Information provided in connection with outstanding debt of subsidiaries

The following tables present condensed consolidating financial information at March 31, 2014 and December 31, 2013, and for the three months ended March 31, 2014 and 2013 for ACE Limited (Parent Guarantor) and ACE INA Holdings, Inc. (Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer.

During the third quarter of 2013, we determined that the Subsidiary Issuer columns presented in the previously issued condensed consolidating financial information should be presented on the equity method of accounting rather than on a consolidated basis. Accordingly, we have revised the disclosure to correct the Condensed Consolidating Statement of Operations and Comprehensive Income and the Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2013. As a result of this revision to the Subsidiary Issuer condensed consolidating financial information, revenues and expenses and cash flows of the subsidiaries of ACE INA Holdings, Inc. (Subsidiary Issuer) are now presented in the Other ACE Limited Subsidiaries column on a combined basis. In addition, we revised the Consolidating Adjustments and Eliminations column to correctly include all intercompany eliminations. Previously, this column reflected only ACE Limited parent company intercompany eliminations. We also revised the Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2013 to correct the presentation of negative cash associated with our affiliated notional cash pooling programs (Pools). In addition, certain items in the Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2013 have been reclassified to conform to current period presentation. Also, the operating cash flows have been corrected to properly reflect certain intercompany transactions previously recorded in financing cash flows for the three months ended March 31, 2013.

Total shareholders' equity and net income of the Subsidiary Issuer and Parent Guarantor were not impacted as a result of these revisions. The impact of the revisions was not material to the prior period consolidated financial statements taken as a whole. There was no impact on the consolidated amounts previously reported.

Condensed Consolidating Balance Sheet at March 31, 2014



(in millions of U.S. dollars)	ACE Limited (Parent Guarantor)		ACE INA Holdings Inc. (Subsidiary Issuer)		Other ACE Limited Subsidiaries		Consolidating Adjustments and Eliminations			ACE Limited Consolidated
Assets
Investments	$	32	$	18	$	61,995	$	—		$	62,045
Cash⁽¹⁾	25		1		1,206		(385		)	847
Insurance and reinsurance balances receivable	—		—		5,540		(779		)	4,761
Reinsurance recoverable on losses and loss expenses	—		—		19,531		(8,776		)	10,755
Reinsurance recoverable on policy benefits	—		—		1,210		(988		)	222
Value of business acquired	—		—		517		—			517
Goodwill and other intangible assets	—		—		5,382		—			5,382
Investments in subsidiaries	29,075		18,368		—		(47,443		)	—
Due from subsidiaries and affiliates, net	487		—		—		(487		)	—
Other assets	3		256		13,956		(3,565		)	10,650
Total assets	$	29,622	$	18,643	$	109,337	$	(62,423	)	$	95,179
Liabilities
Unpaid losses and loss expenses	$	—	$	—	$	45,173	$	(8,307	)	$	36,866
Unearned premiums	—		—		9,584		(1,793		)	7,791
Future policy benefits	—		—		5,620		(988		)	4,632
Due to (from) subsidiaries and affiliates, net	—		367		120		(487		)	—
Affiliated notional cash pooling programs⁽¹⁾	—		385		—		(385		)	—
Short-term debt	—		500		1,401		—			1,901
Long-term debt	—		3,795		13		—			3,808
Trust preferred securities	—		309		—		—			309
Other liabilities	253		1,343		11,927		(3,020		)	10,503
Total liabilities	253		6,699		73,838		(14,980		)	65,810
Total shareholders’ equity	29,369		11,944		35,499		(47,443		)	29,369
Total liabilities and shareholders’ equity	$	29,622	$	18,643	$	109,337	$	(62,423	)	$	95,179

⁽¹⁾

ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At March 31, 2014, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Balance Sheet at December 31, 2013



