year underwriting income excluding catastrophe losses |
$ | 68 | $ | 80 | (14.9 | )% | ||||||
Current accident year combined ratio excluding catastrophe losses |
90.8 | % | 89.6 | % |
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
4 |
ACE LIMITED NEWS RELEASE
| P&C net premiums earned decreased 0.6%, or increased 5.4% in constant dollars. Global P&C net premiums earned were flat, or up 7.6% in constant dollars. |
| The P&C expense ratio for the quarter was 27.1%, compared with 27.8% last year. The Global P&C expense ratio, which excludes Agriculture, was 31.6% compared with 32.7% last year. |
| Total pre-tax and after-tax catastrophe losses, including reinstatement premiums, were $72 million (1.7 percentage points of the combined ratio) and $59 million, respectively, compared with $86 million (2.1 percentage points of the combined ratio) and $76 million, respectively, last year. |
| Favorable prior period development pre-tax and after-tax for the quarter were $210 million (5.0 percentage points of the combined ratio) and $180 million, respectively, compared with $232 million (5.6 percentage points of the combined ratio) and $172 million, respectively, last year. |
| Operating cash flow was $808 million for the quarter. |
| Net loss reserves decreased $122 million in the quarter. Excluding foreign currency, net loss reserves increased $212 million in the quarter. |
| Net investment income was $549 million compared with $566 million last year, primarily reflecting unfavorable foreign currency movement of $11 million and a decrease in call activity in the companys corporate bond portfolio. |
| Net realized and unrealized losses pre-tax totaled $1.2 billion for the quarter. Net realized losses of $368 million included a loss of $313 million from derivative accounting related to variable annuity reinsurance resulting primarily from global equity and interest rate movements. Net unrealized pre-tax losses of $844 million included unrealized foreign exchange losses of $575 million and unrealized losses of $283 million in the investment portfolio primarily due to widening of credit spreads. |
| Operating return on equity was 12.9% for the quarter and 11.7% year to date. Return on equity computed using net income was 7.2% for the quarter and 9.8% year to date. |
Details of financial results by business segment are available in the ACE Limited Financial Supplement. Key segment items for the quarter ended September 30, 2015, include:
| Insurance North American P&C: Net premiums written increased 11.0%, or 11.7% on a constant-dollar basis. Net premiums written excluding Firemans Fund increased 3.9%, or 4.6% on a constant-dollar basis. The combined ratio was 90.5% compared with 91.4%. The current accident year combined ratio excluding catastrophe losses for the quarter was 86.3% compared with 88.5%. Unfavorable prior year reserve development in the quarter of $50 million included a pre-tax environmental liability run-off charge in the companys Brandywine operation of $76 million. The transfer of the Firemans Fund in-force business in April 2015 contributed $33 million of underwriting income that is non-recurring in 2016. This underwriting benefit was offset for operating income purposes by the amortization of intangible assets of $29 million. |
| Insurance North American Agriculture: Net premiums written decreased 3.5%. The combined ratio was 90.2% compared with 89.5%. The current accident year combined ratio excluding catastrophe losses for the quarter was 90.8% compared with 89.6%. The ratio is up mainly due to relatively flat loss adjustment expenses with lower earned premiums. |
| Insurance Overseas General:1 Net premiums written decreased 7.9%, or increased 6.1% on a constant-dollar basis. The combined ratio was 82.0% compared with 80.1%. The current accident year combined ratio excluding catastrophe losses was 90.5% for both periods. |
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
5 |
ACE LIMITED NEWS RELEASE
| Global Reinsurance:* Net premiums written decreased 11.5%, or 9.5% on a constant-dollar basis. The combined ratio was 41.2% compared with 70.2%. The current accident year combined ratio excluding catastrophe losses was 75.3% compared with 75.7%. |
| Life segment: Operating income was $57 million compared with $72 million. The decrease was primarily due to unfavorable reserve development in the current quarter of $5 million, after-tax, in the accident and health business. Life reinsurance decreased reflecting the run-off of the companys variable annuity reinsurance business. Operating income was also impacted by unfavorable foreign currency movement. International life insurance net premiums written and deposits collected increased 4.8% on a constant-dollar basis for the year. |
* | Favorable prior period development of $177 million in the Insurance Overseas General segment and $78 million in the Global Reinsurance segment included $26 million and $54 million, respectively, of favorable development related to an individual legacy liability case reserve take-down. |
Please refer to the ACE Limited Financial Supplement, dated September 30, 2015, 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 recoverables, loss reserves, investment portfolio and capital structure.
ACE will hold its third quarter earnings conference call on Wednesday, October 21, 2015, beginning at 8:30 a.m. Eastern. The earnings conference call will be available via live webcast at www.acegroup.com or by dialing 1-888-471-3842 (within the United States) or 719-325-2499 (international), passcode 721516. 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, November 4, 2015, 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 721516.
About ACE Group
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.
Investor Contact
Helen Wilson: (441) 299-9283; helen.wilson@acegroup.com
Media Contact
Jeffrey Zack: (212) 827-4444; jeffrey.zack@acegroup.com
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
6 |
ACE LIMITED NEWS RELEASE
(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).
Throughout this document there are various measures presented on a constant-dollar basis (i.e., excludes the impact of foreign exchange). We believe it is useful to evaluate the trends in our results, 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), 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 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 impacts underwriting results. We view gains and losses on 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.
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) 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. We also exclude Chubb integration expenses related to the planned acquisition due to the size and complexity of this acquisition. These integration expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration expenses facilitates the comparison of our financial results to our historical operating results. These expenses include legal and professional fees and all costs directly related to the integration activities of the planned Chubb acquisition. 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. In addition, we disclose operating income excluding the impact of foreign exchange in order to adjust for the distortive effects of fluctuations in exchange rates.
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
7 |
ACE LIMITED NEWS RELEASE
P&C combined ratio excluding catastrophe losses and PPD and 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.
International life net premiums written and deposits collected, is adjusted to include deposits collected on universal life and investment contracts (life deposits). 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 insurance business because new life deposits are an important component of production and key to our efforts to grow our business.
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 and Chubb integration expenses, 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. In addition, we disclose per share measures for book value and tangible book value that exclude the impact of foreign currency fluctuations during 2015 in order to adjust for the distortive effects of fluctuations in exchange rates.
Other income (expense) operating excludes from consolidated Other income (expense) the portion of net realized gains and losses related to unconsolidated entities and gains and losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP. Net realized gains (losses) related to unconsolidated entities is excluded from operating income in order to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.
See reconciliation of Non-GAAP Financial Measures on pages 22-24 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.
NM not meaningful comparison
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
8 |
ACE LIMITED NEWS RELEASE
Cautionary Statement Regarding Forward-Looking Statements:
Forward-looking statements made in this press release, such as those related to company performance, including 2015 performance and growth opportunities, and statements about the benefits of the proposed transaction involving ACE and Chubb, ACEs and Chubbs plans, objectives, expectations and intentions and other statements that are not historical facts 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 (SEC).
In addition, with regard to the proposed transaction involving ACE and Chubb, important factors that could cause actual results to differ materially from those indicated by the forward-looking statements include, without limitation, the following: the inability to complete the transaction in a timely manner; the inability to complete the transaction due to the failure of Chubbs shareholders to approve the transaction agreement or the failure of ACE shareholders to approve, among other matters, the issuance of ACE common shares in connection with the transaction; the failure to satisfy other conditions to completion of the transaction, including receipt of required regulatory approvals; the failure of the proposed transaction to close for any other reason; the possibility that any of the anticipated benefits of the proposed transaction will not be realized; the risk that integration of Chubbs operations with those of ACE will be materially delayed or will be more costly or difficult than expected; the effect of the announcement of the transaction on ACEs, Chubbs or the combined companys respective business relationships, operating results and business generally; and diversion of managements attention from ongoing business operations and opportunities. In addition, you should carefully consider the risks and uncertainties and other factors that may affect future results of the combined company described in the section entitled Risk Factors in the joint proxy statement/prospectus delivered to ACEs and Chubbs respective shareholders, and in ACEs and Chubbs respective filings with the SEC.
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.
Additional Information and Where to Find It
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This press release may be deemed to be solicitation material in respect of the proposed transaction between ACE and Chubb. In connection with the proposed transaction, ACE has filed a registration statement on Form S-4, and the final joint proxy statement/prospectus has been delivered to the shareholders of ACE and Chubb. This press release is
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
9 |
ACE LIMITED NEWS RELEASE
not a substitute for the registration statement, definitive joint proxy statement/prospectus or any other documents that ACE or Chubb may file with the SEC or send to shareholders in connection with the proposed transaction. SHAREHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Shareholders will be able to obtain copies of the joint proxy statement/prospectus and other documents filed with the SEC (when available) free of charge at the SECs website, http://www.sec.gov. Copies of documents filed with the SEC by ACE will be made available free of charge on ACEs website at www.acegroup.com. Copies of documents filed with the SEC by Chubb will be made available free of charge on Chubbs website at www.chubb.com.
Participants in Solicitation
ACE, Chubb and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of ACE is set forth in the proxy statement for ACEs 2015 Annual General Meeting, which was filed with the SEC on April 8, 2015, and ACEs Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 27, 2015. Information about the directors and executive officers of Chubb is set forth in the proxy statement for Chubbs 2015 Annual Meeting of Shareholders, which was filed with the SEC on March 13, 2015, and Chubbs Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 26, 2015. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. You may obtain free copies of these documents as described above.
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
10 |
ACE LIMITED NEWS RELEASE
ACE Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
(Unaudited)
September 30 2015 |
December 31 2014 |
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Assets |
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Investments |
$ | 62,384 | $ | 62,904 | ||||
Cash |
1,038 | 655 | ||||||
Insurance and reinsurance balances receivable |
5,290 | 5,426 | ||||||
Reinsurance recoverable on losses and loss expenses |
11,231 | 11,992 | ||||||
Other assets |
17,817 | 17,271 | ||||||
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Total assets |
$ | 97,760 | $ | 98,248 | ||||
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Liabilities |
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Unpaid losses and loss expenses |
$ | 37,564 | $ | 38,315 | ||||
Unearned premiums |
8,510 | 8,222 | ||||||
Other liabilities |
22,559 | 22,124 | ||||||
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Total liabilities |
68,633 | 68,661 | ||||||
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Shareholders equity |
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Total shareholders equity |
29,127 | 29,587 | ||||||
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Total liabilities and shareholders equity |
$ | 97,760 | $ | 98,248 | ||||
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Book value per common share |
$ | 89.88 | $ | 90.02 |
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
11 |
ACE LIMITED NEWS RELEASE
ACE Limited
Summary Consolidated Financial Data
(in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Gross premiums written |
$ | 6,346 | $ | 6,264 | $ | 18,172 | $ | 17,644 | ||||||||
Net premiums written |
4,709 | 4,729 | 13,569 | 13,473 | ||||||||||||
Net premiums earned |
4,719 | 4,754 | 13,006 | 13,056 | ||||||||||||
Losses and loss expenses |
2,643 | 2,684 | 7,182 | 7,233 | ||||||||||||
Policy benefits |
89 | 125 | 384 | 383 | ||||||||||||
Policy acquisition costs |
771 | 825 | 2,205 | 2,311 | ||||||||||||
Administrative expenses |
568 | 554 | 1,700 | 1,655 | ||||||||||||
Net investment income |
549 | 566 | 1,662 | 1,675 | ||||||||||||
Net realized gains (losses) |
(397 | ) | (120 | ) | (360 | ) | (297 | ) | ||||||||
Interest expense |
68 | 70 | 207 | 213 | ||||||||||||
Other income (expense): |
||||||||||||||||
Gains (losses) from separate account assets |
(49 | ) | (6 | ) | (32 | ) | 5 | |||||||||
Other |
37 | 52 | 93 | 134 | ||||||||||||
Amortization of intangible assets |
51 | 27 | 136 | 78 | ||||||||||||
Chubb integration expenses |
9 | | 9 | | ||||||||||||
Income tax expense |
132 | 176 | 395 | 402 | ||||||||||||
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Net income |
$ | 528 | $ | 785 | $ | 2,151 | $ | 2,298 | ||||||||
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Diluted earnings per share: |
||||||||||||||||
Operating income |
$ | 2.74 | $ | 2.64 | $ | 7.38 | $ | 7.32 | ||||||||
Net income |
$ | 1.62 | $ | 2.32 | $ | 6.53 | $ | 6.75 | ||||||||
Weighted average diluted shares outstanding |
327.2 | 337.7 | 329.2 | 340.4 | ||||||||||||
P&C combined ratio |
||||||||||||||||
Loss and loss expense ratio |
58.8 | % | 58.5 | % | 58.3 | % | 58.1 | % | ||||||||
Policy acquisition cost ratio |
15.4 | % | 16.5 | % | 16.1 | % | 16.9 | % | ||||||||
Administrative expense ratio |
11.7 | % | 11.3 | % | 12.8 | % | 12.5 | % | ||||||||
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P&C combined ratio |
85.9 | % | 86.3 | % | 87.2 | % | 87.5 | % | ||||||||
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P&C underwriting income |
$ | 597 | $ | 586 | $ | 1,477 | $ | 1,454 | ||||||||
Other income (expense) operating (1) |
$ | 12 | $ | (3 | ) | $ | 9 | $ | (8 | ) |
(1) | Effective Q3 2015, excludes amortization of intangible assets for all periods presented |
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
12 |
ACE LIMITED NEWS RELEASE
ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Gross Premiums Written |
||||||||||||||||
Insurance North American P&C |
$ | 2,372 | $ | 2,126 | $ | 7,402 | $ | 6,497 | ||||||||
Insurance North American Agriculture |
1,243 | 1,241 | 1,937 | 2,076 | ||||||||||||
Insurance Overseas General |
2,019 | 2,156 | 6,486 | 6,641 | ||||||||||||
Global Reinsurance |
190 | 213 | 774 | 854 | ||||||||||||
Life |
522 | 528 | 1,573 | 1,576 | ||||||||||||
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|
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Total |
$ | 6,346 | $ | 6,264 | $ | 18,172 | $ | 17,644 | ||||||||
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|
|||||||||
Net Premiums Written |
||||||||||||||||
Insurance North American P&C |
$ | 1,711 | $ | 1,541 | $ | 5,116 | $ | 4,594 | ||||||||
Insurance North American Agriculture |
737 | 764 | 1,204 | 1,346 | ||||||||||||
Insurance Overseas General |
1,584 | 1,719 | 5,047 | 5,250 | ||||||||||||
Global Reinsurance |
185 | 208 | 719 | 794 | ||||||||||||
Life |
492 | 497 | 1,483 | 1,489 | ||||||||||||
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Total |
$ | 4,709 | $ | 4,729 | $ | 13,569 | $ | 13,473 | ||||||||
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Net Premiums Earned |
||||||||||||||||
Insurance North American P&C |
$ | 1,682 | $ | 1,518 | $ | 4,896 | $ | 4,547 | ||||||||
Insurance North American Agriculture |
739 | 766 | 1,124 | 1,199 | ||||||||||||
Insurance Overseas General |
1,615 | 1,726 | 4,896 | 5,047 | ||||||||||||
Global Reinsurance |
203 | 255 | 649 | 800 | ||||||||||||
Life |
480 | 489 | 1,441 | 1,463 | ||||||||||||
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Total |
$ | 4,719 | $ | 4,754 | $ | 13,006 | $ | 13,056 | ||||||||
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|||||||||
Operating Income (loss) |
||||||||||||||||
Insurance North American P&C |
$ | 326 | $ | 337 | $ | 1,066 | $ | 1,126 | ||||||||
Insurance North American Agriculture |
56 | 57 | 106 | 51 | ||||||||||||
Insurance Overseas General |
330 | 348 | 811 | 869 | ||||||||||||
Global Reinsurance |
190 | 145 | 463 | 435 | ||||||||||||
Life |
57 | 72 | 190 | 221 | ||||||||||||
Corporate |
(62 | ) | (68 | ) | (206 | ) | (209 | ) | ||||||||
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Total |
$ | 897 | $ | 891 | $ | 2,430 | $ | 2,493 | ||||||||
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ACE®, ACE logo®, and ACE insured® are trademarks of ACE Limited. |
13 |
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:
Any forward-looking statements made in this financial supplement reflect ACE's current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from as indicated by such statements. For example, forward-looking statements related to financial performance including exposures, reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, currency exchange fluctuations, 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.
