Financial Supplement

EX-99.2 3 dex992.htm FINANCIAL SUPPLEMENT Financial Supplement

EXHIBIT 99.2

Financial Supplement

March 31, 2004


Investor Contact Helen M. Wilson Phone: (441) 299-9283 Fax: (441) 292-8675		This report is for informational purposes only. It should be read in conjuction with documents filed by ACE Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
email: investorrelations@ace.bm		Cautionary Statement Regarding Forward-Looking Statements:
		Any forward-looking statements made in this financial supplement reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from those set forth in these statements. For example, the Company’s forward-looking statements concerning exposures, reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience which differs from the Company’s assumptions, uncertainties in the reserving or settlement process, new theories of liability, planned public offerings, judicial and legislative developments, litigation tactics, credit developments among reinsurers and the Company’s forward-looking statements concerning the maturity profile of CDO’s could change if a transaction is unwound early and settlement is reached. Other factors that could affect forward-looking statements are identified in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, the Company’s quarterly reports on Form 10-Q and in the Company’s earnings press release, which are available on the Company’s website.

		Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ACE Limited

Financial Supplement Table of Contents


		Page
I.	Financial Highlights
	- Consolidated Financial Highlights	1

II.	Consolidated Results
	- Consolidated Results - Consecutive Quarters	2-3
	- Computation of Basic and Diluted Earnings Per Share	4
	- Summary Consolidated Balance Sheets	5
	- Consolidated Premiums by Line of Business	6
	- Consolidating Statement of Operations	7

III.	Segment Results
	- Insurance-North American	8
	- Insurance-Overseas General	9-10
	- Global Reinsurance	11-12
	- Financial Services	13-14
	- Financial Guaranty Profile	15-16
	- Financial Services Portfolio	17-20

IV.	Balance Sheet Details
	- Loss Reserve Rollforward	21
	- Asbestos and Environmental Reserves	22
	- Reinsurance Recoverable Analysis	23-26
	- Investment Portfolio	27-28
	- Realized and Unrealized Gains (Losses)	29
	- Capital Structure	30

V.	Other Disclosures
	- Non-GAAP Financial Measures	31
	- Diluted Book Value per Ordinary Share	32
	- Comprehensive Income	33
	- Glossary	34

ACE Limited

Consolidated Financial Highlights

(in millions of U.S. dollars, except per share data and ratios)

(Unaudited)


	Three months ended March 31						% Change 1Q-04 vs. 1Q-03
	2004			2003			% Change 1Q-04 vs. 1Q-03
Gross premiums written	$	4,416		$	4,113		7	%
Net premiums written	$	3,238		$	2,930		11	%
Net premiums earned	$	2,600		$	2,072		25	%
Net investment income	$	238		$	206		16	%
Income excluding net realized gains (losses)	$	411		$	279		47	%
Net income	$	447		$	247		81	%
Comprehensive income	$	581		$	345		68	%
Operating cash flow	$	1,172		$	600		96	%
Combined ratio
Loss and loss expense ratio		60.5	%		63.4	%
Underwriting and administrative expense ratio		26.4	%		27.2	%

Combined ratio		86.9	%		90.6	%
Annualized ROE*		18.7	%		16.7	%
Annualized ROE, excluding FAS 115		20.4	%		18.1	%
Diluted earnings per share
Income excluding net realized gains (losses)	$	1.40		$	1.02		37	%
Net income	$	1.53		$	0.90		70	%
Diluted book value per ordinary share	$	31.36		$	25.14		25	%
Diluted tangible book value per ordinary share	$	22.41		$	15.72		43	%
Weighted average diluted ordinary shares outstanding		284.3			268.0		6	%
Debt/ total capitalization		16.1	%		20.2	%

*	Calculated using income excluding net realized gains (losses).

Page 1

ACE Limited

Consolidated Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Consolidated Property and Casualty Excluding Financial Services⁽¹⁾
Gross premiums written	$	4,155		$	3,330		$	3,295		$	3,241		$	3,532		$	13,398
Net premiums written		2,979			2,250			2,154			2,230			2,357			8,991
Net premiums earned		2,370			2,307			2,146			2,049			1,815			8,317
Losses and loss expenses		1,456			1,429			1,375			1,298			1,122			5,224
Policy acquisition costs		349			363			321			315			281			1,280
Administrative expenses		290			295			271			266			241			1,073

P& C underwriting income	$	275		$	220		$	179		$	170		$	171		$	740
Financial Services underwriting income		58			4			22			17			19			62
Life underwriting income (loss) excluding investment income		3			(2	)		(4	)		(5	)		(5	)		(16	)
Net investment income		238			228			216			211			206			861
Other income (expense)		(17	)		(19	)		(3	)		1			(6	)		(27	)
Interest expense		44			44			45			43			45			177
Income tax expense		102			59			61			65			61			246

