UPDATE 1-Insurer ACE beats estimates, boosts forecast on rising rates

Mon Apr 22, 2013 5:43pm EDT

* Expects FY earnings $7.10-$7.50 per share vs est $7.85

* Q1 operating income $746 million, or $2.17 per share

* Net earned premium up 6 pct at $3.80 bln

* Shares up more than 2 pt after the bell

April 22 (Reuters) - Insurer ACE Ltd reported a quarterly profit that beat analysts' estimates as commercial insurance rates continued to improve in the United States, and it raised its profit expectations for the year.

After at least half a decade of soft pricing, commercial insurance rates have started to firm up as insurers try to protect their margins from low interest rates and catastrophe losses.

ACE shares were up more than 2 percent after the bell.

The company's net income fell to $953 million, or $2.77 per share, from $973 million, or $2.84 per share, a year earlier, as it booked lower investment gains in the first quarter.

The company's operating income of $2.17 per share, however, came well above analysts' estimates of $1.94.

ACE said net earned premium rose 6 percent to $3.80 billion.

"We are taking full advantage of the improved commercial P&C pricing environment in the U.S. and our strong presence in areas of the world where economic fundamentals are superior, such as Asia and Latin America," Chief Executive Evan Greenberg said in a statement.

Property & casualty combined ratio, the percentage of premium revenue an insurer has to pay out in claims, also fell marginally to 88.2 percent from 89.2 percent.

However, low interest rates continued to take a toll on the company's net investment income, which fell more than 2 percent to $531 million.

For the current year, the insurer said it expected operating income of between $7.10 and $7.50 per share, due to lower losses from catastrophes and accidents. It had forecast operating profit of $6.60 to $7.00 per share.

The company's revised forecast still fell below market expectations of $7.85 per share.

ACE shares have gained about 9 percent since the beginning of the year while the wider Thomson Reuters United States Property & Casualty Insurance Index has more than doubled.

Shares of the Zurich-based insurer closed at $89.24 on the New York Stock Exchange on Monday.