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.
Additional Information and Where to Find It
This financial supplement does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This financial supplement may be deemed to be solicitation material in respect of the proposed transaction between ACE and Chubb. In connection with the proposed transaction, ACE has filed a registration statement on Form S-4, and the final joint proxy statement/prospectus has been delivered to the shareholders of ACE and Chubb. This financial supplement is not a substitute for the registration statement, definitive joint proxy statement/prospectus or any other documents that ACE or Chubb may file with the SEC or send to shareholders in connection with the proposed transaction. SHAREHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Shareholders may obtain copies of the joint proxy statement/prospectus and other documents filed with the SEC (when available) free of charge at the SECs website, http://www.sec.gov. Copies of documents filed with the SEC by ACE will be made available free of charge on ACEs website at www.acegroup.com. Copies of documents filed with the SEC by Chubb will be made available free of charge on Chubbs website at www.chubb.com.
Participants in Solicitation
ACE, Chubb and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of ACE is set forth in the proxy statement for ACEs 2015 Annual General Meeting, which was filed with the SEC on April 8, 2015, and ACEs Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 27, 2015. Information about the directors and executive officers of Chubb is set forth in the proxy statement for Chubbs 2015 Annual Meeting of Shareholders, which was filed with the SEC on March 13, 2015, and Chubbs Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 26, 2015. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. You may obtain free copies of these documents as described above.
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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 | |||||
- Book Value and Book Value per Common Share | 21 | |||||
VI. | Other Disclosures | |||||
- Non-GAAP Financial Measures | 22 - 24 | |||||
- Glossary | 25 |
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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 $ % Change 3Q-15 vs. |
Constant $ | |||||||||||||||||||||||||||||||||||||||
% Change 3Q-15 vs. |
% Change | % Change | ||||||||||||||||||||||||||||||||||||||
Three months ended September 30 | Constant $ | Nine months ended September 30 | YTD-15 vs. | Constant $ | YTD-15 vs. | |||||||||||||||||||||||||||||||||||
2015 | 2014 | 3Q-14 | 2014 (1) | 3Q-14 (1) | 2015 | 2014 | YTD-14 | 2014 (1) | YTD-14 (1) | |||||||||||||||||||||||||||||||
Gross premiums written |
$ | 6,346 | $ | 6,264 | 1.3 | % | $ | 5,955 | 6.6 | % | $ | 18,172 | $ | 17,644 | 3.0 | % | $ | 16,828 | 8.0 | % | ||||||||||||||||||||
Net premiums written |
$ | 4,709 | $ | 4,729 | -0.4 | % | $ | 4,464 | 5.5 | % | $ | 13,569 | $ | 13,473 | 0.7 | % | $ | 12,786 | 6.1 | % | ||||||||||||||||||||
P&C net premiums written (2) |
$ | 4,217 | $ | 4,232 | -0.4 | % | $ | 3,992 | 5.6 | % | $ | 12,086 | $ | 11,984 | 0.8 | % | $ | 11,355 | 6.4 | % | ||||||||||||||||||||
Global P&C net premiums written (2) |
$ | 3,480 | $ | 3,468 | 0.3 | % | $ | 3,230 | 7.8 | % | $ | 10,882 | $ | 10,638 | 2.3 | % | $ | 10,009 | 8.7 | % | ||||||||||||||||||||
Net premiums earned |
$ | 4,719 | $ | 4,754 | -0.7 | % | $ | 4,484 | 5.2 | % | $ | 13,006 | $ | 13,056 | -0.4 | % | $ | 12,381 | 5.0 | % | ||||||||||||||||||||
Net investment income |
$ | 549 | $ | 566 | -3.1 | % | $ | 555 | -1.1 | % | $ | 1,662 | $ | 1,675 | -0.8 | % | $ | 1,646 | 1.0 | % | ||||||||||||||||||||
Operating income |
$ | 897 | $ | 891 | 0.8 | % | $ | 855 | 5.0 | % | $ | 2,430 | $ | 2,493 | -2.5 | % | $ | 2,408 | 0.9 | % | ||||||||||||||||||||
Net income |
$ | 528 | $ | 785 | -32.7 | % | $ | 2,151 | $ | 2,298 | -6.4 | % | ||||||||||||||||||||||||||||
Comprehensive income (loss) |
$ | (271 | ) | $ | 298 | N/M | $ | 768 | $ | 2,754 | -72.1 | % | ||||||||||||||||||||||||||||
Operating cash flow |
$ | 808 | $ | 1,126 | $ | 2,699 | $ | 3,222 | ||||||||||||||||||||||||||||||||
P&C combined ratio (2) |
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Loss and loss expense ratio |
58.8 | % | 58.5 | % | 58.3 | % | 58.1 | % | ||||||||||||||||||||||||||||||||
Underwriting and administrative expense ratio |
27.1 | % | 27.8 | % | 28.9 | % | 29.4 | % | ||||||||||||||||||||||||||||||||
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Combined ratio |
85.9 | % | 86.3 | % | 87.2 | % | 87.5 | % | ||||||||||||||||||||||||||||||||
Operating return on equity (ROE) |
12.9 | % | 12.6 | % | 11.7 | % | 11.9 | % | ||||||||||||||||||||||||||||||||
ROE |
7.2 | % | 10.4 | % | 9.8 | % | 10.4 | % | ||||||||||||||||||||||||||||||||
Operating effective tax rate (3) |
13.5 | % | 16.9 | % | 14.0 | % | 14.2 | % | ||||||||||||||||||||||||||||||||
Effective tax rate |
20.0 | % | 18.3 | % | 15.5 | % | 14.9 | % | ||||||||||||||||||||||||||||||||
Diluted earnings per share |
||||||||||||||||||||||||||||||||||||||||
Operating income |
$ | 2.74 | $ | 2.64 | 3.8 | % | $ | 7.38 | $ | 7.32 | 0.8 | % | ||||||||||||||||||||||||||||
Net income |
$ | 1.62 | $ | 2.32 | -30.2 | % | $ | 6.53 | $ | 6.75 | -3.3 | % | ||||||||||||||||||||||||||||
December 31 2014 |
% Change 3Q-15 vs. 4Q-14 |
|||||||||||||||||||||||||||||||||||||||
Book value per common share |
$ | 89.88 | $ | 90.02 | -0.2 | % | ||||||||||||||||||||||||||||||||||
Book value per common share excluding foreign currency (4) |
$ | 92.61 | $ | 90.02 | 2.9 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share |
$ | 72.25 | $ | 72.61 | -0.5 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share excluding foreign currency (4) |
$ | 73.93 | $ | 72.61 | 1.8 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share excluding acquisitions (5) |
$ | 73.72 | $ | 72.61 | 1.5 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share excluding acquisitions and foreign currency (4) (5) |
$ | 75.39 | $ | 72.61 | 3.8 | % | ||||||||||||||||||||||||||||||||||
Weighted average basic common shares outstanding |
324.2 | 334.5 | 325.9 | 337.1 | ||||||||||||||||||||||||||||||||||||
Weighted average diluted common shares outstanding |
327.2 | 337.7 | 329.2 | 340.4 | ||||||||||||||||||||||||||||||||||||
Debt plus trust preferred securities/ tangible capital |
21.9 | % | 20.2 | % | 20.7 | % |
(1) | Prior periods on a constant dollar basis. |
(2) | See non-GAAP financial measures. |
(3) | Operating effective tax rate is dependent upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would change the effective tax rate. The decrease in the operating effective tax rate for the quarter was primarily due to a higher percentage of operating earnings being generated in lower tax paying jurisdictions. |
(4) | For 2015, book value per common share and tangible book value per common share exclude the impact of foreign currency movement during the year. |
(5) | For 2015, tangible book value per common share excludes the impact from goodwill and intangibles relating to the acquisition of the Firemans Fund high net worth personal lines insurance business in the United States of $474 million. |
Financial Highlights | Page 1 |
![]() |
ACE Limited Consolidated Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
ACE Limited Consolidated
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | YTD 2015 |
YTD 2014 |
Full Year 2014 |
|||||||||||||||||||||||||
Consolidated Results (Including Corporate) Excluding Life Segment (1) |
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Gross premiums written |
$ | 5,824 | $ | 5,975 | $ | 4,800 | $ | 5,193 | $ | 5,736 | $ | 16,599 | $ | 16,068 | $ | 21,261 | ||||||||||||||||
Net premiums written |
4,217 | 4,284 | 3,585 | 3,803 | 4,232 | 12,086 | 11,984 | 15,787 | ||||||||||||||||||||||||
Net premiums earned |
4,239 | 3,873 | 3,453 | 3,871 | 4,265 | 11,565 | 11,593 | 15,464 | ||||||||||||||||||||||||
Adjusted losses and loss expenses (1) |
2,494 | 2,282 | 1,970 | 2,269 | 2,494 | 6,746 | 6,740 | 9,009 | ||||||||||||||||||||||||
Policy acquisition costs |
654 | 609 | 600 | 641 | 702 | 1,863 | 1,956 | 2,597 | ||||||||||||||||||||||||
Administrative expenses |
494 | 504 | 481 | 517 | 483 | 1,479 | 1,443 | 1,960 | ||||||||||||||||||||||||
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Underwriting income |
597 | 478 | 402 | 444 | 586 | 1,477 | 1,454 | 1,898 | ||||||||||||||||||||||||
Net investment income |
483 | 496 | 485 | 508 | 497 | 1,464 | 1,476 | 1,984 | ||||||||||||||||||||||||
Interest expense |
67 | 69 | 67 | 66 | 66 | 203 | 203 | 269 | ||||||||||||||||||||||||
Other income (expense) - operating (2) |
11 | (2 | ) | | 4 | (2 | ) | 9 | (2 | ) | 2 | |||||||||||||||||||||
Amortization of intangible assets |
51 | 54 | 30 | 29 | 27 | 135 | 76 | 105 | ||||||||||||||||||||||||
Income tax expense |
133 | 128 | 111 | 110 | 169 | 372 | 377 | 487 | ||||||||||||||||||||||||
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Operating income (including Corporate) excluding Life segment |
840 | 721 | 679 | 751 | 819 | 2,240 | 2,272 | 3,023 | ||||||||||||||||||||||||
Life segment operating income |
57 | 67 | 66 | 76 | 72 | 190 | 221 | 297 | ||||||||||||||||||||||||
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Consolidated operating income |
897 | 788 | 745 | 827 | 891 | 2,430 | 2,493 | 3,320 | ||||||||||||||||||||||||
Chubb integration expenses, net of tax |
(7 | ) | | | | | (7 | ) | | | ||||||||||||||||||||||
Adjusted net realized gains (losses) (1) |
(393 | ) | 128 | (89 | ) | (210 | ) | (165 | ) | (354 | ) | (348 | ) | (558 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
25 | 33 | 26 | 49 | 55 | 84 | 142 | 191 | ||||||||||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
(6 | ) | 7 | 1 | 111 | (4 | ) | 2 | (11 | ) | 100 | |||||||||||||||||||||
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Consolidated net income |
$ | 528 | $ | 942 | $ | 681 | $ | 555 | $ | 785 | $ | 2,151 | $ | 2,298 | $ | 2,853 | ||||||||||||||||
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% Change versus prior year period (1) |
||||||||||||||||||||||||||||||||
Net premiums written as reported |
-0.4 | % | 5.5 | % | -2.9 | % | 2.4 | % | 2.2 | % | 0.8 | % | 5.7 | % | 4.9 | % | ||||||||||||||||
Net premiums earned as reported |
-0.6 | % | 0.8 | % | -1.0 | % | -0.3 | % | 2.9 | % | -0.2 | % | 7.1 | % | 5.1 | % | ||||||||||||||||
Net premiums written constant $ |
5.6 | % | 11.6 | % | 1.7 | % | 5.0 | % | 1.7 | % | 6.4 | % | 6.1 | % | 5.9 | % | ||||||||||||||||
Net premiums earned constant $ |
5.4 | % | 7.0 | % | 3.5 | % | 2.1 | % | 2.5 | % | 5.4 | % | 7.6 | % | 6.2 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written (1) |
72 | % | 72 | % | 75 | % | 73 | % | 74 | % | 73 | % | 75 | % | 74 | % | ||||||||||||||||
Operating effective tax rate |
13.5 | % | 14.7 | % | 13.7 | % | 12.7 | % | 16.9 | % | 14.0 | % | 14.2 | % | 13.9 | % | ||||||||||||||||
P&C combined ratio (1) |
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Loss and loss expense ratio |
58.8 | % | 58.9 | % | 57.1 | % | 58.6 | % | 58.5 | % | 58.3 | % | 58.1 | % | 58.3 | % | ||||||||||||||||
Policy acquisition cost ratio |
15.4 | % | 15.7 | % | 17.4 | % | 16.6 | % | 16.5 | % | 16.1 | % | 16.9 | % | 16.8 | % | ||||||||||||||||
Administrative expense ratio |
11.7 | % | 13.1 | % | 13.9 | % | 13.3 | % | 11.3 | % | 12.8 | % | 12.5 | % | 12.6 | % | ||||||||||||||||
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Combined ratio |
85.9 | % | 87.7 | % | 88.4 | % | 88.5 | % | 86.3 | % | 87.2 | % | 87.5 | % | 87.7 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
89.2 | % | 88.4 | % | 89.3 | % | 89.5 | % | 89.8 | % | 89.0 | % | 89.2 | % | 89.3 | % | ||||||||||||||||
P&C expense ratio |
27.1 | % | 28.8 | % | 31.3 | % | 29.9 | % | 27.8 | % | 28.9 | % | 29.4 | % | 29.4 | % | ||||||||||||||||
P&C expense ratio excluding A&H |
23.6 | % | 25.5 | % | 27.9 | % | 26.7 | % | 24.3 | % | 25.5 | % | 25.8 | % | 26.0 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax |
$ | | $ | | $ | | $ | 2 | $ | 1 | $ | | $ | 1 | $ | 3 | ||||||||||||||||
Catastrophe losses - pre-tax |
$ | 72 | $ | 124 | $ | 51 | $ | 71 | $ | 87 | $ | 247 | $ | 220 | $ | 291 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (210 | ) | $ | (153 | ) | $ | (83 | ) | $ | (107 | ) | $ | (232 | ) | $ | (446 | ) | $ | (420 | ) | $ | (527 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
62.2 | % | 59.7 | % | 58.1 | % | 59.6 | % | 62.2 | % | 60.1 | % | 59.9 | % | 59.8 | % |
(1) | See non-GAAP financial measures. |
(2) | Excludes portion of net realized investment gains and losses related to unconsolidated entities. |
Note: Effective Q3 2015, amortization of intangible assets (previously included in prior year other income (expense) operating) are now reported separately throughout this report. Prior year amounts are reclassified to conform to the current period presentation.
