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ACE Life Segment Fell on Lower 3Q15 Accident and Health Business

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Life segment

ACE’s (ACE) Life segment reported an 0.8% decline in net premiums written in 3Q15. The division’s net premium written fell to $492 million in 3Q15 as compared to $497 million in the corresponding quarter last year and $500 million the previous quarter. The division’s net investment income fell by 4.3% to $66 million. The operating income stood at $57 million compared with $72 million. The decrease was mainly due to unfavorable reserve development in the current quarter of $5 million after tax in the accident and health business.

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Life reinsurance

ACE’s Life reinsurance business also fell, reflecting the run-off of the company’s variable annuity reinsurance business. Its operating income was impacted by unfavorable foreign currency movement. International life insurance net premiums written and deposits collected rose 4.8% on a constant dollar basis for the year. International business is benefiting from higher policy sales in Hong Kong, China, India, and other Asian countries.

The division’s underwriting income fell by 27% to $64 million in 3Q15 as compared to $88 million in the corresponding quarter last year. The fall was due to lower premium income, investment income, and higher loss expenses.

ACE Life provides traditional life insurance protection and savings products to retail and corporate clients primarily in Asia and Latin America. The North American operations of combined insurance distribute specialty individual accident and supplemental health insurance products predominantly through captive agents to middle-income consumers in the US and Canada.

ACE reported net profit margins of 14.8% in the last fiscal year. Let’s compare this to the company’s competitors:

  • AIG (AIG) reported net profit margins of 11.7%.
  • Allstate (ALL) reported net profit margins of 8.0%.
  • Chubb (CB) reported net profit margins of 14.9%.

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

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