Bermuda's biggest insurance company Ace yesterday announced a record annual profit of $2.58 billion, despite a fall of 14 percent in fourth-quarter earnings.

The global insurer year-end earnings were up by 12 percent from its 2006 profit, while net income for the fourth quarter of 2007 was down from the same period in 2006, from $665 million to $572 million.

Ace's operating income was up 15 percent to $2.7 billion last year and operating income for the fourth quarter rose eight percent to a record $693 million.

Evan Greenberg, chairman and CEO of Ace, said: "Ace had a strong fourth quarter that capped an excellent year for the company.

"All areas of the company performed well, and the financial markets crisis had a relatively modest impact on our results.

"For the year, we achieved record net income and net operating income, which increased 12 percent and 15 percent, respectively, while book value per share increased 16 percent.

"In December we announced two acquisitions that will further diversify and contribute to Ace's future earnings. Looking ahead, we are well positioned to manage through an increasingly difficult environment marked by continuing volatility in the financial markets, deteriorating economic fundamentals and a softening property and casualty market."

Other highlights from the results included net premiums declining 1.3 percent over the prior year quarter and 0.4 percent over the full year, while net premiums earned increased one percent over the prior fourth quarter and four percent over the full year.

Its strongest sector was life insurance and reinsurance, where net premiums written rose 42 percent over the prior year quarter, but, in contrast global reinsurance suffered a 31 percent decrease in net premiums written over the prior year quarter.

The North American insurance lines were also down with net premiums written falling by seven percent for the fourth quarter 2007 compared to the same period in 2006. The property and casualty (P&C) combined ratio for the quarter was 88.1 percent compared with 88.2 percent in the prior year quarter, while, for the full year, the P&C combined ratio was 87.9 percent compared with 88.1 percent for 2006.

P&C underwriting income was $351 million for the quarter and $1.4 billion for the full year and shareholder equity increased 17 percent for the year to $16.7 billion.

Elsewhere, book value per share climbed by four percent from September 30, 2007, and 16 percent for the year to $48.89 and the return on average equity for last year was 17.9 percent.

Report Card

Net income: $2.6 billion compared to $2.3 billion in 2006

Combined ratio: 88.1 percent compared to 88.2 percent in 2006

Gross premiums written: $4.1 billion compared to $4 billion in 2006