Ace Ltd.'s third-quarter profit was down 92 percent to $54 million, the Switzerland-based insurer reported last night.

The company, which has major operations in Bermuda, is one of a minority in the industry to be able to report a positive net income figure for the July-through-September period.

Catastrophe losses, which totalled $311 million, including losses from hurricanes Gustav and Ike, ate into the company's profits.

The turmoil in credit and equity environments negatively impacted the company's investment and life reinsurance results.

Net realised and unrealised losses from Ace's investment portfolio amounted to $1.1 billion. This included $854 million of unrealised losses.

Net realised losses from derivatives related to guaranteed minimum income benefit (GMIB) liabilities of the company's life reinsurance business totalled around $161 million.

Earnings broke down to $0.16 per share, compared to $1.95 per share, or $656 million for the same quarter last year.

Net premiums written rose 17 percent for the quarter, while book value fell $971 million during the three months and the company achieved a 12.7 percent return on equity.

"Ace performed relatively well in a period marked by extraordinary financial market conditions and significant natural catastrophes," chief executive officer Evan Greenberg said.

"Our financial results demonstrated balance sheet stability and earnings strength.

"For the quarter, we recorded operating income of $504 million, generated a return on equity of 12.7 percent, and our combined ratio was 97.9 percent. Our book value in the quarter was impacted by the extreme movement in financial asset prices and declined six percent, while in the last 12 months, our book value has remained stable, down less than one percent.

"In my judgment, given both the rapid destruction and increased cost of capital, combined with the damage inflicted on a number of companies in our industry, the soft market for P&C insurance is essentially over, and rates will begin to firm.

"These challenging times will create opportunities for those companies with the financial wherewithal and franchise power to take advantage, and I'm confident Ace will be one of them."