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) |
September 30 2015 |
June 30 2015 |
March 31 2015 |
December 31 2014 |
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Assets |
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Fixed maturities available for sale, at fair value |
$ | 48,278 | $ | 48,701 | $ | 50,410 | $ | 49,395 | ||||||||
Fixed maturities held to maturity, at amortized cost |
8,564 | 8,676 | 6,982 | 7,331 | ||||||||||||
Equity securities, at fair value |
464 | 498 | 536 | 510 | ||||||||||||
Short-term investments, at fair value |
1,808 | 2,062 | 2,536 | 2,322 | ||||||||||||
Other investments |
3,270 | 3,328 | 3,430 | 3,346 | ||||||||||||
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Total investments |
62,384 | 63,265 | 63,894 | 62,904 | ||||||||||||
Cash |
1,038 | 790 | 948 | 655 | ||||||||||||
Securities lending collateral |
1,011 | 1,080 | 1,033 | 1,330 | ||||||||||||
Insurance and reinsurance balances receivable |
5,290 | 5,757 | 5,026 | 5,426 | ||||||||||||
Reinsurance recoverable on losses and loss expenses |
11,231 | 11,775 | 11,588 | 11,992 | ||||||||||||
Deferred policy acquisition costs |
2,809 | 2,806 | 2,683 | 2,601 | ||||||||||||
Value of business acquired |
410 | 434 | 440 | 466 | ||||||||||||
Prepaid reinsurance premiums |
2,059 | 2,238 | 1,981 | 2,026 | ||||||||||||
Goodwill and other intangible assets |
5,713 | 5,969 | 5,516 | 5,724 | ||||||||||||
Deferred tax assets |
395 | 285 | 224 | 295 | ||||||||||||
Investments in partially-owned insurance companies |
654 | 638 | 590 | 504 | ||||||||||||
Other assets |
4,766 | 4,803 | 4,475 | 4,325 | ||||||||||||
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Total assets |
$ | 97,760 | $ | 99,840 | $ | 98,398 | $ | 98,248 | ||||||||
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Liabilities |
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Unpaid losses and loss expenses |
$ | 37,564 | $ | 38,230 | $ | 37,326 | $ | 38,315 | ||||||||
Unearned premiums |
8,510 | 8,879 | 8,182 | 8,222 | ||||||||||||
Future policy benefits |
4,776 | 4,835 | 4,744 | 4,754 | ||||||||||||
Insurance and reinsurance balances payable |
4,225 | 4,602 | 4,198 | 4,095 | ||||||||||||
Securities lending payable |
1,012 | 1,081 | 1,034 | 1,331 | ||||||||||||
Accounts payable, accrued expenses, and other liabilities |
5,977 | 6,090 | 6,194 | 5,726 | ||||||||||||
Short-term debt |
2,103 | 2,102 | 2,552 | 2,552 | ||||||||||||
Long-term debt |
4,157 | 4,157 | 4,157 | 3,357 | ||||||||||||
Trust preferred securities |
309 | 309 | 309 | 309 | ||||||||||||
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Total liabilities |
68,633 | 70,285 | 68,696 | 68,661 | ||||||||||||
Shareholders equity |
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Total shareholders equity, excl. AOCI |
29,319 | 28,948 | 28,550 | 28,396 | ||||||||||||
Accumulated other comprehensive income (AOCI) |
(192 | ) | 607 | 1,152 | 1,191 | |||||||||||
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Total shareholders equity |
29,127 | 29,555 | 29,702 | 29,587 | ||||||||||||
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Total liabilities and shareholders equity |
$ | 97,760 | $ | 99,840 | $ | 98,398 | $ | 98,248 | ||||||||
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Book value per common share |
$ | 89.88 | $ | 91.27 | $ | 90.81 | $ | 90.02 | ||||||||
% change over prior quarter |
-1.5 | % | 0.5 | % | 0.9 | % | -0.4 | % | ||||||||
Tangible book value per common share |
$ | 72.25 | $ | 72.84 | $ | 73.94 | $ | 72.61 | ||||||||
% change over prior quarter |
-0.8 | % | -1.5 | % | 1.8 | % | -1.9 | % |
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 | |||||||||||||||||||||||||||||||||||||
3Q-15 vs. | Constant $ | 3Q-15 vs. | YTD | YTD | YTD-15 vs. | Constant $ | YTD-15 vs. | |||||||||||||||||||||||||||||||||
3Q-15 | 3Q-14 | 3Q-14 | 3Q-14 (2) | 3Q-14 (2) | 2015 | 2014 | YTD-14 | YTD-14 (2) | YTD-14 (2) | |||||||||||||||||||||||||||||||
Net premiums written |
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Property and all other |
$ | 1,250 | $ | 1,234 | 1.4 | % | $ | 4,318 | $ | 4,071 | 6.1 | % | ||||||||||||||||||||||||||||
Casualty |
1,593 | 1,546 | 3.0 | % | 4,635 | 4,495 | 3.1 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
2,843 | 2,780 | 2.3 | % | $ | 2,628 | 8.2 | % | 8,953 | 8,566 | 4.5 | % | $ | 8,160 | 9.7 | % | ||||||||||||||||||||||||
Agriculture |
737 | 764 | -3.5 | % | 764 | -3.5 | % | 1,204 | 1,346 | -10.5 | % | 1,346 | -10.5 | % | ||||||||||||||||||||||||||
Personal accident (A&H) (1) |
890 | 937 | -5.2 | % | 841 | 5.8 | % | 2,689 | 2,815 | -4.5 | % | 2,572 | 4.5 | % | ||||||||||||||||||||||||||
Life |
239 | 248 | -3.6 | % | 231 | 3.3 | % | 723 | 746 | -3.2 | % | 708 | 2.1 | % | ||||||||||||||||||||||||||
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Total consolidated |
$ | 4,709 | $ | 4,729 | -0.4 | % | $ | 4,464 | 5.5 | % | $ | 13,569 | $ | 13,473 | 0.7 | % | $ | 12,786 | 6.1 | % | ||||||||||||||||||||
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% of Total Consolidated |
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Property and all other |
27 | % | 26 | % | 32 | % | 30 | % | ||||||||||||||||||||||||||||||||
Casualty |
33 | % | 33 | % | 34 | % | 33 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
60 | % | 59 | % | 66 | % | 63 | % | ||||||||||||||||||||||||||||||||
Agriculture |
16 | % | 16 | % | 9 | % | 10 | % | ||||||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
19 | % | 20 | % | 20 | % | 21 | % | ||||||||||||||||||||||||||||||||
Life |
5 | % | 5 | % | 5 | % | 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 |
$ | 1,321 | $ | 1,313 | 0.6 | % | $ | 3,914 | $ | 3,847 | 1.7 | % | ||||||||||||||||||||||||||||
Casualty |
1,548 | 1,493 | 3.8 | % | 4,642 | 4,515 | 2.8 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
2,869 | 2,806 | 2.3 | % | $ | 2,648 | 8.4 | % | 8,556 | 8,362 | 2.3 | % | $ | 7,963 | 7.4 | % | ||||||||||||||||||||||||
Agriculture |
739 | 766 | -3.6 | % | 766 | -3.6 | % | 1,124 | 1,199 | -6.3 | % | 1,199 | -6.3 | % | ||||||||||||||||||||||||||
Personal accident (A&H) (1) |
884 | 942 | -6.2 | % | 846 | 4.5 | % | 2,645 | 2,770 | -4.5 | % | 2,531 | 4.5 | % | ||||||||||||||||||||||||||
Life |
227 | 240 | -5.7 | % | 224 | 1.2 | % | 681 | 725 | -6.1 | % | 688 | -1.0 | % | ||||||||||||||||||||||||||
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Total consolidated |
$ | 4,719 | $ | 4,754 | -0.7 | % | $ | 4,484 | 5.2 | % | $ | 13,006 | $ | 13,056 | -0.4 | % | $ | 12,381 | 5.0 | % | ||||||||||||||||||||
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% of Total Consolidated |
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Property and all other |
28 | % | 28 | % | 30 | % | 29 | % | ||||||||||||||||||||||||||||||||
Casualty |
33 | % | 31 | % | 36 | % | 35 | % | ||||||||||||||||||||||||||||||||
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Subtotal |
61 | % | 59 | % | 66 | % | 64 | % | ||||||||||||||||||||||||||||||||
Agriculture |
16 | % | 16 | % | 9 | % | 9 | % | ||||||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
18 | % | 20 | % | 20 | % | 21 | % | ||||||||||||||||||||||||||||||||
Life |
5 | % | 5 | % | 5 | % | 6 | % | ||||||||||||||||||||||||||||||||
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Total consolidated |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||||||||||
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Operating income, after-tax |
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Property, casualty, and all other |
$ | 705 | $ | 671 | 5.4 | % | $ | 649 | 8.9 | % | $ | 1,882 | $ | 1,964 | -4.1 | % | $ | 1,913 | -1.6 | % | ||||||||||||||||||||
Agriculture |
56 | 57 | -1.7 | % | 57 | -1.7 | % | 106 | 51 | NM | 51 | NM | ||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
102 | 122 | -16.9 | % | 108 | -5.8 | % | 337 | 360 | -6.6 | % | 326 | 3.4 | % | ||||||||||||||||||||||||||
Life |
34 | 41 | -19.5 | % | 41 | -19.5 | % | 105 | 118 | -11.3 | % | 118 | -11.3 | % | ||||||||||||||||||||||||||
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Total consolidated |
$ | 897 | $ | 891 | 0.8 | % | $ | 855 | 5.0 | % | $ | 2,430 | $ | 2,493 | -2.5 | % | $ | 2,408 | 0.9 | % | ||||||||||||||||||||
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% of Total Consolidated |
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Property, casualty, and all other |
79 | % | 75 | % | 78 | % | 79 | % | ||||||||||||||||||||||||||||||||
Agriculture |
6 | % | 6 | % | 4 | % | 2 | % | ||||||||||||||||||||||||||||||||
Personal accident (A&H) (1) |
11 | % | 14 | % | 14 | % | 14 | % | ||||||||||||||||||||||||||||||||
Life |
4 | % | 5 | % | 4 | % | 5 | % | ||||||||||||||||||||||||||||||||
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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 segment.
