NEW YORK (Bloomberg) Ace Ltd last night said fourth-quarter profit rose five percent on improved returns from investments and a rise in policy sales.Net income advanced to $1 billion, or $2.92 a share, from $953 million, or $2.81, a year earlier, the Zurich-based company said in a statement. Operating income, which excludes some investment results, was $2.05 a share, beating the $1.84 average estimate of 19 analysts surveyed by Bloomberg.Ace, which has offices in more than 50 countries, remained profitable during a global economic decline that has crimped demand for coverage. Chief executive officer Evan Greenberg expanded beyond commercial property-casualty insurance through acquisitions, adding life and general insurance companies in Asia and purchasing a majority stake in a US crop insurer.“They’re building a very good, high-quality portfolio of non-correlated products, as well as businesses that are geographically diverse,” said Michael Paisan, an analyst at Stifel Nicolaus & Co., before the earnings were announced. “It’s kind of the like the conglomerate theory, where you’re not at the whims of any single market.” Paisan has a “buy” rating on the stock.Ace shares advanced 34 cents to $62.50 at 4 p.m. in New York Stock Exchange composite trading. They have gained 26 percent in the past year compared with a 18 percent gain in the S&P 500 Index.Mr Greenberg said: “Ace had a very good fourth quarter and a strong finish to an excellent year, both financially and operationally. During the year, we made important strides to better position our company for the future. Our after-tax operating income for the year was nearly $2.7 billion, with strong contributions from both underwriting and investment income, and our book value continued its track record of growth, closing up 17 percent for the year. Over the last five years, we have grown our per-share book and tangible book value at a compound annual rate of 14.5 percent and 15.8 percent, respectively.“Our P&C combined ratio for 2010 was 90.2 percent, which speaks to our strong underwriting culture and cycle management. I believe these standout financial results, which produced an operating return on equity of 13.1 percent, demonstrate the power of our well-diversified global balance of businesses.“During the year we added to our executive management ranks, increased the rigor of our underwriting discipline and completed a number of acquisitions that will pay us dividends immediately and, more importantly, over the longer-term. During the quarter, S&P upgraded the financial strength rating of our core operating insurance companies to AA-, acknowledging the strength of our balance sheet and our distinct global franchise. Without a doubt, we ended the year stronger and better positioned to capitalise upon opportunity in 2011 and beyond.“While the operating environment remains challenging, both economically and competitively, we are optimistic and confident in our ability to continue delivering superior results.”In 2010, ACE agreed to pay about $1.1 billion for a majority stake in Rain & Hail Insurance Service Inc., $425 million for New York Life Insurance Co.’s Hong Kong and South Korean life units and $210 million for Malaysia-based Jerneh Insurance Bhd.Useful websites: www.acegroup.com, www.stifel.com