Bermuda's insurance and reinsurance giant Ace Ltd. has recorded a 13 percent rise in its second quarter profits to $649 million, despite suffering catastrophe losses of $88m as a result of floods in the UK, US and Australia.

The catastrophe losses are significantly up on the same period in 2006 when losses then totalled a mere $2m.

However, strong performances across the company lifted its profits $76m year-on-year giving net income of $1.93 per share for the quarter compared to $1.72 a year ago.

Evan Greenberg, chairman and chief executive officer of Ace, said: "We had an excellent quarter and all areas of the Company performed well. Book value increased $225 million in the quarter and has grown six percent year-to-date. "We are confident in our ability to grow book value at a reasonable rate into the foreseeable future, softening market conditions notwithstanding. Ace's global presence continues to provide us with opportunities for profitable growth around the world." The company did suffer an unrealised after-tax loss of $382m, incurred from the mark-to-market effect of rising interest rates.

Its book value increased $225m in the quarter, with its investment portfolio exposure to sub-prime mortgages negligible and the company foreseeing no adverse impact.

Ace estimates it will face pre-tax catastrophe losses of $300m in the second half of the year, and is forecasting its property and casualty net earned premium growth will average between two and four percent for the full year with earnings per share in the range of $7.15 to $7.50.

Second-quarter operating highlights for the company included insurance net premiums written increasing three percent with property and casualty net premiums earned also increasing three percent over the prior year quarter.

The company reported that prior period development was favourable $40m pre-tax for the quarter and favourable $14m pre-tax for the same quarter last year.

Ace's invested assets increased by $1bn, or three percent, during the second quarter to $39.9bn.