Global P&C (Including Corporate)
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Gross premiums written |
$ | 4,581 | $ | 5,409 | $ | 4,672 | $ | 4,891 | $ | 4,495 | $ | 14,662 | $ | 13,992 | $ | 18,883 | ||||||||||||||||
Net premiums written |
3,480 | 3,905 | 3,497 | 3,559 | 3,468 | 10,882 | 10,638 | 14,197 | ||||||||||||||||||||||||
Net premiums earned |
3,500 | 3,552 | 3,389 | 3,544 | 3,499 | 10,441 | 10,394 | 13,938 | ||||||||||||||||||||||||
Losses and loss expenses |
1,870 | 2,009 | 1,948 | 2,017 | 1,853 | 5,827 | 5,692 | 7,709 | ||||||||||||||||||||||||
Policy acquisition costs |
612 | 586 | 604 | 629 | 661 | 1,802 | 1,887 | 2,516 | ||||||||||||||||||||||||
Administrative expenses |
494 | 500 | 482 | 513 | 480 | 1,476 | 1,438 | 1,951 | ||||||||||||||||||||||||
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Underwriting income |
524 | 457 | 355 | 385 | 505 | 1,336 | 1,377 | 1,762 | ||||||||||||||||||||||||
Net investment income |
478 | 490 | 479 | 501 | 491 | 1,447 | 1,457 | 1,958 | ||||||||||||||||||||||||
Interest expense |
67 | 69 | 67 | 66 | 66 | 203 | 203 | 269 | ||||||||||||||||||||||||
Other income (expense)operating (1) |
10 | (1 | ) | 1 | 5 | (3 | ) | 10 | (2 | ) | 4 | |||||||||||||||||||||
Amortization of intangible assets |
43 | 47 | 23 | 21 | 19 | 113 | 52 | 74 | ||||||||||||||||||||||||
Income tax expense |
118 | 124 | 101 | 98 | 146 | 343 | 356 | 454 | ||||||||||||||||||||||||
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Global P&C operating income |
784 | 706 | 644 | 706 | 762 | 2,134 | 2,221 | 2,927 | ||||||||||||||||||||||||
Chubb integration expenses, net of tax |
(7 | ) | | | | | (7 | ) | | | ||||||||||||||||||||||
Net realized gains (losses) |
(67 | ) | 25 | (30 | ) | (67 | ) | (76 | ) | (72 | ) | (111 | ) | (178 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
13 | 16 | 12 | 43 | 51 | 41 | 142 | 185 | ||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains |
(7 | ) | 5 | | 110 | (5 | ) | (2 | ) | (9 | ) | 101 | ||||||||||||||||||||
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Global P&C net income |
$ | 730 | $ | 742 | $ | 626 | $ | 572 | $ | 742 | $ | 2,098 | $ | 2,261 | $ | 2,833 | ||||||||||||||||
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% Change versus prior year period |
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Net premiums written as reported |
0.3 | % | 6.4 | % | 0.0 | % | 3.0 | % | 4.0 | % | 2.3 | % | 6.7 | % | 5.7 | % | ||||||||||||||||
Net premiums earned as reported |
0.0 | % | 1.2 | % | 0.1 | % | 2.6 | % | 6.2 | % | 0.5 | % | 8.6 | % | 7.0 | % | ||||||||||||||||
Net premiums written constant $ |
7.8 | % | 13.2 | % | 5.0 | % | 5.8 | % | 3.4 | % | 8.7 | % | 7.2 | % | 6.9 | % | ||||||||||||||||
Net premiums earned constant $ |
7.6 | % | 8.0 | % | 4.8 | % | 5.4 | % | 5.7 | % | 6.8 | % | 9.2 | % | 8.2 | % | ||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
76 | % | 72 | % | 75 | % | 73 | % | 77 | % | 74 | % | 76 | % | 75 | % | ||||||||||||||||
Combined ratio |
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Loss and loss expense ratio |
53.4 | % | 56.5 | % | 57.5 | % | 56.9 | % | 52.9 | % | 55.8 | % | 54.8 | % | 55.3 | % | ||||||||||||||||
Policy acquisition cost ratio |
17.5 | % | 16.5 | % | 17.8 | % | 17.8 | % | 18.9 | % | 17.3 | % | 18.1 | % | 18.0 | % | ||||||||||||||||
Administrative expense ratio |
14.1 | % | 14.1 | % | 14.2 | % | 14.4 | % | 13.8 | % | 14.1 | % | 13.8 | % | 14.1 | % | ||||||||||||||||
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Combined ratio |
85.0 | % | 87.1 | % | 89.5 | % | 89.1 | % | 85.6 | % | 87.2 | % | 86.7 | % | 87.4 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses |
88.8 | % | 88.2 | % | 89.5 | % | 90.2 | % | 89.8 | % | 88.8 | % | 89.2 | % | 89.4 | % | ||||||||||||||||
Expense ratio |
31.6 | % | 30.6 | % | 32.0 | % | 32.2 | % | 32.7 | % | 31.4 | % | 31.9 | % | 32.1 | % | ||||||||||||||||
Expense ratio excluding A&H |
28.2 | % | 27.4 | % | 28.7 | % | 29.2 | % | 29.3 | % | 28.1 | % | 28.6 | % | 28.8 | % | ||||||||||||||||
Catastrophe reinstatement premiums |
$ | | $ | | $ | | $ | 2 | $ | 1 | $ | | $ | 1 | $ | 3 | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 72 | $ | 117 | $ | 50 | $ | 70 | $ | 85 | $ | 239 | $ | 208 | $ | 278 | ||||||||||||||||
Favorable prior period development (PPD) |
$ | (205 | ) | $ | (153 | ) | $ | (50 | ) | $ | (106 | ) | $ | (229 | ) | $ | (408 | ) | $ | (455 | ) | $ | (561 | ) | ||||||||
Loss and loss expense ratio excluding |
57.3 | % | 57.6 | % | 57.6 | % | 57.9 | % | 57.5 | % | 57.5 | % | 57.3 | % | 57.5 | % |
(1) | Excludes portion of net realized investment gains and losses related to unconsolidated entities. |
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 | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Gross premiums written |
$ | 3,615 | $ | 3,471 | $ | 2,253 | $ | 2,841 | $ | 3,367 | $ | 9,339 | $ | 8,573 | $ | 11,414 | ||||||||||||||||
Net premiums written |
2,448 | 2,354 | 1,518 | 1,913 | 2,305 | 6,320 | 5,940 | 7,853 | ||||||||||||||||||||||||
Net premiums earned |
2,421 | 2,009 | 1,590 | 1,887 | 2,284 | 6,020 | 5,746 | 7,633 | ||||||||||||||||||||||||
Losses and loss expenses (1) |
1,799 | 1,393 | 1,057 | 1,329 | 1,694 | 4,249 | 4,057 | 5,386 | ||||||||||||||||||||||||
Policy acquisition costs |
197 | 153 | 157 | 166 | 210 | 507 | 549 | 715 | ||||||||||||||||||||||||
Administrative expenses |
192 | 193 | 170 | 181 | 168 | 555 | 506 | 687 | ||||||||||||||||||||||||
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|
|||||||||||||||||
Underwriting income |
233 | 270 | 206 | 211 | 212 | 709 | 634 | 845 | ||||||||||||||||||||||||
Net investment income |
271 | 275 | 269 | 280 | 283 | 815 | 831 | 1,111 | ||||||||||||||||||||||||
Interest expense |
3 | 2 | 2 | 2 | 2 | 7 | 7 | 9 | ||||||||||||||||||||||||
Other income (expense)operating |
3 | (2 | ) | 2 | 6 | | 3 | 4 | 9 | |||||||||||||||||||||||
Amortization of intangible assets |
39 | 39 | 7 | 8 | 8 | 85 | 24 | 31 | ||||||||||||||||||||||||
Income tax expense |
83 | 92 | 88 | 70 | 91 | 263 | 261 | 331 | ||||||||||||||||||||||||
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|
|||||||||||||||||
Operating income |
382 | 410 | 380 | 417 | 394 | 1,172 | 1,177 | 1,594 | ||||||||||||||||||||||||
Net realized gains (losses) (1) |
(33 | ) | | (6 | ) | (39 | ) | (5 | ) | (39 | ) | (25 | ) | (64 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
14 | 10 | 4 | 19 | 32 | 28 | 71 | 90 | ||||||||||||||||||||||||
Income tax expense on net realized gains |
2 | 1 | 2 | 1 | 5 | 5 | 7 | 8 | ||||||||||||||||||||||||
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|
|||||||||||||||||
Net income |
$ | 361 | $ | 419 | $ | 376 | $ | 396 | $ | 416 | $ | 1,156 | $ | 1,216 | $ | 1,612 | ||||||||||||||||
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|||||||||||||||||
Combined ratio |
||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
74.3 | % | 69.3 | % | 66.5 | % | 70.4 | % | 74.1 | % | 70.6 | % | 70.6 | % | 70.6 | % | ||||||||||||||||
Policy acquisition cost ratio |
8.2 | % | 7.6 | % | 9.8 | % | 8.8 | % | 9.2 | % | 8.4 | % | 9.5 | % | 9.4 | % | ||||||||||||||||
Administrative expense ratio |
7.9 | % | 9.7 | % | 10.7 | % | 9.6 | % | 7.4 | % | 9.2 | % | 8.9 | % | 8.9 | % | ||||||||||||||||
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|||||||||||||||||
Combined ratio |
90.4 | % | 86.6 | % | 87.0 | % | 88.8 | % | 90.7 | % | 88.2 | % | 89.0 | % | 88.9 | % | ||||||||||||||||
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|||||||||||||||||
Combined ratio excluding catastrophe losses and PPD |
87.6 | % | 86.0 | % | 87.4 | % | 87.9 | % | 88.9 | % | 87.1 | % | 88.0 | % | 88.0 | % | ||||||||||||||||
Catastrophe reinstatement premiums expensedpre-tax |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 22 | $ | 61 | $ | 46 | $ | 30 | $ | 37 | $ | 129 | $ | 115 | $ | 145 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD)pre-tax |
$ | 45 | $ | (49 | ) | $ | (54 | ) | $ | (12 | ) | $ | 8 | $ | (58 | ) | $ | (61 | ) | $ | (73 | ) | ||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
71.6 | % | 68.8 | % | 67.1 | % | 69.6 | % | 72.5 | % | 69.5 | % | 69.6 | % | 69.6 | % | ||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written |
6.2 | % | 16.4 | % | -5.9 | % | 3.0 | % | -0.1 | % | 6.4 | % | 4.5 | % | 4.1 | % | ||||||||||||||||
Net premiums earned |
5.9 | % | 7.4 | % | 0.0 | % | -2.6 | % | -0.4 | % | 4.8 | % | 5.2 | % | 3.2 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written |
68 | % | 68 | % | 67 | % | 67 | % | 68 | % | 68 | % | 69 | % | 69 | % |
(1) | See non-GAAP financial measures. |
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 | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Gross premiums written |
$ | 2,372 | $ | 2,905 | $ | 2,125 | $ | 2,539 | $ | 2,126 | $ | 7,402 | $ | 6,497 | $ | 9,036 | ||||||||||||||||
Net premiums written |
1,711 | 1,975 | 1,430 | 1,669 | 1,541 | 5,116 | 4,594 | 6,263 | ||||||||||||||||||||||||
Net premiums earned |
1,682 | 1,688 | 1,526 | 1,560 | 1,518 | 4,896 | 4,547 | 6,107 | ||||||||||||||||||||||||
Losses and loss expenses |
1,175 | 1,120 | 1,035 | 1,077 | 1,053 | 3,330 | 3,009 | 4,086 | ||||||||||||||||||||||||
Policy acquisition costs |
155 | 130 | 161 | 154 | 169 | 446 | 480 | 634 | ||||||||||||||||||||||||
Administrative expenses |
192 | 189 | 171 | 177 | 165 | 552 | 501 | 678 | ||||||||||||||||||||||||
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|
|||||||||||||||||
Underwriting income |
160 | 249 | 159 | 152 | 131 | 568 | 557 | 709 | ||||||||||||||||||||||||
Net investment income |
266 | 269 | 263 | 273 | 277 | 798 | 812 | 1,085 | ||||||||||||||||||||||||
Interest expense |
3 | 2 | 2 | 2 | 2 | 7 | 7 | 9 | ||||||||||||||||||||||||
Other income (expense)operating |
2 | (1 | ) | 3 | 7 | (1 | ) | 4 | 4 | 11 | ||||||||||||||||||||||
Amortization of intangible assets |
31 | 32 | | | | 63 | | | ||||||||||||||||||||||||
Income tax expense |
68 | 88 | 78 | 58 | 68 | 234 | 240 | 298 | ||||||||||||||||||||||||
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|
|||||||||||||||||
Operating income |
326 | 395 | 345 | 372 | 337 | 1,066 | 1,126 | 1,498 | ||||||||||||||||||||||||
Net realized gains (losses) |
(33 | ) | | (6 | ) | (42 | ) | (5 | ) | (39 | ) | (25 | ) | (67 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
14 | 10 | 4 | 19 | 32 | 28 | 71 | 90 | ||||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
2 | 1 | 2 | 1 | 5 | 5 | 7 | 8 | ||||||||||||||||||||||||
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|
|
|||||||||||||||||
Net income |
$ | 305 | $ | 404 | $ | 341 | $ | 348 | $ | 359 | $ | 1,050 | $ | 1,165 | $ | 1,513 | ||||||||||||||||
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|
|||||||||||||||||
Combined ratio |
||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
69.9 | % | 66.3 | % | 67.9 | % | 69.0 | % | 69.3 | % | 68.0 | % | 66.2 | % | 66.9 | % | ||||||||||||||||
Policy acquisition cost ratio |
9.2 | % | 7.7 | % | 10.5 | % | 9.9 | % | 11.1 | % | 9.1 | % | 10.5 | % | 10.4 | % | ||||||||||||||||
Administrative expense ratio |
11.4 | % | 11.2 | % | 11.2 | % | 11.3 | % | 11.0 | % | 11.3 | % | 11.1 | % | 11.1 | % | ||||||||||||||||
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|
|||||||||||||||||
Combined ratio |
90.5 | % | 85.2 | % | 89.6 | % | 90.2 | % | 91.4 | % | 88.4 | % | 87.8 | % | 88.4 | % | ||||||||||||||||
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|
|||||||||||||||||
Combined ratio excluding catastrophe losses and PPD |
86.3 | % | 85.0 | % | 87.9 | % | 89.1 | % | 88.5 | % | 86.4 | % | 87.6 | % | 88.0 | % | ||||||||||||||||
Catastrophe reinstatement premiums expensedpre-tax |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 22 | $ | 54 | $ | 45 | $ | 29 | $ | 35 | $ | 121 | $ | 103 | $ | 132 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD)pre-tax |
$ | 50 | $ | (49 | ) | $ | (21 | ) | $ | (11 | ) | $ | 11 | $ | (20 | ) | $ | (96 | ) | $ | (107 | ) | ||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
65.7 | % | 66.1 | % | 66.3 | % | 67.8 | % | 66.9 | % | 66.0 | % | 66.2 | % | 66.6 | % | ||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written |
11.0 | % | 20.8 | % | 0.8 | % | 4.2 | % | 2.7 | % | 11.3 | % | 6.5 | % | 5.9 | % | ||||||||||||||||
Net premiums earned |
10.7 | % | 9.6 | % | 2.5 | % | 3.3 | % | 5.1 | % | 7.7 | % | 8.0 | % | 6.8 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written |
72 | % | 68 | % | 67 | % | 66 | % | 72 | % | 69 | % | 71 | % | 69 | % |
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 | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Gross premiums written |
$ | 1,243 | $ | 566 | $ | 128 | $ | 302 | $ | 1,241 | $ | 1,937 | $ | 2,076 | $ | 2,378 | ||||||||||||||||
Net premiums written |
737 | 379 | 88 | 244 | 764 | 1,204 | 1,346 | 1,590 | ||||||||||||||||||||||||
Net premiums earned |
739 | 321 | 64 | 327 | 766 | 1,124 | 1,199 | 1,526 | ||||||||||||||||||||||||
Losses and loss expenses (1) |
624 | 273 | 22 | 252 | 641 | 919 | 1,048 | 1,300 | ||||||||||||||||||||||||
Policy acquisition costs |
42 | 23 | (4 | ) | 12 | 41 | 61 | 69 | 81 | |||||||||||||||||||||||
Administrative expenses |
| 4 | (1 | ) | 4 | 3 | 3 | 5 | 9 | |||||||||||||||||||||||
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|
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Underwriting income |
73 | 21 | 47 | 59 | 81 | 141 | 77 | 136 | ||||||||||||||||||||||||
Net investment income |
5 | 6 | 6 | 7 | 6 | 17 | 19 | 26 | ||||||||||||||||||||||||
Interest expense |
| | | | | | | | ||||||||||||||||||||||||
Other income (expense)operating |
1 | (1 | ) | (1 | ) | (1 | ) | 1 | (1 | ) | | (2 | ) | |||||||||||||||||||
Amortization of intangible assets |
8 | 7 | 7 | 8 | 8 | 22 | 24 | 31 | ||||||||||||||||||||||||
Income tax expense |
15 | 4 | 10 | 12 | 23 | 29 | 21 | 33 | ||||||||||||||||||||||||
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|
