Global insurer Ace has reported a rise in third-quarter net income on surging premiums and several bolt-on acquisitions.

Net income for the quarter was $US640 million ($618 million), up from a $US39 million ($37 million) loss in the corresponding quarter last year, but after-tax operating income fell 8% to $US688 million ($664 million) because of exposure to severe drought in the US.

Ace paid $US97 million ($93 million) in crop insurance claims in the quarter and says full-year operating income will take a $US195 million ($188 million) after-tax hit from crop insurance. This is $US73 million ($70 million) down on its second-quarter earnings update “worst-case scenario”.

The addition of PT Asuransi Jaya Proteksi, one of Indonesia’s top 10 general insurers, aided Ace’s total net premiums, which rose 8.6% in the quarter, or 11.1% in constant dollar terms.

Ace is now in a far stronger financial position than 12 months previously, with after-tax operating income up 27% to $US2.13 billion ($2.05 million).

CEO Evan Greenberg says it was an “excellent” quarter marked by strong earnings and growth in premiums and book value.

“While the drought conditions in the US severely impacted our crop insurance business and reduced operating income by [US]28 cents (22 cents) per share, as a total company we delivered outstanding underwriting results,” he said.

“We continue to benefit from the favourable property and casualty pricing trend in North America, where we recorded strong double-digit premium growth, and internationally, excluding the impact of foreign exchange, we also registered good growth across a broad spectrum of property and casualty, accident and health, and personal lines businesses, particularly in Asia and Latin America.”

The third-quarter result followed a 45% drop in net income to $US328 million ($313 million) in the group’s second quarter.

Ace has been diversifying in emerging markets and recently announced plans to buy Ally Financial’s Mexican insurance business for $US865 million ($835 million).

Last month it bought Mexican surety company Fianzas Monterrey from New York Life Insurance Company for $US285 million ($275 million).