* Expects 2013 oper profit of $6.60-$7.00/shr vs est $7.89
* 4th-qtr operating profit $1.43 vs $1.90 a year earlier
* After-tax catastrophe losses triple to $400 million
* Shares fall 5 pct in extended trading
By Ashutosh Pandey
Jan 29 Insurer ACE Ltd reported a 24
percent fall in quarterly operating profit, hurt by losses
related to superstorm Sandy, and forecast a full-year profit
below analysts' estimates.
After-tax catastrophe losses tripled to $400 million in the
fourth quarter from $137 million a year earlier. The insurer
took a loss of $393 million resulting from Sandy, marginally
higher than the $380 million it estimated in December.
ACE's shares were down 5 percent in extended trading after
closing at $84.94 on Tuesday on the New York Stock Exchange.
Operating income of $492 million included a tax benefit of
$121 million from a favorable resolution of prior years' tax
matters, the company said.
ACE also took a after-tax charge of $90 million related to
the strengthening of its asbestos and environmental and other
run-off business reserves.
"There may be some concerns associated with the asbestos and
environmental insurance business," Stifel Nicolaus analyst Meyer
Shields said, referring to the drop in the share price.
Shields said the charge overshadowed resolution of the tax
The company forecast an operating profit of between $6.60
and $7.00 per share for 2013, below the average analyst forecast
of $7.89 per share.
ACE projected catastrophe losses of $395 million after tax
Net earnings rose to $765 million, or $2.22 per share, for
the fourth quarter, from $735 million, or $2.15 per share, a
On an operating basis, the Zurich-based property and
casualty insurer and reinsurer earned $1.43 per share, compared
with $1.90 a year earlier.
Analysts had expected an operating profit of $1.28 per
share, according to Thomson Reuters I/B/E/S.
Net premiums written in North America fell 6.5 percent to
$1.52 billion, primarily due to increased crop insurance premium
payments to the U.S. government as a result of the government's
crop insurance profit and loss calculation formula, ACE said.
U.S. crop insurance payments on losses caused mainly due to
the drought last year have crossed $12.3 billion so far. Some
experts say indemnities could top $20 billion, nearly double the
old record set in 2011.
The company's property & casualty combined ratio, the
percentage of premium revenue an insurer has to pay out in
claims, rose to 105.5 percent from 93 percent.
Shares of ACE, which has a market value of about $29
billion, traded at life-highs earlier this month, and were up 15
percent in the six months to Tuesday's close.
The Thomson Reuters United States Property & Casualty
Insurance Index has also gained about 15
percent in the same period.