|||||||||||||||||
Operating income |
56 | 15 | 35 | 45 | 57 | 106 | 51 | 96 | ||||||||||||||||||||||||
Net realized gains (losses) (1) |
| | | 3 | | | | 3 | ||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
| | | | | | | | ||||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
| | | | | | | | ||||||||||||||||||||||||
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|
|||||||||||||||||
Net income |
$ | 56 | $ | 15 | $ | 35 | $ | 48 | $ | 57 | $ | 106 | $ | 51 | $ | 99 | ||||||||||||||||
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|
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Combined ratio |
||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
84.5 | % | 85.3 | % | 33.3 | % | 77.2 | % | 83.7 | % | 81.8 | % | 87.4 | % | 85.2 | % | ||||||||||||||||
Policy acquisition cost ratio |
5.7 | % | 7.2 | % | -6.0 | % | 3.6 | % | 5.4 | % | 5.4 | % | 5.8 | % | 5.3 | % | ||||||||||||||||
Administrative expense ratio |
0.0 | % | 1.1 | % | -0.9 | % | 1.0 | % | 0.4 | % | 0.3 | % | 0.4 | % | 0.6 | % | ||||||||||||||||
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|||||||||||||||||
Combined ratio |
90.2 | % | 93.6 | % | 26.4 | % | 81.8 | % | 89.5 | % | 87.5 | % | 93.6 | % | 91.1 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
90.8 | % | 91.4 | % | 76.7 | % | 82.4 | % | 89.6 | % | 90.1 | % | 89.4 | % | 87.8 | % | ||||||||||||||||
Catastrophe reinstatement premiumspre-tax |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Catastrophe lossespre-tax |
$ | | $ | 7 | $ | 1 | $ | 1 | $ | 2 | $ | 8 | $ | 12 | $ | 13 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD)pre-tax |
$ | (5 | ) | $ | | $ | (33 | ) | $ | (1 | ) | $ | (3 | ) | $ | (38 | ) | $ | 35 | $ | 34 | |||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
85.1 | % | 83.1 | % | 83.2 | % | 77.9 | % | 83.8 | % | 84.4 | % | 82.9 | % | 81.8 | % | ||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written |
-3.5 | % | -2.4 | % | -54.6 | % | -5.0 | % | -5.2 | % | -10.5 | % | -1.8 | % | -2.3 | % | ||||||||||||||||
Net premiums earned |
-3.6 | % | -2.9 | % | -37.2 | % | -23.4 | % | -9.8 | % | -6.3 | % | -4.2 | % | -9.1 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written |
59 | % | 67 | % | 69 | % | 81 | % | 62 | % | 62 | % | 65 | % | 67 | % |
(1) | See non-GAAP financial measures for treatment of losses and loss expenses in the P&C combined ratio. |
Insurance - North American Agriculture | Page 8 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars, except ratios) (Unaudited) |
Insurance - Overseas General
Constant $ | YTD | YTD | Full Year | |||||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 3Q-14(1) | 2015 | 2014 | 2014 | ||||||||||||||||||||||||||||
Gross premiums written |
$ | 2,019 | $ | 2,212 | $ | 2,255 | $ | 2,212 | $ | 2,156 | $ | 1,894 | $ | 6,486 | $ | 6,641 | $ | 8,853 | ||||||||||||||||||
Net premiums written |
1,584 | 1,669 | 1,794 | 1,749 | 1,719 | 1,493 | 5,047 | 5,250 | 6,999 | |||||||||||||||||||||||||||
Net premiums earned |
1,615 | 1,644 | 1,637 | 1,758 | 1,726 | 1,498 | 4,896 | 5,047 | 6,805 | |||||||||||||||||||||||||||
Losses and loss expenses |
674 | 816 | 814 | 835 | 707 | 601 | 2,304 | 2,354 | 3,189 | |||||||||||||||||||||||||||
Policy acquisition costs |
405 | 396 | 389 | 419 | 418 | 361 | 1,190 | 1,206 | 1,625 | |||||||||||||||||||||||||||
Administrative expenses |
246 | 254 | 256 | 262 | 258 | 226 | 756 | 764 | 1,026 | |||||||||||||||||||||||||||
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Underwriting income |
290 | 178 | 178 | 242 | 343 | 310 | 646 | 723 | 965 | |||||||||||||||||||||||||||
Net investment income |
132 | 139 | 138 | 147 | 130 | 122 | 409 | 398 | 545 | |||||||||||||||||||||||||||
Interest expense |
1 | 1 | 1 | 2 | 2 | 1 | 3 | 4 | 6 | |||||||||||||||||||||||||||
Other income (expense)operating |
6 | 4 | 2 | 6 | 4 | 4 | 12 | 11 | 18 | |||||||||||||||||||||||||||
Amortization of intangible assets |
12 | 15 | 23 | 21 | 19 | 18 | 50 | 52 | 74 | |||||||||||||||||||||||||||
Income tax expense |
85 | 65 | 53 | 78 | 108 | 100 | 203 | 207 | 285 | |||||||||||||||||||||||||||
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|
|||||||||||||||||||
Operating income |
330 | 240 | 241 | 294 | 348 | 317 | 811 | 869 | 1,163 | |||||||||||||||||||||||||||
Net realized gains (losses) |
(13 | ) | 13 | (10 | ) | (7 | ) | (75 | ) | (10 | ) | (71 | ) | (78 | ) | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
| 3 | 4 | 12 | 9 | 7 | 33 | 45 | ||||||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
(9 | ) | 4 | (1 | ) | 111 | (11 | ) | (6 | ) | (18 | ) | 93 | |||||||||||||||||||||||
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|
|||||||||||||||||||||
Net income |
$ | 326 | $ | 252 | $ | 236 | $ | 188 | $ | 293 | $ | 814 | $ | 849 | $ | 1,037 | ||||||||||||||||||||
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|
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Combined ratio |
||||||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
41.7 | % | 49.7 | % | 49.7 | % | 47.5 | % | 40.9 | % | 47.1 | % | 46.6 | % | 46.9 | % | ||||||||||||||||||||
Policy acquisition cost ratio |
25.1 | % | 24.1 | % | 23.8 | % | 23.8 | % | 24.3 | % | 24.3 | % | 23.9 | % | 23.9 | % | ||||||||||||||||||||
Administrative expense ratio |
15.2 | % | 15.4 | % | 15.6 | % | 15.0 | % | 14.9 | % | 15.4 | % | 15.2 | % | 15.0 | % | ||||||||||||||||||||
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|
|||||||||||||||||||||
Combined ratio |
82.0 | % | 89.2 | % | 89.1 | % | 86.3 | % | 80.1 | % | 86.8 | % | 85.7 | % | 85.8 | % | ||||||||||||||||||||
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|
|||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD |
90.5 | % | 89.8 | % | 90.3 | % | 89.4 | % | 90.5 | % | 90.2 | % | 90.1 | % | 89.9 | % | ||||||||||||||||||||
Catastrophe reinstatement premiumspre-tax |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||||||
Catastrophe lossespre-tax |
$ | 39 | $ | 58 | $ | 5 | $ | 30 | $ | 39 | $ | 102 | $ | 82 | $ | 112 | ||||||||||||||||||||
Favorable prior period development (PPD)pre-tax |
$ | (177 | ) | $ | (68 | ) | $ | (24 | ) | $ | (86 | ) | $ | (219 | ) | $ | (269 | ) | $ | (305 | ) | $ | (391 | ) | ||||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
50.2 | % | 50.3 | % | 50.9 | % | 50.7 | % | 51.3 | % | 50.5 | % | 51.1 | % | 51.0 | % | ||||||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||||||
Net premiums written as reported |
-7.9 | % | -5.1 | % | 1.3 | % | 3.0 | % | 9.4 | % | -3.9 | % | 8.9 | % | 7.4 | % | ||||||||||||||||||||
Net premiums earned as reported |
-6.4 | % | -3.9 | % | 1.6 | % | 3.4 | % | 7.2 | % | -3.0 | % | 9.0 | % | 7.5 | % | ||||||||||||||||||||
Net premiums written constant $ |
6.1 | % | 7.6 | % | 11.0 | % | 8.4 | % | 8.1 | % | 8.3 | % | 9.7 | % | 9.4 | % | ||||||||||||||||||||
Net premiums earned constant $ |
7.8 | % | 9.4 | % | 11.2 | % | 8.8 | % | 6.0 | % | 9.5 | % | 9.9 | % | 9.6 | % | ||||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
78 | % | 75 | % | 80 | % | 79 | % | 80 | % | 78 | % | 79 | % | 79 | % |
(1) | Prior periods on a constant dollar basis. |
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 | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Gross premiums written |
$ | 190 | $ | 292 | $ | 292 | $ | 140 | $ | 213 | $ | 774 | $ | 854 | $ | 994 | ||||||||||||||||
Net premiums written |
185 | 261 | 273 | 141 | 208 | 719 | 794 | 935 | ||||||||||||||||||||||||
Net premiums earned |
203 | 220 | 226 | 226 | 255 | 649 | 800 | 1,026 | ||||||||||||||||||||||||
Losses and loss expenses |
20 | 72 | 99 | 104 | 92 | 191 | 327 | 431 | ||||||||||||||||||||||||
Policy acquisition costs |
52 | 60 | 54 | 56 | 74 | 166 | 201 | 257 | ||||||||||||||||||||||||
Administrative expenses |
12 | 13 | 12 | 13 | 13 | 37 | 41 | 54 | ||||||||||||||||||||||||
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Underwriting income |
119 | 75 | 61 | 53 | 76 | 255 | 231 | 284 | ||||||||||||||||||||||||
Net investment income |
76 | 79 | 75 | 78 | 81 | 230 | 238 | 316 | ||||||||||||||||||||||||
Interest expense |
1 | 1 | 1 | | 1 | 3 | 4 | 4 | ||||||||||||||||||||||||
Other income (expense)operating |
4 | | 1 | 3 | | 5 | 1 | 4 | ||||||||||||||||||||||||
Amortization of intangible assets |
| | | | | | | | ||||||||||||||||||||||||
Income tax expense |
8 | 8 | 8 | 7 | 11 | 24 | 31 | 38 | ||||||||||||||||||||||||
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Operating income |
190 | 145 | 128 | 127 | 145 | 463 | 435 | 562 | ||||||||||||||||||||||||
Net realized gains (losses) |
(14 | ) | 5 | (11 | ) | (12 | ) | 6 | (20 | ) | (17 | ) | (29 | ) | ||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
(2 | ) | 3 | 4 | 12 | 10 | 5 | 38 | 50 | |||||||||||||||||||||||
Income tax expense on net realized gains (losses) |
| (1 | ) | | | | (1 | ) | | | ||||||||||||||||||||||
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Net income |
$ | 174 | $ | 154 | $ | 121 | $ | 127 | $ | 161 | $ | 449 | $ | 456 | $ | 583 | ||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
9.6 | % | 32.9 | % | 43.6 | % | 45.8 | % | 36.2 | % | 29.4 | % | 40.9 | % | 42.0 | % | ||||||||||||||||
Policy acquisition cost ratio |
25.4 | % | 27.2 | % | 24.0 | % | 25.0 | % | 28.8 | % | 25.5 | % | 25.0 | % | 25.0 | % | ||||||||||||||||
Administrative expense ratio |
6.2 | % | 5.6 | % | 5.6 | % | 5.7 | % | 5.2 | % | 5.7 | % | 5.2 | % | 5.3 | % | ||||||||||||||||
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Combined ratio |
41.2 | % | 65.7 | % | 73.2 | % | 76.5 | % | 70.2 | % | 60.6 | % | 71.1 | % | 72.3 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
75.3 | % | 79.6 | % | 75.5 | % | 76.2 | % | 75.7 | % | 76.8 | % | 75.4 | % | 75.6 | % | ||||||||||||||||
Catastrophe reinstatement premiums collectedpre-tax |
$ | | $ | | $ | | $ | 2 | $ | 1 | $ | | $ | 1 | $ | 3 | ||||||||||||||||
Catastrophe lossespre-tax |
$ | 11 | $ | 5 | $ | | $ | 11 | $ | 11 | $ | 16 | $ | 23 | $ | 34 | ||||||||||||||||
Favorable prior period development (PPD)pre-tax |
$ | (78 | ) | $ | (36 | ) | $ | (5 | ) | $ | (9 | ) | $ | (21 | ) | $ | (119 | ) | $ | (54 | ) | $ | (63 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
44.3 | % | 46.7 | % | 46.0 | % | 45.4 | % | 42.8 | % | 45.7 | % | 45.5 | % | 45.5 | % | ||||||||||||||||
% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written as reported |
-11.5 | % | -5.9 | % | -11.4 | % | -9.4 | % | -21.2 | % | -9.5 | % | -5.0 | % | -5.7 | % | ||||||||||||||||
Net premiums earned as reported |
-20.4 | % | -15.5 | % | -20.6 | % | -7.7 | % | 6.3 | % | -18.8 | % | 9.3 | % | 5.1 | % | ||||||||||||||||
Net premiums written constant $ |
-9.5 | % | -3.9 | % | -9.1 | % | -8.8 | % | -21.8 | % | -7.4 | % | -5.2 | % | -5.8 | % | ||||||||||||||||
Net premiums earned constant $ |
-18.1 | % | -13.2 | % | -19.0 | % | -7.1 | % | 5.7 | % | -16.8 | % | 8.9 | % | 4.9 | % | ||||||||||||||||
Other ratios |
||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written |
97 | % | 90 | % | 93 | % | 100 | % | 98 | % | 93 | % | 93 | % | 94 | % |
Global Reinsurance | Page 10 |
![]() |
ACE Limited Segment Results - Consecutive Quarters (in millions of U.S. dollars) (Unaudited) |
Life
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Gross premiums written |
$ | 522 | $ | 529 | $ | 522 | $ | 553 | $ | 528 | $ | 1,573 | $ | 1,576 | $ | 2,129 | ||||||||||||||||
Net premiums written |
492 | 500 | 491 | 523 | 497 | 1,483 | 1,489 | 2,012 | ||||||||||||||||||||||||
Net premiums earned |
480 | 487 | 474 | 499 | 489 | 1,441 | 1,463 | 1,962 | ||||||||||||||||||||||||
Losses and loss expenses |
153 | 137 | 152 | 147 | 145 | 442 | 442 | 589 | ||||||||||||||||||||||||
Policy benefits (1) |
89 | 153 | 142 | 134 | 125 | 384 | 383 | 517 | ||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets (1) |
49 | (6 | ) | (11 | ) | 3 | 6 | 32 | (5 | ) | (2 | ) | ||||||||||||||||||||
Policy acquisition costs |
117 | 118 | 107 | 123 | 123 | 342 | 355 | 478 | ||||||||||||||||||||||||
Administrative expenses |
74 | 74 | 73 | 73 | 71 | 221 | 212 | 285 | ||||||||||||||||||||||||
Net investment income |
66 | 66 | 66 | 69 | 69 | 198 | 199 | 268 | ||||||||||||||||||||||||
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Life underwriting income (2) |
64 | 77 | 77 | 88 | 88 | 218 | 275 | 363 | ||||||||||||||||||||||||
Interest expense |
1 | 2 | 1 | 1 | 4 | 4 | 10 | 11 | ||||||||||||||||||||||||
Other income (expense) - operating (1) |
1 | 1 | (2 | ) | 1 | (1 | ) | | (6 | ) | (5 | ) | ||||||||||||||||||||
Amortization of intangible assets |
| 1 | | 1 | | 1 | 2 | 3 | ||||||||||||||||||||||||
Income tax expense |
7 | 8 | 8 | 11 | 11 | 23 | 36 | 47 | ||||||||||||||||||||||||
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Operating income |
57 | 67 | 66 | 76 | 72 | 190 | 221 | 297 | ||||||||||||||||||||||||
Net realized gains (losses): |
||||||||||||||||||||||||||||||||
Mark-to-market on guaranteed living benefits derivative (net of related hedges) |
(313 | ) | 102 | (57 | ) | (153 | ) | (95 | ) | (268 | ) | (232 | ) | (385 | ) | |||||||||||||||||
Foreign exchange gains (losses) and all other |
(13 | ) | 1 | (2 | ) | 7 | 6 | (14 | ) | (5 | ) | 2 | ||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
12 | 17 | 14 | 6 | 4 | 43 | | 6 | ||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
1 | 2 | 1 | 1 | 1 | 4 | (2 | ) | (1 | ) | ||||||||||||||||||||||
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Net income (loss) |
$ | (258 | ) | $ | 185 | $ | 20 | $ | (65 | ) | $ | (14 | ) | $ | (53 | ) | $ | (14 | ) | $ | (79 | ) | ||||||||||
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% Change versus prior year period |
||||||||||||||||||||||||||||||||
Net premiums written as reported |
-0.8 | % | 0.3 | % | -0.6 | % | 4.0 | % | 3.8 | % | -0.4 | % | 1.4 | % | 2.0 | % | ||||||||||||||||
Net premiums earned as reported |
