Despite second-quarter profit that fell 28%, driven by lower premiums and a stronger dollar, Ace Ltd. (ACE) said Monday that it has come a long way toward recovering from the financial downturn that began last year.

"Recession, a strong U.S. dollar and a competitive pricing environment impacted premium growth," said Chief Executive Evan Greenberg in a press release.

Ace reported profit of $535 million, or $1.58 a share, down from $746 million, or $2.18 a share, a year earlier.

The latest results included $171 million in net realized investment losses. The prior-year quarter included $126 million in net realized investment losses and $28 million in credit-related impairments.

Operating earnings, which exclude realized investment gains and losses and one-time items, fell to $2.09 a share from $2.16. Analysts' estimates were for per-share operating earnings of $1.94, according to a poll by Thomson Reuters.

Analyst David A. Havens of Hexagon Securities LLC called the earnings "pretty much solid as expected," in an email message.

The company's book value rose 14% in the first half of the year, "recovering completely from losses suffered during the financial market stress in the second half of last year," Greenberg said.

He added that prices are firming and many of Ace's lines grew because of "continued customer flight to safety."

Last week, rival Chubb Corp. (CB) also said that some customers sought out the higher-rated insurers, particularly in some lines of insurance where claims can come years after the policy goes into effect.

Commercial property and casualty insurers, such as Ace, were expected to see better investment returns in the second quarter and weather-related catastrophe losses only a little above typical. And after years of falling prices, large commercial insurance customers reported slightly higher prices in the first quarter.

But executives at both Chubb and Ace have complained that some insurers that they would not name, but that likely referred to American International Group Inc. (AIG), were slashing prices to keep business, which held down rates overall. AIG has consistently denied cutting prices below sound rates to keep business. On Monday, AIG announced that its main property/casualty business would be rebranded as Chartis to further its efforts to chart its own identity.

Combined ratio - the amount of expenses and claims paid to premiums received - improved to 87.7% from 87.8%.

Gross premiums written and earned declined 5.1% and 4.7%, respectively. Excluding the effect of foreign-currency exchange, they rose 1% and 2%, respectively.

Premiums written fell 4% in the North American insurance business and also slid in other segments, except global reinsurance, where they increased 22%.

Net loss reserves increased $192 million, excluding the foreign-exchange impact.

Ace's shares were at $48 in after-hours trading, down 2 cents. The stock has climbed about 55% from a six-year low in March but is still down nearly a third from last September.

-By Lavonne Kuykendall and Kathy Shwiff, Dow Jones Newswires; 312-750-4141; lavonne.kuykendall@dowjones.com