Property and casualty insurer ACE Ltd. said on Tuesday that its second-quarter earnings dropped 45% as losses from reinsurance for variable annuities contracts offset an increase in premiums written and lower catastrophe losses.
However, ACE raised its financial outlook for the full year, in part due to the lower-than-expected catastrophe losses.
The company, based in Zurich, said net income was $328 million, or 96 cents per share, for the three months ended June 30. That was down from $594 million, or $1.74 per share, for the same period a year ago.
The latest results included $415 million in net realized losses, primarily from variable annuity reinsurance derivatives. Stripping out the one-time losses, ACE earned $2.17 per share.
ACE’s net premiums written grew 4.5% to $4.13 billion for the quarter, and underwriting income rose 46% to $429 million.
Total after-tax catastrophe losses including reinstatement premiums were $41 million, down from $101 million in the year-ago period.
ACE cited the lower catastrophe losses and expansion of its financial reserves as it raised its full-year expectations for $7.20 to $7.60 per share in after-tax operating income. In April, the company expected earnings of $7.03 to $7.43 per share.
Analysts, on average, expect $7.74, according to a survey by FactSet.
ACE shares fell 72 cents to close at $69.17.