A hailstorm in Australia and tornadoes in the US hit hard at the third quarter results of Bermuda-based insurance giant ACE.

The major catastrophic losses bit into ACE Limited's earnings which dropped 60 percent on the previous year's results to $43.8 million, excluding net realised gains, or 22 cents a share.

A year earlier ACE posted earnings totaling 55 cents a share or $107.1 million.

The results posted publicly yesterday showed net income for the quarter was $69.1 million or 35 cents per share -- well down on the same quarter last year's $176.5 million or 90 cents per share.

ACE chairman, president and CEO Brian Duperreault admitted the hailstorm and tornadoes had ripped into the results, but he said this was what insurance was all about.

"We incurred net losses of $55 million from these two events, which adversely affected earnings by 28 cents per share,'' he said.

"If these losses had not occurred, net income excluding realised gains for the quarter would have been 50 cents per share.

"Providing coverage for catastrophic events is an essential part of our business.'' But he was upbeat about the future and spoke of an "exciting new chapter'' for ACE with the completion of the ACE INA acquisition positioning the company as a global leader.

Excluding the $55 million in catastrophic losses and a $77 million contract ACE's combined ratio was 87.8 percent for the quarter. A ratio of less than 100 percent indicates an underwriting profit.

Net premiums written during the quarter jumped 22 percent to $392.2 million from $322.6 million in the same period the previous year.

And while net profit on premiums rose 22 percent to $300 million, net investment income excluding net realised gains was down almost nine percent to $84.8 million from $93 million a year ago.

ACE expanded its lines into more traditional commercial product lines when it finalised the $3.45 deal to buy the property casualty business of CIGNA Corp.

earlier this month -- and after the close of the quarter.

Results from those lines will not impact on corporate earnings until the fourth quarter.

In June ACE announced details of its plan to buy reinsurer Capital Re Corp in a $606 million stock deal due to close later this year.

The fully diluted net asset value per share of the company at June 30 was $20.24.