Ace Ltd has a market cap of $26.91 billion; its shares were traded at around $78.39 with a P/E ratio of 9.7 and P/S ratio of 1.5. The dividend yield of Ace Ltd stocks is 2.5%. Ace Ltd had an annual average earning growth of 31.1% over the past 10 years.
Highlight of Business Operations:Net premiums earned reflect the portion of net premiums written that were recorded as revenues for the period as the exposure periods expire. Our Insurance – North American segment reported an increase in net premiums earned for the three months ended September 30, 2012 in the retail division from our risk management business, and from growth in commercial and personal lines. This growth was partially offset by our continued planned reduction of our U.S. general market risk transfer workers compensation business. Retail results for the nine months ended September 30, 2012 were also partially offset by lower premiums associated with a couple of large structured prospective risk management programs. For the three and nine months ended September 30, 2012, our wholesale and specialty division reported growth in net premiums earned primarily in our agriculture business from our crop hail business and the acquisition of Penn Millers in November 2011. For the three months ended September 30, 2012, our Global Reinsurance segment reported an increase in net premiums earned primarily due to the new reinsurance treaties noted above. This growth was more than offset in our nine month results due to consecutive annual net decreases in production in prior quarters and to the effect of a non-recurring loss portfolio transfer treaty written in the prior year. In our Life segment, net premiums earned were flat for the three months ended September 30, 2012, and increased for the nine months ended September 30, 2012, primarily from business generated from prior year acquisitions in Life insurance, partially offset by the run off of our Life reinsurance variable annuity business. In our Insurance – Overseas General segment, results for the three months ended September 30, 2012 grew on a constant-dollar basis driven by continued strong written premium production in Latin America and Asia, though results reported in U.S. dollars decreased. Results for the nine months ended September 30, 2012 increased on both a constant-dollar and reported U.S. dollar basis from growth noted in Latin America and Asia as well as from the favorable impact of reinstatement premiums expensed in the prior year.
Our effective income tax rate, which we calculate as income tax expense divided by income before income tax, is dependent upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would change the effective income tax rate. Our effective income tax rate was 19 percent and 17 percent for the three and nine months ended September 30, 2012, respectively, compared with 132 percent and 32 percent for the prior year periods, respectively. The decrease in our effective income tax rate for the three and nine months ended September 30, 2012 was primarily due to a decrease in the amount of net realized losses on derivatives generated in lower tax-paying jurisdictions.
For the three months ended September 30, 2012, the net adverse impact included in the MPCI business underwriting results due to the drought in the U.S. was $147 million pre-tax and $97 million after-tax. No net profit or loss is expected on this business in the fourth quarter related to the 2012 crop year. The combined ratio for the MPCI business was 114 percent for the quarter and is expected to be approximately 104 percent for the full year.
We assess which subsidiaries to draw dividends from based on a number of factors. Considerations such as regulatory and legal restrictions as well as the subsidiary s financial condition are paramount to the dividend decision. The legal restrictions on the payment of dividends from retained earnings by our Bermuda subsidiaries are currently satisfied by the share capital and additional paid-in capital of each of the Bermuda subsidiaries. ACE Limited received no dividends from its Bermuda subsidiaries during the nine months ended September 30, 2012. ACE Limited received dividends of $500 million from its Bermuda subsidiaries during the nine months ended September 30, 2011.
Sources of liquidity include cash from operations, routine sales of investments, and financing arrangements. The following is a discussion of our cash flows for the nine months ended September 30, 2012 and 2011.
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