-1.9 | % | -0.8 | % | -1.9 | % | 3.6 | % | 4.8 | % | -1.5 | % | 2.8 | % | 3.0 | % | ||||||||||||||||
Net premiums written constant $ (3) |
4.4 | % | 4.1 | % | 2.4 | % | 6.2 | % | 4.4 | % | 3.7 | % | 3.3 | % | 4.0 | % | ||||||||||||||||
Net premiums earned constant $ |
3.4 | % | 3.0 | % | 0.9 | % | 5.9 | % | 5.4 | % | 2.4 | % | 4.5 | % | 4.9 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified from Other income (expense) for purposes of presenting Life underwriting income in the Life segment. 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) | International life insurance net premiums written and deposits breakdown (excludes Combined North American and Life reinsurance businesses): |
Constant $ | Constant $ | |||||||||||||||||||||||
% Change | % Change | |||||||||||||||||||||||
Constant $ | 3Q-15 vs. | Constant $ | YTD-15 vs. | |||||||||||||||||||||
3Q-15 | 3Q-14(5) | 3Q-14(5) | YTD-15 | YTD-14(5) | YTD-14(5) | |||||||||||||||||||
International life insurance net premiums written |
$ | 180 | $ | 165 | 8.7 | % | $ | 545 | $ | 510 | 6.9 | % | ||||||||||||
International life insurance deposits (4) |
210 | 233 | -9.6 | % | 726 | 703 | 3.4 | % | ||||||||||||||||
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Total international life insurance net premiums written and deposits |
$ | 390 | $ | 398 | -2.0 | % | $ | 1,271 | $ | 1,213 | 4.8 | % | ||||||||||||
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(4) | Includes deposits collected on universal life and investment contracts. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues. |
(5) | Prior periods on a constant dollar basis. |
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, 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 | |||||||||||||
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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 | |||||||||||||
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Balance at June 30, 2014 |
$ | 37,177 | $ | 10,110 | $ | 27,067 | ||||||||||
Losses and loss expenses incurred |
3,840 | 1,156 | 2,684 | |||||||||||||
Losses and loss expenses paid |
(3,165 | ) | (810 | ) | (2,355 | ) | 88 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(405 | ) | (120 | ) | (285 | ) | ||||||||||
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Balance at September 30, 2014 |
$ | 37,447 | $ | 10,336 | $ | 27,111 | ||||||||||
Losses and loss expenses incurred |
3,442 | 1,026 | 2,416 | |||||||||||||
Losses and loss expenses paid |
(3,307 | ) | (873 | ) | (2,434 | ) | 101 | % | ||||||||
Other (incl. foreign exch. revaluation) |
733 | 818 | (85 | ) | ||||||||||||
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Balance at December 31, 2014 |
$ | 38,315 | $ | 11,307 | $ | 27,008 | ||||||||||
Losses and loss expenses incurred |
2,743 | 621 | 2,122 | |||||||||||||
Losses and loss expenses paid |
(3,062 | ) | (744 | ) | (2,318 | ) | 109 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(670 | ) | (197 | ) | (473 | ) | ||||||||||
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Balance at March 31, 2015 |
$ | 37,326 | $ | 10,987 | $ | 26,339 | ||||||||||
Losses and loss expenses incurred |
3,065 | 648 | 2,417 | |||||||||||||
Losses and loss expenses paid |
(2,830 | ) | (547 | ) | (2,283 | ) | 94 | % | ||||||||
Other (incl. foreign exch. revaluation) |
669 | 60 | 609 | |||||||||||||
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Balance at June 30, 2015 |
$ | 38,230 | $ | 11,148 | $ | 27,082 | ||||||||||
Losses and loss expenses incurred |
3,252 | 609 | 2,643 | |||||||||||||
Losses and loss expenses paid |
(3,391 | ) | (908 | ) | (2,483 | ) | 94 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(527 | ) | (193 | ) | (334 | ) | ||||||||||
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Balance at September 30, 2015 |
$ | 37,564 | $ | 10,656 | $ | 26,908 | ||||||||||
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Add net recoverable on paid losses |
| 575 | (575 | ) | ||||||||||||
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Balance including net recoverable on paid losses |
$ | 37,564 | $ | 11,231 | $ | 26,333 | ||||||||||
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Loss Reserve Rollforward | Page 12 |
![]() |
ACE Limited Reinsurance Recoverable Analysis (in millions of U.S. dollars) (Unaudited) |
Net Reinsurance Recoverable by Division
September 30 | June 30 | March 31 | December 31 | |||||||||||||
2015 | 2015 | 2015 | 2014 | |||||||||||||
Reinsurance recoverable on paid losses and loss expenses |
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Active operations |
$ | 392 | $ | 448 | $ | 413 | $ | 478 | ||||||||
Brandywine and Other Run-off |
284 | 283 | 292 | 313 | ||||||||||||
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Total |
$ | 676 | $ | 731 | $ | 705 | $ | 791 | ||||||||
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Reinsurance recoverable on unpaid losses and loss expenses |
||||||||||||||||
Active operations |
$ | 9,769 | $ | 10,262 | $ | 10,052 | $ | 10,348 | ||||||||
Brandywine and Other Run-off |
1,127 | 1,136 | 1,184 | 1,210 | ||||||||||||
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Total |
$ | 10,896 | $ | 11,398 | $ | 11,236 | $ | 11,558 | ||||||||
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Gross reinsurance recoverable |
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Active operations |
$ | 10,161 | $ | 10,710 | $ | 10,465 | $ | 10,826 | ||||||||
Brandywine and Other Run-off |
1,411 | 1,419 | 1,476 | 1,523 | ||||||||||||
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Total |
$ | 11,572 | $ | 12,129 | $ | 11,941 | $ | 12,349 | ||||||||
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Provision for uncollectible reinsurance (1) |
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Active operations |
$ | (207 | ) | $ | (214 | ) | $ | (213 | ) | $ | (217 | ) | ||||
Brandywine and Other Run-off |
(134 | ) | (140 | ) | (140 | ) | (140 | ) | ||||||||
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Total |
$ | (341 | ) | $ | (354 | ) | $ | (353 | ) | $ | (357 | ) | ||||
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Net reinsurance recoverable |
||||||||||||||||
Active operations |
$ | 9,954 | $ | 10,496 | $ | 10,252 | $ | 10,609 | ||||||||
Brandywine and Other Run-off |
1,277 | 1,279 | 1,336 | 1,383 | ||||||||||||
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Total |
$ | 11,231 | $ | 11,775 | $ | 11,588 | $ | 11,992 | ||||||||
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(1) | The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance, net of usable collateral of approximately $2.4 billion. |
Reinsurance Recoverable | Page 13 |
![]() |
ACE Limited Investment Portfolio (in millions of U.S. dollars) (Unaudited) |
September 30 2015 |
June 30 2015 |
March 31 2015 |
December 31 2014 |
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Market Value |
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Fixed maturities available for sale |
$ | 48,278 | $ | 48,701 | $ | 50,410 | $ | 49,395 | ||||||||||||||||||||||||
Fixed maturities held to maturity |
8,750 | 8,805 | 7,307 | 7,589 | ||||||||||||||||||||||||||||
Short-term investments |
1,808 | 2,062 | 2,536 | 2,322 | ||||||||||||||||||||||||||||
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Total fixed maturities |
$ | 58,836 | $ | 59,568 | $ | 60,253 | $ | 59,306 | ||||||||||||||||||||||||
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Asset Allocation by Market Value |
||||||||||||||||||||||||||||||||
Treasury |
$ | 2,619 | 4 | % | $ | 2,424 | 4 | % | $ | 2,448 | 4 | % | $ | 2,448 | 4 | % | ||||||||||||||||
Agency |
1,040 | 2 | % | 1,139 | 2 | % | 1,221 | 2 | % | 1,222 | 2 | % | ||||||||||||||||||||
Corporate and asset-backed |
20,018 | 34 | % | 20,007 | 34 | % | 20,370 | 34 | % | 19,854 | 34 | % | ||||||||||||||||||||
Mortgage-backed |
12,936 | 22 | % | 12,661 | 21 | % | 12,791 | 21 | % | 12,325 | 21 | % | ||||||||||||||||||||
Municipal |
5,306 | 9 | % | 5,276 | 9 | % | 5,067 | 9 | % | 4,930 | 8 | % | ||||||||||||||||||||
Non-U.S. |
15,109 | 26 | % | 15,999 | 27 | % | 15,820 | 26 | % | 16,205 | 27 | % | ||||||||||||||||||||
Short-term investments |
1,808 | 3 | % | 2,062 | 3 | % | 2,536 | 4 | % | 2,322 | 4 | % | ||||||||||||||||||||
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Total fixed maturities |
$ | 58,836 | 100 | % | $ | 59,568 | 100 | % | $ | 60,253 | 100 | % | $ | 59,306 | 100 | % | ||||||||||||||||
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Credit Quality by Market Value |
||||||||||||||||||||||||||||||||
AAA |
$ | 8,712 | 15 | % | $ | 9,320 | 16 | % | $ | 9,386 | 16 | % | $ | 8,943 | 15 | % | ||||||||||||||||
AA |
21,560 | 37 | % | 21,294 | 36 | % | 21,760 | 36 | % | 21,589 | 36 | % | ||||||||||||||||||||
A |
11,877 | 20 | % | 11,568 | 19 | % | 11,712 | 19 | % | 11,625 | 20 | % | ||||||||||||||||||||
BBB |
8,688 | 15 | % | 8,806 | 15 | % | 8,789 | 15 | % | 8,690 | 15 | % | ||||||||||||||||||||
BB |
4,281 | 7 | % | 4,531 | 8 | % | 4,377 | 7 | % | 4,372 | 7 | % | ||||||||||||||||||||
B |
3,527 | 6 | % | 3,860 | 6 | % | 4,054 | 7 | % | 3,916 | 7 | % | ||||||||||||||||||||
Other |
191 | 0 | % | 189 | 0 | % | 175 | 0 | % | 171 | 0 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total fixed maturities |
$ | 58,836 | 100 | % | $ | 59,568 | 100 | % | $ | 60,253 | 100 | % | $ | 59,306 | 100 | % | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Cost/Amortized Cost |
||||||||||||||||||||||||||||||||
Fixed maturities available for sale |
$ | 47,411 | $ | 47,599 | $ | 48,384 | $ | 47,826 | ||||||||||||||||||||||||
Fixed maturities held to maturity |
8,564 | 8,676 | 6,982 | 7,331 | ||||||||||||||||||||||||||||
Short-term investments |
1,808 | 2,062 | 2,536 | 2,322 | ||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||||||||||||||
Subtotal fixed maturities |
57,783 | 58,337 | 57,902 | 57,479 | ||||||||||||||||||||||||||||
Equity securities |
434 | 433 | 447 | 440 | ||||||||||||||||||||||||||||
Other investments |
2,943 | 2,989 | 3,096 | 2,999 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total investment portfolio |
$ | 61,160 | $ | 61,759 | $ | 61,445 | $ | 60,918 | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||||||||||||||
Avg. duration of fixed maturities |
4.0 years | 4.1 years | 3.9 years | 4.0 years | ||||||||||||||||||||||||||||
Avg. market yield of fixed maturities |
2.9 | % | 2.9 | % | 2.6 | % | 2.8 | % | ||||||||||||||||||||||||
Avg. credit quality |
A/Aa | A/Aa | A/Aa | A/Aa | ||||||||||||||||||||||||||||
Avg. yield on invested assets |
3.6 | % | 3.6 | % | 3.6 | % | 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 September 30, 2015 |
||||||||||||||||||||||||
Agency residential mortgage-backed (RMBS) |
$ | | $ | 10,327 | $ | | $ | | $ | | $ | 10,327 | ||||||||||||
Non-agency RMBS |
26 | 5 | 14 | 8 | 13 | 66 | ||||||||||||||||||
Commercial mortgage-backed |
2,516 | 13 | 14 | | | 2,543 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total mortgage-backed securities at market value |
$ | 2,542 | $ | 10,345 | $ | 28 | $ | 8 | $ | 13 | $ | 12,936 | ||||||||||||
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|
|
|
|
|
|
|
|
|
|
U.S. Corporate and Asset-backed Fixed Income Portfolios
Market Value at September 30, 2015
S&P Credit Rating | ||||||||||||||||||||
Investment Grade | ||||||||||||||||||||
AAA | AA | A | BBB | Total | ||||||||||||||||
Asset-backed |
$ | 754 | $ | 50 | $ | | $ | | $ | 804 | ||||||||||
Banks |
| 18 | 2,207 | 314 | 2,539 | |||||||||||||||
Basic Materials |
| 3 | 92 | 286 | 381 | |||||||||||||||
Communications |
| 58 | 212 | 997 | 1,267 | |||||||||||||||
Consumer, Cyclical |
| 108 | 444 | 512 | 1,064 | |||||||||||||||
Consumer, Non-Cyclical |
53 | 474 | 1,245 | 835 | 2,607 | |||||||||||||||
Diversified Financial Services |
| 44 | 303 | 137 | 484 | |||||||||||||||
Energy |
25 | 35 | 147 | 757 | 964 | |||||||||||||||
Industrial |
| 362 | 456 | 407 | 1,225 | |||||||||||||||
Utilities |
| 10 | 660 | 388 | 1,058 | |||||||||||||||
All Others |
80 | 244 | 562 | 608 | 1,494 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 912 | $ | 1,406 | $ | 6,328 | $ | 5,241 | $ | 13,887 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Market Value at September 30, 2015
S&P Credit Rating | ||||||||||||||||
Below Investment Grade | ||||||||||||||||
BB | B | CCC | Total | |||||||||||||
Asset-backed |
$ | | $ | 3 | $ | 10 | $ | 13 | ||||||||
Banks |
3 | 4 | | 7 | ||||||||||||
Basic Materials |
139 | 90 | 2 | 231 | ||||||||||||
Communications |
582 | 477 | 11 | 1,070 | ||||||||||||
Consumer, Cyclical |
595 | 514 | 27 | 1,136 | ||||||||||||
Consumer, Non-Cyclical |
530 | 792 | 29 | 1,351 | ||||||||||||
Diversified Financial Services |
141 | 45 | | 186 | ||||||||||||
Energy |
373 | 141 | 10 | 524 | ||||||||||||
Industrial |
342 | 329 | 16 | 687 | ||||||||||||
Utilities |
207 | 66 | | 273 | ||||||||||||
All Others |
270 | 366 | 17 | 653 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 3,182 | $ | 2,827 | $ | 122 | $ | 6,131 | ||||||||
|
|
|
|
|
|
|
|
Investments 2 | Page 15 |
![]() |
ACE Limited Investment Portfolio - 3 (in millions of U.S. dollars) (Unaudited) |
Non-U.S. Fixed Income Portfolio
September 30, 2015
Non-U.S. Government Securities
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
United Kingdom |
$ | 991 | $ | | $ | | $ | | $ | | $ | 991 | ||||||||||||
Republic of Korea |
| 897 | | | | 897 | ||||||||||||||||||
Federative Republic of Brazil |
| | | 545 | 28 | 573 | ||||||||||||||||||
United Mexican States |
| | 393 | 118 | | 511 | ||||||||||||||||||
Canada |
435 | | | | | 435 | ||||||||||||||||||
Kingdom of Thailand |
| | 356 | | | 356 | ||||||||||||||||||
Province of Ontario |
| | 340 | | | 340 | ||||||||||||||||||
Province of Quebec |
| | 237 | | | 237 | ||||||||||||||||||
Japan |
| | 203 | | | 203 | ||||||||||||||||||
Australia |
187 | | | | | 187 | ||||||||||||||||||
