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ACE Global Reinsurance Benefited from Lower Claims in 3Q15

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Oct. 29 2015, Updated 8:05 p.m. ET

Global Reinsurance segment

ACE’s (ACE) Global Reinsurance segment reported a decline in net premiums written of 11.5% or 9.5% on a constant dollar basis. The division’s net premium written fell to $185 million in 3Q15 as compared to $208 million in the corresponding quarter last year and $261 million the previous quarter. The division’s net investment income fell by 6.2% to $76 million. The decline in earnings was mainly due to increased competition from existing and new players around the world.

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ACE Tempest Re

ACE markets its reinsurance offerings under the brand name “ACE Tempest Re.” Its offerings include property and casualty reinsurance products to a diverse array of primary insurers. Business units include ACE Tempest Re Bermuda, ACE Tempest Re USA, ACE Tempest Re Canada, and ACE Tempest Re International.

The division’s combined ratio was 41.2% in 3Q15 as compared to 70.2% in the corresponding quarter last year. The current accident year combined ratio excluding catastrophe losses was 75.3% compared with 75.7%. The combined ratio fell due to lower loss ratio of 9.6% as compared to 36.2% and policy acquisition cost ratio of 25.4% as compared to 28.8%. The division’s net income increased by 8.1% to $174 million in 3Q15 on lower claims in comparison to 3Q14.

ACE Tempest Re is a P&C underwriting specialist with more than 25 years of experience in all market cycles. In addition, a global footprint and diverse product offerings allow the company to select preferred business with a concentration in short tail casualty and property lines, where the competitive pressures are not as high as in the general marketplace.

ACE reported operating profit margin of 18.4% in the last fiscal year. Let’s compare this to the company’s competitors:

  • AIG (AIG) reported operating profit margin of 15.5%.
  • Allstate (ALL) reported operating profit margin of 11.9%.
  • Chubb (CB) reported operating profit margin of 20.3%.

Together these companies form 0.88% of the Vanguard Dividend Appreciation ETF (VIG).

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