Bermuda-based global insurer ACE Limited last night posted a profit of $433 million.

ACE's earnings in the first three months of the year were down three percent from $447 million in net income during the same period a year ago.

ACE president and CEO Evan Greenberg, said: "This was a very good quarter for ACE. We had record operating income (see ACE report card) led by substantial increases in earned premiums and net investment income, and excellent property and casualty (P&C) underwriting results as reflected in a combined ratio of 89.2 percent."

Although the company's first quarter results this year were lower than a year ago, Mr. Greenberg stressed the strength of the result given 'softening' market conditions - or a more competitive environment generally accompanied by lower rates.

"Our written premium growth rate is naturally slowing in line with a softening rate environment and our determination to maintain underwriting discipline," he said in an earnings release.

ACE increased North American policy sales 18 percent to $1.43 billion, the smallest quarterly gain since at least 2002, as more competition lowered prices industrywide. Rates that surged for the three years following the September 2001 terrorist attacks fell an average 9.4 percent in the first quarter, according to a survey released by the Council of Insurance Agents and Brokers.

Earnings this year should be "relatively solid but we are expecting a significant deterioration in 2006," said Adam Klauber, an analyst at Cochran Caronia Securities in Chicago, who has a "market perform" rating on Ace shares.

ACE said its profit margin narrowed as it used 89.6 percent of premium income to pay claims and expenses compared with 86.9 percent a year ago. Total policy sales, including the company's overseas and reinsurance businesses, rose 3.9 percent to $3.37 billion. Net investment income increased 19 percent to $284 million.

Shares of ACE fell 17 cents to $39.62 yesterday in New York Stock Exchange composite trading. The company announced its results after regular trading hours.

ACE 1Q earnings conference call: This morning from 9.30 a.m. (Bermuda). The call can be accessed through the ACE website, www.acelimited.com