UPDATE 2-Insurer Ace Ltd Posts Sharp Drop In Q4 Profit

By Lilla Zuill
February 3, 2009

* Q4 net falls over 96 percent

* Income ex-items matches Wall Street view

* Shares fall 3 pct in extended trading (Adds CEO comment, detail on write-downs, net written premiums, background)

NEW YORK, Feb 3 (Reuters) - Ace Ltd (ACE.N) said on Tuesday its net income fell sharply in the fourth quarter, hurt by investment write-downs.

Ace, a large property-casualty insurer that last year moved its headquarter to Switzerland from Bermuda, said its net earnings were $20 million, or 6 cents a share, compared with $572 million or $1.69 a share, in the year-ago quarter.

Excluding items, Ace's income was 10 percent lower than a year ago at $624 million, or $1.87 a share, matching analysts' average expectations, according to Reuters Estimates.

Ace recorded net realized losses of $644 million from impaired investments -- nearly ten times the losses in the same quarter a year ago, citing wider credit spreads and declines in global equity markets.

Chief Executive Evan Greenberg said he expected most of the losses, in its investment portfolio and in a life reinsurance business, would "recover in value over time."

Greenberg added that insurance rates were "firming" after several years of declining pricing, and said Ace was gaining market share from weakened competitors.

At the same time "recessionary conditions are formidable," said Greenberg, but added he was "encouraged by government efforts to stimulate the economy."

Some American International Group Inc (AIG.N) customers have been moving business to other carriers since AIG's near-bankruptcy and U.S. taxpayer bailout last year.

Analysts name Ace and Zurich Financial Services (ZURN.VX) as two firms gaining business since AIG's troubles.

Net premiums written rose 7 percent to about $3 billion in the quarter.

Shares of Ace fell about 3 pct in extended trading, after closing 0.9 percent lower in the regular session at $42.77.

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