(in millions of U.S. dollars)	ACE Limited (Parent Guarantor)		ACE INA Holdings Inc. (Subsidiary Issuer)		Other ACE Limited Subsidiaries		Consolidating Adjustments and Eliminations			ACE Limited Consolidated
Assets
Investments	$	32	$	10	$	60,886	$	—		$	60,928
Cash⁽¹⁾	—		16		748		(185		)	579
Insurance and reinsurance balances receivable	—		—		5,835		(809		)	5,026
Reinsurance recoverable on losses and loss expenses	—		—		20,057		(8,830		)	11,227
Reinsurance recoverable on policy benefits	—		—		1,215		(997		)	218
Value of business acquired	—		—		536		—			536
Goodwill and other intangible assets	—		—		5,404		—			5,404
Investments in subsidiaries	28,351		18,105		—		(46,456		)	—
Due from subsidiaries and affiliates, net	844		—		—		(844		)	—
Other assets	5		258		13,788		(3,459		)	10,592
Total assets	$	29,232	$	18,389	$	108,469	$	(61,580	)	$	94,510
Liabilities
Unpaid losses and loss expenses	$	—	$	—	$	45,714	$	(8,271	)	$	37,443
Unearned premiums	—		—		9,242		(1,703		)	7,539
Future policy benefits	—		—		5,612		(997		)	4,615
Due to (from) subsidiaries and affiliates, net	—		714		130		(844		)	—
Affiliated notional cash pooling programs⁽¹⁾	185		—		—		(185		)	—
Short-term debt	—		500		1,401		—			1,901
Long-term debt	—		3,795		12		—			3,807
Trust preferred securities	—		309		—		—			309
Other liabilities	222		1,318		11,655		(3,124		)	10,071
Total liabilities	407		6,636		73,766		(15,124		)	65,685
Total shareholders’ equity	28,825		11,753		34,703		(46,456		)	28,825
Total liabilities and shareholders’ equity	$	29,232	$	18,389	$	108,469	$	(61,580	)	$	94,510

⁽¹⁾

ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statements of Operations and Comprehensive Income



For the Three Months Ended March 31, 2014	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries			Consolidating Adjustments and Eliminations			ACE Limited Consolidated
(in millions of U.S. dollars)	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries			Consolidating Adjustments and Eliminations			ACE Limited Consolidated
Net premiums written	$	—		$	—		$	4,185		$	—		$	4,185
Net premiums earned	—			—			3,970			—			3,970
Net investment income	—			—			553			—			553
Equity in earnings of subsidiaries	702			180			—			(882		)	—
Net realized gains (losses) including OTTI	—			(1		)	(103		)	—			(104		)
Losses and loss expenses	—			—			2,161			—			2,161
Policy benefits	—			—			114			—			114
Policy acquisition costs and administrative expenses	17			6			1,240			—			1,263
Interest (income) expense	(10		)	71			10			—			71
Other (income) expense	(42		)	14			11			—			(17		)
Income tax expense (benefit)	3			(30		)	120			—			93
Net income	$	734		$	118		$	764		$	(882	)	$	734
Comprehensive income	$	1,108		$	266		$	1,138		$	(1,404	)	$	1,108

Condensed Consolidating Statements of Operations and Comprehensive Income (Revised)



For the Three Months Ended March 31, 2013	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries		Consolidating Adjustments and Eliminations			ACE Limited Consolidated
(in millions of U.S. dollars)	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries		Consolidating Adjustments and Eliminations			ACE Limited Consolidated
Net premiums written	$	—		$	—		$	3,798	$	—		$	3,798
Net premiums earned	—			—			3,573		—			3,573
Net investment income	—			1			530		—			531
Equity in earnings of subsidiaries	914			188			—		(1,102		)	—
Net realized gains (losses) including OTTI	12			—			194		—			206
Losses and loss expenses	—			—			1,926		—			1,926
Policy benefits	—			—			131		—			131
Policy acquisition costs and administrative expenses	15			4			1,109		—			1,128
Interest (income) expense	(7		)	62			5		—			60
Other (income) expense	(38		)	9			19		—			(10		)
Income tax expense (benefit)	3			(33		)	152		—			122
Net income	$	953		$	147		$	955	$	(1,102	)	$	953
Comprehensive income (loss)	$	716		$	(1	)	$	718	$	(717	)	$	716

