Ace reported its net operating income up by 49 percent in the last financial year -- as the company managed to grow from within.

The company's annual report stated that the income came as its book value per share increased by 15 percent.

Speaking at the ACE annual general meeting last Friday, chairman and chief executive officer, Brian Duperreault said: "Last week we released our earnings for the first quarter of 2001. Gross premiums grew by 28 percent, investment income by 12 percent and net operating income by 29 percent.

"It was the first quarter since the acquisition of ACE INA that we achieved a significant positive cash flow from operations. This highlights the fact that the growth we achieved was substantially organic rather than acquisition accretive.'' The report states that over the year net operating income was up 49 percent and book value per share was up 15 percent. $4.9 billion in premiums written was a 96 percent increase on the year before. Underwriting profit margins increased 4 percentage points to 95.5 percent.

It is the underwriting profit margin, or combined ratio, that ACE is particularly pleased about. The group policy is that all divisions must operate at a below 100 percent combined ratio, so that the actual business of insurance (the income and expenditure of writing the premiums and paying out the losses) is profitable before investment income comes into the picture.

"While insurance industry results vary with market conditions, we have been able to outperform our peer group through both good and bad times. Our management remains committed to building the best insurance and financial services company that we can to operate profitably under all market conditions,'' said Mr. Duperreault.

This is also the first full year the company has been able to demonstrate organic growth. There have been no acquisitions since December 1999, so all the growth in business has been organic and ACE is delighted it has seen a 19 percent growth in net premiums.

It is reported in the annual report's review of the various companies in the group that ACE Bermuda has been able to take advantage of global deregulation of the nuclear power industry. The company offers replacement coverage to utilities currently insured in industry pooling arrangements, having formed a marketing alliance with Nuclear Electric Insurance Ltd to reach nuclear utilities outside North America.

ACE Tempest Re has developed a structure under which catastrophe cover can be triggered by a series of events occurring during the year. This was in response to the fact that winter perils do not lend themselves to conventional catastrophe cover because they often result from a series of blizzards rather than a single event.

ACE Global Markets integrated Lloyd's underwriting vehicle, Syndicate 2488, received a Moody's financial strength rating of Aa2 (Excellent) in the year.

It is currently the highest rated syndicate at Lloyd's and was the first ever to receive a financial strength rating on a stand-alone basis. In anticipation of an across-the-market hardening the syndicate has increased its capacity by 20 percent for the year 2001.

While making the transition to profitability ACE USA has been expanding its business and making use of other branches of the ACE family to offer high levels of aggregate capacity. An example of this is ACE USA's insuring a portion of the state of Alabama's insurance fund. As a result of this the state's broker then turned to ACE Bermuda and ACE Global Markets to obtain additional capacity. Through this combination ACE was able to offer property capacity of $300-$350 million in 2000.

ACE International operates in nearly 50 countries, both mature and developing, around the world through a network of ACE companies. ACE International companies also refer clients and brokers to ACE Bermuda, ACE Financial Services and ACE Global Markets for solutions that might otherwise be unavailable in their local markets.

ACE Financial Services has two principal divisions : ACE Guaranty Re and ACE Capital Re. ACE Guaranty Re writes financial guarantee covers relating to municipal bonds, asset backed securities and corporate risks. ACE Capital Re underwrites mortgage default risk, structured credit products, residual value, life reinsurance, title reinsurance and trade credit reinsurance.

Every one of these entities showed an increase in gross premiums written for the year 2000. ACE Bermuda increased by $45 million to $598, ACE Global Markets by $429 million to $1.1 billion, ACE Global Reinsurance by $9 million to $191 million, ACE USA by $1.8 billion to $3.4 billion, ACE International by $1.1 billion to $2 billion and ACE Financial services, a new company, produced $327 million gross premiums.