Other Non-U.S. Government Securities |
515 | 848 | 254 | 319 | 501 | 2,437 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 2,128 | $ | 1,745 | $ | 1,783 | $ | 982 | $ | 529 | $ | 7,167 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Non-U.S. Corporate Securities
|
||||||||||||||||||||||||
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
United Kingdom |
$ | 114 | $ | 44 | $ | 608 | $ | 571 | $ | 190 | $ | 1,527 | ||||||||||||
Canada |
89 | 134 | 222 | 316 | 182 | 943 | ||||||||||||||||||
United States (1) |
1 | 84 | 106 | 224 | 187 | 602 | ||||||||||||||||||
France |
34 | 64 | 224 | 174 | 30 | 526 | ||||||||||||||||||
Australia |
76 | 77 | 249 | 96 | 22 | 520 | ||||||||||||||||||
Netherlands |
24 | 125 | 164 | 130 | 56 | 499 | ||||||||||||||||||
Germany |
80 | 18 | 131 | 130 | 19 | 378 | ||||||||||||||||||
Switzerland |
39 | 16 | 98 | 114 | 33 | 300 | ||||||||||||||||||
China |
| 146 | 79 | 29 | 11 | 265 | ||||||||||||||||||
Hong Kong |
9 | 5 | 146 | 7 | 4 | 171 | ||||||||||||||||||
Other Non-U.S. Corporate Securities |
251 | 278 | 639 | 558 | 485 | 2,211 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 717 | $ | 991 | $ | 2,666 | $ | 2,349 | $ | 1,219 | $ | 7,942 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) 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
September 30, 2015 |
Market Value | Rating | ||||||
1 | JP Morgan Chase & Co | $ | 475 | A | ||||
2 | General Electric Co | 455 | AA+ | |||||
3 | Goldman Sachs Group Inc | 329 | A- | |||||
4 | AT&T INC | 294 | BBB+ | |||||
5 | Wells Fargo & Co | 268 | A+ | |||||
6 | Bank of America Corp | 238 | A- | |||||
7 | Verizon Communications Inc | 236 | BBB+ | |||||
8 | Morgan Stanley | 229 | A- | |||||
9 | HSBC Holdings Plc | 228 | A | |||||
10 | Ford Motor Co | 210 | BBB- |
Investments 4 | Page 17 |
![]() |
ACE Limited Net Realized and Unrealized Gains (Losses) (in millions of U.S. dollars) (Unaudited) |
Three months ended September 30, 2015 | Nine months ended September 30, 2015 | |||||||||||||||||||||||
Net Realized | Net Unrealized | Net Realized | Net Unrealized | |||||||||||||||||||||
Gains | Gains | Net | Gains | Gains | Net | |||||||||||||||||||
(Losses) (1) | (Losses) | Impact | (Losses) (1) | (Losses) | Impact | |||||||||||||||||||
Fixed maturities |
$ | (51 | ) | $ | (237 | ) | $ | (288 | ) | $ | (50 | ) | $ | (630 | ) | $ | (680 | ) | ||||||
Fixed income derivatives |
(22 | ) | | (22 | ) | 6 | | 6 | ||||||||||||||||
Public equity |
2 | (34 | ) | (32 | ) | 32 | (40 | ) | (8 | ) | ||||||||||||||
Private equity |
9 | (12 | ) | (3 | ) | 49 | (19 | ) | 30 | |||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total investment portfolio |
(62 | ) | (283 | ) | (345 | ) | 37 | (689 | ) | (652 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges (2) |
(313 | ) | | (313 | ) | (268 | ) | | (268 | ) | ||||||||||||||
Foreign exchange (3) |
(2 | ) | (575 | ) | (577 | ) | (73 | ) | (860 | ) | (933 | ) | ||||||||||||
Partially-owned entities (4) |
14 | 10 | 24 | 45 | 10 | 55 | ||||||||||||||||||
Other |
(5 | ) | 4 | (1 | ) | (11 | ) | 11 | | |||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net gains (losses) before tax |
(368 | ) | (844 | ) | (1,212 | ) | (270 | ) | (1,528 | ) | (1,798 | ) | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income tax expense (benefit) |
(6 | ) | (45 | ) | (51 | ) | 2 | (145 | ) | (143 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net gains (losses) |
$ | (362 | ) | $ | (799 | ) | $ | (1,161 | ) | $ | (272 | ) | $ | (1,383 | ) | $ | (1,655 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Other-than-temporary impairments for the quarter includes $26 million for fixed maturities, $3 million for public equity and $1 million for private equity. Year to date other-than-temporary impairments includes $46 million for fixed maturities, $4 million for public equities and $1 million for private equity. |
(2) | The quarter and year to date include $83 million and $69 million, respectively, of gains on applicable hedges. |
(3) | Unrealized foreign exchange loss, after-tax, for the quarter was $547 million. Unrealized foreign exchange loss, after-tax, year to date was $825 million. |
(4) | 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 September 30, 2014 | Nine months ended September 30, 2014 | |||||||||||||||||||||||
Net Realized | Net Unrealized | Net Realized | Net Unrealized | |||||||||||||||||||||
Gains | Gains | Net | Gains | Gains | Net | |||||||||||||||||||
(Losses) (5) | (Losses) | Impact | (Losses) (5) | (Losses) | Impact | |||||||||||||||||||
Fixed maturities |
$ | 18 | $ | (361 | ) | $ | (343 | ) | $ | 49 | $ | 638 | $ | 687 | ||||||||||
Fixed income derivatives |
(13 | ) | | (13 | ) | (53 | ) | | (53 | ) | ||||||||||||||
Public equity |
(56 | ) | 36 | (20 | ) | (60 | ) | 70 | 10 | |||||||||||||||
Private equity |
51 | (5 | ) | 46 | 143 | 43 | 186 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total investment portfolio |
| (330 | ) | (330 | ) | 79 | 751 | 830 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges (6) |
(95 | ) | | (95 | ) | (232 | ) | | (232 | ) | ||||||||||||||
Foreign exchange (7) |
(19 | ) | (251 | ) | (270 | ) | (42 | ) | (131 | ) | (173 | ) | ||||||||||||
Partially-owned entities (8) |
4 | (7 | ) | (3 | ) | (4 | ) | (7 | ) | (11 | ) | |||||||||||||
Other |
| 7 | 7 | (7 | ) | (6 | ) | (13 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net gains (losses) before tax |
(110 | ) | (581 | ) | (691 | ) | (206 | ) | 607 | 401 | ||||||||||||||
Income tax expense (benefit) |
(4 | ) | (94 | ) | (98 | ) | (11 | ) | 151 | 140 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net gains (losses) |
$ | (106 | ) | $ | (487 | ) | $ | (593 | ) | $ | (195 | ) | $ | 456 | $ | 261 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(5) | Other-than-temporary impairments for the quarter includes $4 million for fixed maturities. Year to date other-than-temporary impairments includes $17 million for fixed maturities, $3 million for private equity, and $7 million for public equity. |
(6) | The quarter and year to date include $15 million and $106 million, respectively, of losses on applicable hedges. |
(7) | Unrealized foreign exchange loss, after-tax, for the quarter and year to date were $202 million and $124 million, respectively. |
(8) | 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). |
Net Gains (Losses) | Page 18 |
![]() |
ACE Limited Capital Structure (in millions of U.S. dollars, except ratios) (Unaudited) |
September 30 | June 30 | March 31 | December 31 | December 31 | ||||||||||||||||
2015 | 2015 | 2015 | 2014 | 2013 | ||||||||||||||||
Total short-term debt (1) (2) |
$ | 2,103 | $ | 2,102 | $ | 2,552 | $ | 2,552 | $ | 1,901 | ||||||||||
Total long-term debt |
4,157 | 4,157 | 4,157 | 3,357 | 3,807 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total debt |
$ | 6,260 | $ | 6,259 | $ | 6,709 | $ | 5,909 | $ | 5,708 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total trust preferred securities |
$ | 309 | $ | 309 | $ | 309 | $ | 309 | $ | 309 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total shareholders equity |
$ | 29,127 | $ | 29,555 | $ | 29,702 | $ | 29,587 | $ | 28,825 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total capitalization |
$ | 35,696 | $ | 36,123 | $ | 36,720 | $ | 35,805 | $ | 34,842 | ||||||||||
Tangible capital (3) |
$ | 29,983 | $ | 30,154 | $ | 31,204 | $ | 30,081 | $ | 29,438 | ||||||||||
Leverage ratios |
||||||||||||||||||||
Debt/ total capitalization |
17.5 | % | 17.3 | % | 18.3 | % | 16.5 | % | 16.4 | % | ||||||||||
Debt plus trust preferred securities/ total capitalization |
18.4 | % | 18.2 | % | 19.1 | % | 17.4 | % | 17.3 | % | ||||||||||
Debt/ tangible capital |
20.9 | % | 20.8 | % | 21.5 | % | 19.6 | % | 19.4 | % | ||||||||||
Debt plus trust preferred securities/ tangible capital |
21.9 | % | 21.8 | % | 22.5 | % | 20.7 | % | 20.4 | % |
Note: As of September 30, 2015, there was $0.5 billion usage of credit facilities on a total commitment of $1.0 billion.
(1) | In May 2015, $450 million of 5.6 percent senior notes matured and were fully paid. In November 2015, $700 million of 2.6 percent senior notes will mature and are expected to be fully paid using proceeds from the issuance of $700 million of 3.35 percent senior notes in May 2014. |
(2) | Repurchase agreements in the amount of $150 million matured during the quarter, and there were new repurchase agreements in the amount of $151 million. |
(3) | Tangible capital is equal to total capitalization less goodwill and other intangible assets. |
Capital Structure | Page 19 |
![]() |
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 September 30 | Nine months ended September 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Numerator |
||||||||||||||||
Operating income to common shares |
$ | 897 | $ | 891 | $ | 2,430 | $ | 2,493 | ||||||||
Chubb integration expenses, net of tax |
(7 | ) | | (7 | ) | | ||||||||||
Adjusted net realized gains (losses), net of tax |
(362 | ) | (106 | ) | (272 | ) | (195 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 528 | $ | 785 | $ | 2,151 | $ | 2,298 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Rollforward of Common Shares Outstanding |
||||||||||||||||
Shares - beginning of period |
323,814,281 | 336,225,589 | 328,659,686 | 339,793,935 | ||||||||||||
Repurchase of shares |
| (4,349,302 | ) | (6,677,663 | ) | (10,143,184 | ) | |||||||||
Shares issued, excluding option exercises |
(78,863 | ) | (41,637 | ) | 1,039,238 | 1,270,038 | ||||||||||
Issued for option exercises |
326,950 | 276,907 | 1,041,107 | 1,190,768 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Shares - end of period |
324,062,368 | 332,111,557 | 324,062,368 | 332,111,557 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Denominator |
||||||||||||||||
Weighted average shares outstanding |
324,210,936 | 334,472,324 | 325,904,502 | 337,083,498 | ||||||||||||
Effect of other dilutive securities |
2,962,484 | 3,201,656 | 3,269,724 | 3,298,569 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adj. wtd. avg. shares outstanding and assumed conversions |
327,173,420 | 337,673,980 | 329,174,226 | 340,382,067 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per share |
||||||||||||||||
Operating income |
$ | 2.77 | $ | 2.66 | $ | 7.46 | $ | 7.40 | ||||||||
Chubb integration expenses, net of tax |
(0.02 | ) | | (0.02 | ) | | ||||||||||
Adjusted net realized gains (losses), net of tax |
(1.12 | ) | (0.31 | ) | (0.84 | ) | (0.58 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 1.63 | $ | 2.35 | $ | 6.60 | $ | 6.82 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
||||||||||||||||
Operating income |
$ | 2.74 | $ | 2.64 | $ | 7.38 | $ | 7.32 | ||||||||
Chubb integration expenses, net of tax |
(0.02 | ) | | (0.02 | ) | | ||||||||||
Adjusted net realized gains (losses), net of tax |
(1.10 | ) | (0.32 | ) | (0.83 | ) | (0.57 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 1.62 | $ | 2.32 | $ | 6.53 | $ | 6.75 | ||||||||
|
|
|
|
|
|
|
|
Earnings per share | Page 20 |
![]() |
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
September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||
2015 | 2015 | 2015 | 2014 | 2014 | ||||||||||||||||
Shareholders equity |
$ | 29,127 | $ | 29,555 | $ | 29,702 | $ | 29,587 | $ | 30,017 | ||||||||||
Less: goodwill and other intangible assets |
5,713 | 5,969 | 5,516 | 5,724 | 5,425 | |||||||||||||||
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Numerator for tangible book value per share |
$ | 23,414 | $ | 23,586 | $ | 24,186 | $ | 23,863 | $ | 24,592 | ||||||||||
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Book value - % change over prior quarter |
-1.4 | % | -0.5 | % | 0.4 | % | -1.4 | % | -1.0 | % | ||||||||||
Tangible book value - % change over prior quarter |
-0.7 | % | -2.5 | % | 1.4 | % | -3.0 | % | -0.8 | % | ||||||||||
Denominator |
324,062,368 | 323,814,281 | 327,084,762 | 328,659,686 | 332,111,557 | |||||||||||||||
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Book value per common share |
$ | 89.88 | $ | 91.27 | $ | 90.81 | $ | 90.02 | $ | 90.38 | ||||||||||
Tangible book value per common share |
$ | 72.25 | $ | 72.84 | $ | 73.94 | $ | 72.61 | $ | 74.05 | ||||||||||
Reconciliation of Book Value |
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Shareholders equity, beginning of quarter |
$ | 29,555 | $ | 29,702 | $ | 29,587 | $ | 30,017 | $ | 30,325 | ||||||||||
Operating income |
897 | 788 | 745 | 827 | 891 | |||||||||||||||
Chubb integration expenses, net of tax |
(7 | ) | | | | | ||||||||||||||
Adjusted net realized gains (losses), net of tax |
(362 | ) | 154 | (64 | ) | (272 | ) | (106 | ) | |||||||||||
Net unrealized gains (losses), net of tax |
(255 | ) | (672 | ) | 361 | 94 | (290 | ) | ||||||||||||
Repurchase of shares |
| (394 | ) | (340 | ) | (430 | ) | (450 | ) | |||||||||||
Dividend declared on common shares |
(218 | ) | (217 | ) | (222 | ) | (223 | ) | (223 | ) | ||||||||||
Cumulative translation, net of tax |
(547 | ) | 132 | (410 | ) | (520 | ) | (202 | ) | |||||||||||
Pension liability |
3 | (5 | ) | 10 | 9 | 5 | ||||||||||||||
Other (1) |
61 | 67 | 35 | 85 | 67 | |||||||||||||||
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$ | 29,127 | $ | 29,555 | $ | 29,702 | $ | 29,587 | $ | 30,017 | |||||||||||
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(1) | Other primarily includes proceeds from exercise of stock options and stock compensation. |
Reconciliation Book Value | Page 21 |
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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 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 gains and losses on 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 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. A reconciliation of GAAP combined ratio to P&C combined ratio is provided on page 24.
