Ace Insurance has posted a 32.7% fall in third-quarter net income as volatile equity markets, including unfavourable foreign currency movement of $US548 million ($760 million), hit home.

The Zurich-based global insurer’s net income for the three months to September 30 fell to $US528 million ($732 million).

But Ace earned a record after-tax operating income of $US897 million ($1.24 billion), up 0.8% on the corresponding period last year.

Gross written premium (GWP) grew to $US6.35 billion ($8.8 billion) from $US6.26 billion ($8.68 billion), net investment income slipped to $US549 million ($761 million) from $US566 million ($784.6 million) and net realised losses worsened to $US397 million ($550.3 million) from $US120 million ($166.4 million).

The property and casualty arm’s combined operating ratio improved to 85.9% from 86.3%.

“Ace had a great quarter,” Chairman and CEO Evan Greenberg said. “Volatility in the credit, equity and foreign exchange markets affected our results, but did not prevent us from producing record earnings, record underwriting results and good revenue growth in constant dollars.”

The insurer’s book value and tangible book value per share fell due to the foreign currency changes, while volatilities in the global equity markets caused realised and unrealised losses of $US622 million (862.2 million) in the investment and variable annuity reinsurance portfolios.

Net income for the nine months to September 30 fell to $US2.15 billion ($2.98 billion) from $US2.3 billion ($3.2 billion), and GWP grew to $US18.17 billion ($25.19 billion) from $US17.64 billion ($24.5 billion).

Ace says it is on track to complete its $US28.3 billion ($39.2 billion) friendly takeover of US rival Chubb in the first quarter of next year. “We are making good progress with integration planning and will be ready to hit the ground running when we close,” Mr Greenberg said.

The merged entity will have combined revenue of $US31 billion ($43 billion).