Condensed Consolidating Statements of Operations and Comprehensive Income (As previously reported)



For the Three Months Ended March 31, 2013	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments ⁽²⁾			ACE Limited Consolidated
(in millions of U.S. dollars)	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments ⁽²⁾			ACE Limited Consolidated
Net premiums written	$	—		$	2,082		$	1,716		$	—		$	3,798
Net premiums earned	—			2,006			1,567			—			3,573
Net investment income	—			248			283			—			531
Equity in earnings of subsidiaries	914			—			—			(914		)	—
Net realized gains (losses) including OTTI	12			10			184			—			206
Losses and loss expenses	—			1,253			673			—			1,926
Policy benefits	—			81			50			—			131
Policy acquisition costs and administrative expenses	15			626			487			—			1,128
Interest (income) expense	(7		)	67			—			—			60
Other (income) expense	(38		)	34			(6		)	—			(10		)
Income tax expense	3			56			63			—			122
Net income	$	953		$	147		$	767		$	(914	)	$	953
Comprehensive income (loss)	$	716		$	(1	)	$	915		$	(914	)	$	716


⁽¹⁾	Includes all other subsidiaries of ACE Limited and intercompany eliminations.


⁽²⁾	Includes ACE Limited parent company eliminations.

Condensed Consolidating Statement of Cash Flows



For the Three Months Ended March 31, 2014	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries			Consolidating Adjustments and Eliminations			ACE Limited Consolidated
(in millions of U.S. dollars)
Net cash flows from (used for) operating activities	$	57		$	(13	)	$	1,206		$	—		$	1,250
Cash flows from investing activities
Purchases of fixed maturities available for sale	—			—			(3,522		)	—			(3,522		)
Purchases of fixed maturities held to maturity	—			—			(30		)	—			(30		)
Purchases of equity securities	—			—			(37		)	—			(37		)
Sales of fixed maturities available for sale	—			—			2,208			—			2,208
Sales of equity securities	—			—			27			—			27
Maturities and redemptions of fixed maturities available for sale	—			—			1,550			—			1,550
Maturities and redemptions of fixed maturities held to maturity	—			—			212			—			212
Net change in short-term investments	—			(8		)	(757		)	—			(765		)
Net derivative instruments settlements	—			(9		)	(87		)	—			(96		)
Other	—			(3		)	(47		)	—			(50		)
Net cash flows used for investing activities	—			(20		)	(483		)	—			(503		)
Cash flows from financing activities
Dividends paid on Common Shares	(214		)	—			—			—			(214		)
Common Shares repurchased	—			—			(335		)	—			(335		)
Proceeds from share-based compensation plans, including windfall tax benefits	—			—			40			—			40
Advances (to) from affiliates	367			(367		)	—			—			—
Net proceeds from (payments to) affiliated notional cash pooling programs⁽¹⁾	(185		)	385			—			(200		)	—
Other	—			—			37			—			37
Net cash flows (used for) from financing activities	(32		)	18			(258		)	(200		)	(472		)
Effect of foreign currency rate changes on cash and cash equivalents	—			—			(7		)	—			(7		)
Net increase (decrease) in cash	25			(15		)	458			(200		)	268
Cash – beginning of period⁽¹⁾	—			16			748			(185		)	579
Cash – end of period⁽¹⁾	$	25		$	1		$	1,206		$	(385	)	$	847

⁽¹⁾

ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At March 31, 2014 and December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows (Revised)