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) 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 a 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. We also exclude Chubb integration expenses related to the planned acquisition due to the size and complexity of this acquisition. These integration expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration expenses facilitates the comparison of our financial results to our historical operating results. These expenses include legal and professional fees and all costs directly related to the integration activities of the planned Chubb acquisition. 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. A reconciliation of Consolidated Other income (expense) on a GAAP basis to Consolidated Other income (expense) - operating is provided on page 24.
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.
International life insurance net premiums written and deposits collected, 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 insurance business because new life deposits are an important component of production and key to our efforts to grow our business.
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 21. Tangible book value per common share excluding 2014 acquisitions 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 acquisition of the Firemans Fund high net worth personal lines insurance business in the United States in order to adjust for the distortive effect of acquisitions. In addition, we disclose per share measures that exclude the impact of foreign currency fluctuations during 2015 in order to adjust for the distortive effects of fluctuations in exchange rates.
Reconciliation Non-GAAP | Page 22 |
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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)
Operating income
Operating income is a common performance measure for insurance companies and is presented throughout this report.
The following table presents the reconciliation of Net income to Operating income:
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Net income, as reported |
$ | 528 | $ | 942 | $ | 681 | $ | 555 | $ | 785 | $ | 2,151 | $ | 2,298 | $ | 2,853 | ||||||||||||||||
Chubb integration expenses, net of tax |
(7 | ) | | | | | (7 | ) | | | ||||||||||||||||||||||
Adjusted net realized gains (losses) |
(393 | ) | 128 | (89 | ) | (210 | ) | (165 | ) | (354 | ) | (348 | ) | (558 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities (1) |
25 | 33 | 26 | 49 | 55 | 84 | 142 | 191 | ||||||||||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
(6 | ) | 7 | 1 | 111 | (4 | ) | 2 | (11 | ) | 100 | |||||||||||||||||||||
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Operating income |
$ | 897 | $ | 788 | $ | 745 | $ | 827 | $ | 891 | $ | 2,430 | $ | 2,493 | $ | 3,320 | ||||||||||||||||
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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 Operating income (loss) of each segment and Corporate:
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Insurance North American P&C |
$ | 326 | $ | 395 | $ | 345 | $ | 372 | $ | 337 | $ | 1,066 | $ | 1,126 | $ | 1,498 | ||||||||||||||||
Insurance Overseas General |
330 | 240 | 241 | 294 | 348 | 811 | 869 | 1,163 | ||||||||||||||||||||||||
Global Reinsurance |
190 | 145 | 128 | 127 | 145 | 463 | 435 | 562 | ||||||||||||||||||||||||
Corporate |
(62 | ) | (74 | ) | (70 | ) | (87 | ) | (68 | ) | (206 | ) | (209 | ) | (296 | ) | ||||||||||||||||
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Global P&C (including Corporate) |
784 | 706 | 644 | 706 | 762 | 2,134 | 2,221 | 2,927 | ||||||||||||||||||||||||
Insurance North American Agriculture |
56 | 15 | 35 | 45 | 57 | 106 | 51 | 96 | ||||||||||||||||||||||||
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Consolidated Results (including Corporate) Excluding Life Segment |
840 | 721 | 679 | 751 | 819 | 2,240 | 2,272 | 3,023 | ||||||||||||||||||||||||
Life |
57 | 67 | 66 | 76 | 72 | 190 | 221 | 297 | ||||||||||||||||||||||||
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Consolidated operating income |
$ | 897 | $ | 788 | $ | 745 | $ | 827 | $ | 891 | $ | 2,430 | $ | 2,493 | $ | 3,320 | ||||||||||||||||
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Operating ROE
The following table presents the reconciliation of ROE to Operating ROE:
YTD | YTD | Full Year | ||||||||||||||||||
3Q-15 | 3Q-14 | 2015 | 2014 | 2014 | ||||||||||||||||
Net income |
$ | 528 | $ | 785 | $ | 2,151 | $ | 2,298 | $ | 2,853 | ||||||||||
Operating income |
$ | 897 | $ | 891 | $ | 2,430 | $ | 2,493 | $ | 3,320 | ||||||||||
Equity - beginning of period, as reported |
$ | 29,555 | $ | 30,325 | $ | 29,587 | $ | 28,825 | $ | 28,825 | ||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax |
1,540 | 2,047 | 1,851 | 1,174 | 1,174 | |||||||||||||||
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Equity - beginning of period, as adjusted |
$ | 28,015 | $ | 28,278 | $ | 27,736 | $ | 27,651 | $ | 27,651 | ||||||||||
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Equity - end of period, as reported |
$ | 29,127 | $ | 30,017 | $ | 29,127 | $ | 30,017 | $ | 29,587 | ||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax |
1,285 | 1,757 | 1,285 | 1,757 | 1,851 | |||||||||||||||
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Equity - end of period, as adjusted |
$ | 27,842 | $ | 28,260 | $ | 27,842 | $ | 28,260 | $ | 27,736 | ||||||||||
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Average equity, as reported |
$ | 29,341 | $ | 30,171 | $ | 29,357 | $ | 29,421 | $ | 29,206 | ||||||||||
Average equity, as adjusted |
$ | 27,929 | $ | 28,269 | $ | 27,789 | $ | 27,956 | $ | 27,694 | ||||||||||
Operating ROE |
12.9 | % | 12.6 | % | 11.7 | % | 11.9 | % | 12.0 | % | ||||||||||
ROE |
7.2 | % | 10.4 | % | 9.8 | % | 10.4 | % | 9.8 | % |
Reconciliation Non-GAAP 2 | Page 23 |
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ACE Limited Non-GAAP Financial Measures - 3 (in millions of U.S. dollars, except ratios) (Unaudited) |
Regulation G - Non-GAAP Financial Measures (continued)
Operating effective tax rate
The following table presents the reconciliation of effective tax rate to the operating effective tax rate:
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Tax expense, as reported |
$ | 134 | $ | 143 | $ | 120 | $ | 232 | $ | 176 | $ | 397 | $ | 402 | $ | 634 | ||||||||||||||||
Tax expense (benefit) on Chubb integration expenses |
(2 | ) | | | | | (2 | ) | | | ||||||||||||||||||||||
Tax expense (benefit) on adjusted net realized gains (losses) |
(6 | ) | 7 | 1 | 111 | (4 | ) | 2 | (11 | ) | 100 | |||||||||||||||||||||
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Tax expense, adjusted |
$ | 142 | $ | 136 | $ | 119 | $ | 121 | $ | 180 | $ | 397 | $ | 413 | $ | 534 | ||||||||||||||||
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Income before tax, as reported |
$ | 662 | $ | 1,085 | $ | 801 | $ | 787 | $ | 961 | $ | 2,548 | $ | 2,700 | $ | 3,487 | ||||||||||||||||
Less: Chubb integration expenses |
(9 | ) | | | | | (9 | ) | | | ||||||||||||||||||||||
Less: adjusted realized gains (losses) |
(393 | ) | 128 | (89 | ) | (210 | ) | (165 | ) | (354 | ) | (348 | ) | (558 | ) | |||||||||||||||||
Less: realized gains (losses) related to unconsolidated entities |
25 | 33 | 26 | 49 | 55 | 84 | 142 | 191 | ||||||||||||||||||||||||
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Operating income before tax |
$ | 1,039 | $ | 924 | $ | 864 | $ | 948 | $ | 1,071 | $ | 2,827 | $ | 2,906 | $ | 3,854 | ||||||||||||||||
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Effective tax rate |
20.0 | % | 13.2 | % | 15.0 | % | 29.5 | % | 18.3 | % | 15.5 | % | 14.9 | % | 18.2 | % | ||||||||||||||||
Adjustment for tax impact of Chubb integration expenses |
-0.1 | % | | | | | 0.0 | % | | | ||||||||||||||||||||||
Adjustment for tax impact of adjusted net realized gains (losses) |
-6.4 | % | 1.5 | % | -1.3 | % | -16.8 | % | -1.4 | % | -1.5 | % | -0.7 | % | -4.3 | % | ||||||||||||||||
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Operating effective tax rate |
13.5 | % | 14.7 | % | 13.7 | % | 12.7 | % | 16.9 | % | 14.0 | % | 14.2 | % | 13.9 | % | ||||||||||||||||
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Other income (expense) - operating
The following table presents the reconciliation of Consolidated Other income (expense) on a GAAP basis to Consolidated Other income (expense) - operating. Other income (expense) operating is a non-GAAP financial measure which excludes gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP and the portion of net realized gains and losses related to unconsolidated entities. Gains (losses) from fair value changes in separate account assets are reclassified from Other income (expense) for purposes of presenting Life underwriting income, as the offsetting movement in the separate account liabilities is included in Policy benefits. Net realized gains (losses) related to unconsolidated entities is excluded from operating income in order to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.
Note: Effective Q3 2015, amortization of intangible assets (previously reported in Other income (expense) - operating) are now reported separately. Prior year amounts are reclassified to conform to the current year presentation.
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
Consolidated GAAP Other income (expense): |
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Consolidated excluding Life segment |
$ | 24 | $ | 14 | $ | 12 | $ | 47 | $ | 49 | $ | 50 | $ | 140 | $ | 187 | ||||||||||||||||
Life segment |
(36 | ) | 24 | 23 | 4 | (3 | ) | 11 | (1 | ) | 3 | |||||||||||||||||||||
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Consolidated |
(12 | ) | 38 | 35 | 51 | 46 | 61 | 139 | 190 | |||||||||||||||||||||||
Less: Gains (losses) from fair value changes in separate account assets |
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Consolidated excluding Life segment |
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Life segment |
(49 | ) | 6 | 11 | (3 | ) | (6 | ) | (32 | ) | 5 | 2 | ||||||||||||||||||||
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Consolidated |
(49 | ) | 6 | 11 | (3 | ) | (6 | ) | (32 | ) | 5 | 2 | ||||||||||||||||||||
Less: Net realized gains (losses) related to unconsolidated entities |
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Consolidated excluding Life segment |
13 | 16 | 12 | 43 | 51 | 41 | 142 | 185 | ||||||||||||||||||||||||
Life segment |
12 | 17 | 14 | 6 | 4 | 43 | | 6 | ||||||||||||||||||||||||
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Consolidated |
25 | 33 | 26 | 49 | 55 | 84 | 142 | 191 | ||||||||||||||||||||||||
Consolidated Other income (expense) - operating: |
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Consolidated excluding Life segment |
11 | (2 | ) | | 4 | (2 | ) | 9 | (2 | ) | 2 | |||||||||||||||||||||
Life segment |
1 | 1 | (2 | ) | 1 | (1 | ) | | (6 | ) | (5 | ) | ||||||||||||||||||||
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Consolidated |
$ | 12 | $ | (1 | ) | $ | (2 | ) | $ | 5 | $ | (3 | ) | $ | 9 | $ | (8 | ) | $ | (3 | ) | |||||||||||
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P&C combined ratio
The following table presents the reconciliation of GAAP combined ratio to P&C combined ratio. The P&C combined ratio includes the impact of realized gains and losses 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 gains and losses on these derivatives as part of the results of our underwriting operations.
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-15 | 2Q-15 | 1Q-15 | 4Q-14 | 3Q-14 | 2015 | 2014 | 2014 | |||||||||||||||||||||||||
GAAP combined ratio |
85.8 | % | 87.6 | % | 88.4 | % | 88.5 | % | 87.3 | % | 87.2 | % | 87.9 | % | 88.1 | % | ||||||||||||||||
Impact of gains and losses on crop derivatives |
0.1 | % | 0.1 | % | 0.0 | % | 0.0 | % | -1.0 | % | 0.0 | % | -0.4 | % | -0.4 | % | ||||||||||||||||
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P&C combined ratio |
85.9 | % | 87.7 | % | 88.4 | % | 88.5 | % | 86.3 | % | 87.2 | % | 87.5 | % | 87.7 | % | ||||||||||||||||
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Reconciliation Non-GAAP 3 | Page 24 |
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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 Chubb integration expenses, net of tax and adjusted net realized gains (losses), net of tax: Operating income or income excluding Chubb integration expenses and 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.
Chubb integration expenses, net of tax: Chubb integration expenses comprise legal and professional fees and all other costs directly related to the integration activities of the planned Chubb acquisition.
Glossary | Page 25 |
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