For the Three Months Ended March 31, 2013	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries			Consolidating Adjustments and Eliminations			ACE Limited Consolidated
(in millions of U.S. dollars)
Net cash flows from (used for) operating activities	$	25		$	(19	)	$	907		$	—		$	913
Cash flows from investing activities
Purchases of fixed maturities available for sale	—			—			(5,568		)	103			(5,465		)
Purchases of fixed maturities held to maturity	—			—			(142		)	—			(142		)
Purchases of equity securities	—			—			(107		)	—			(107		)
Sales of fixed maturities available for sale	—			—			2,867			(103		)	2,764
Sales of equity securities	—			—			31			—			31
Maturities and redemptions of fixed maturities available for sale	—			—			2,016			—			2,016
Maturities and redemptions of fixed maturities held to maturity	—			—			491			—			491
Net change in short-term investments	—			4			(691		)	—			(687		)
Net derivative instruments settlements	—			—			(279		)	—			(279		)
Acquisition of subsidiaries	—			—			(33		)	—			(33		)
Capital contribution	—			(27		)	—			27			—
Other	—			2			(57		)	—			(55		)
Net cash flows used for investing activities	—			(21		)	(1,472		)	27			(1,466		)
Cash flows from financing activities
Dividends paid on Common Shares	(2		)	—			—			—			(2		)
Common Shares repurchased	—			—			(154		)	—			(154		)
Net proceeds from issuance of long-term debt	—			947			—			—			947
Net proceeds from issuance of short-term debt	—			—			1			—			1
Proceeds from share-based compensation plans	—			—			21			—			21
Advances (to) from affiliates	71			(71		)	—			—			—
Dividends to parent company	—			—			—			—			—
Capital contribution	—			—			27			(27		)	—
Net payments to affiliated notional cash pooling programs⁽¹⁾	—			(349		)	—			349			—
Net cash flows from (used for) financing activities	69			527			(105		)	322			813
Effect of foreign currency rate changes on cash and cash equivalents	—			—			(20		)	—			(20		)
Net increase (decrease) in cash	94			487			(690		)	349			240
Cash – beginning of period⁽¹⁾	103			2			859			(349		)	615
Cash – end of period⁽¹⁾	$	197		$	489		$	169		$	—		$	855

⁽¹⁾

ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At March 31, 2013 and December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows (As previously reported)



For the Three Months Ended March 31, 2013	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
(in millions of U.S. dollars)
Net cash flows from operating activities	$	53		$	644		$	216		$	—		$	913
Cash flows from investing activities
Purchases of fixed maturities available for sale	—			(3,825		)	(2,327		)	—			(6,152		)
Purchases of fixed maturities held to maturity	—			(137		)	(5		)	—			(142		)
Purchases of equity securities	—			(89		)	(18		)	—			(107		)
Sales of fixed maturities available for sale	—			1,473			1,291			—			2,764
Sales of equity securities	—			25			6			—			31
Maturities and redemptions of fixed maturities available for sale	—			879			1,137			—			2,016
Maturities and redemptions of fixed maturities held to maturity	—			351			140			—			491
Net derivative instruments settlements	—			4			(283		)	—			(279		)
Advances from (to) affiliates	43			—			—			(43		)	—
Acquisition of subsidiaries	—			(33		)	—			—			(33		)
Other	—			(86		)	31			—			(55		)
Net cash flows from (used for) investing activities	43			(1,438		)	(28		)	(43		)	(1,466		)
Cash flows from financing activities
Dividends paid on Common Shares	(2		)	—			—			—			(2		)
Common Shares repurchased	—			—			(154		)	—			(154		)
Net proceeds from issuance of long-term debt	—			947			—			—			947
Net proceeds from issuance of short-term debt	—			—			1			—			1
Proceeds from share-based compensation plans, including windfall tax benefits	—			(8		)	29			—			21
Advances (to) from affiliates	—			(71		)	28			43			—
Net cash flows from (used for) financing activities	(2		)	868			(96		)	43			813
Effect of foreign currency rate changes on cash and cash equivalents	—			(29		)	9			—			(20		)
Net increase in cash	94			45			101			—			240
Cash – beginning of period	103			515			(3		)	—			615
Cash – end of period⁽³⁾	$	197		$	560		$	98		$	—		$	855


⁽¹⁾	Includes all other subsidiaries of ACE Limited and intercompany eliminations.


⁽²⁾	Includes ACE Limited parent company eliminations and certain consolidating adjustments.

⁽³⁾

ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.