Income excluding net realized gains (losses)	$	411		$	328		$	304		$	286		$	279		$	1,197
Net realized gains (losses)		57			128			57			107			(40	)		252
Tax effect of net realized gains (losses)		(21	)		(12	)		(6	)		(22	)		8			(32	)

Net income	$	447		$	444		$	355		$	371		$	247		$	1,417

% Change versus prior year period⁽¹⁾
Gross premiums written		18	%		13	%		11	%		25	%		36	%		21	%
Net premiums written		26	%		32	%		27	%		46	%		59	%		40	%
Net premiums earned		31	%		41	%		44	%		55	%		65	%		50	%
Other ratios⁽¹⁾
Net premiums written/gross premiums written		72	%		68	%		65	%		69	%		67	%		67	%
Effective tax rate		20	%		15	%		17	%		19	%		18	%		17	%
ROE
Annualized ROE		18.7	%		15.8	%		15.2	%		15.6	%		16.7	%		15.8	%
Annualized ROE, excluding FAS 115		20.40	%		17.3	%		16.8	%		17.2	%		18.1	%		17.2	%

⁽¹⁾	Consolidated property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.

Page 2

ACE Limited

Consolidated Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Combined ratio
Loss and loss expense ratio		60.5	%		66.8	%		64.6	%		64.5	%		63.4	%		65.0	%
Policy acquisition cost ratio		14.1	%		13.6	%		14.4	%		14.6	%		14.4	%		14.2	%
Administrative expense ratio		12.3	%		11.5	%		12.4	%		12.6	%		12.8	%		12.3	%

Combined ratio		86.9	%		91.9	%		91.4	%		91.7	%		90.6	%		91.5	%

Consolidated Property and Casualty Excluding Financial Services⁽¹⁾
	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Combined ratio
Loss and loss expense ratio		61.5	%		61.9	%		64.0	%		63.4	%		61.8	%		62.8	%
Policy acquisition cost ratio		14.7	%		15.8	%		15.0	%		15.3	%		15.5	%		15.4	%
Administrative expense ratio		12.2	%		12.8	%		12.6	%		13.0	%		13.3	%		12.9	%

Combined ratio		88.4	%		90.5	%		91.6	%		91.7	%		90.6	%		91.1	%

Large losses and other items
Catastrophe and other large losses	$	—		$	35		$	42		$	30		$	5		$	112
Prior period development⁽²⁾	$	(6	)	$	14		$	62		$	21		$	24		$	121

⁽¹⁾	Consolidated property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.

⁽²⁾	See Financial Services schedule for prior period development related to that segment.

Page 3

ACE Limited

Computation of Basic and Diluted Earnings Per Share

(in millions of U.S. dollars, except share and per share data)

(Unaudited)


	Three months ended March 31
	2004			2003
Numerator
Income excluding net realized gains (losses)	$	411		$	279
Perpetual preferred dividend		(11	)		—
Mezzanine equity dividend		—			(7	)

Income to ordinary shares, excl. net realized gains (losses)		400			272
Net realized gains (losses), net of income tax		36			(32	)

Net income available to the holders of ordinary shares	$	436		$	240

Rollforward of ordinary shares
Ordinary shares - beginning of period		279,897,193			262,679,356
Issued under employee stock purchase plan		125,631			135,803
Stock (cancelled) granted		1,259,605			1,492,847
Issued for option exercises		1,432,480			183,813

Ordinary shares - end of period		282,714,909			264,491,819

Denominator
Weighted average shares outstanding		278,937,204			260,986,223
Dilutive effect of mezzanine equity		—			916,016
Effect of other dilutive securities		5,352,364			6,138,426

Adj. wtd. avg. shares outstanding and assumed conversions		284,289,568			268,040,665

Basic earnings per share
Income excluding net realized gains (losses)	$	1.43		$	1.04
Net realized gains (losses)		0.13			(0.12	)

Net income	$	1.56		$	0.92

Diluted earnings per share
Income excluding net realized gains (losses)	$	1.40		$	1.02
Net realized gains (losses)		0.13			(0.12	)

Net income	$	1.53		$	0.90

Page 4

ACE Limited

Summary Consolidated Balance Sheets

(in millions of U.S. dollars)


	March 31 2004		December 31 2003
	(Unaudited)		(Audited)
Assets
Fixed maturities available for sale, at fair value	$	19,920	$	18,645
Equity securities, at fair value		539		544
Securities on loan, at fair value		1,183		684
Short-term investments		3,290		2,928
Other investments, at fair value		643		645
Cash		614		562

Total investments and cash		26,189		24,008
Insurance and reinsurance balances receivable		3,493		2,837
Reinsurance recoverable		14,062		14,081
Deferred policy acquisition costs		1,108		1,005
Prepaid reinsurance premiums		1,578		1,372
Goodwill		2,699		2,711
Deferred tax assets		997		1,090
Other assets		2,352		2,449

Total assets	$	52,478	$	49,553


Liabilities
Unpaid losses and loss expenses	$	27,697	$	27,155
Unearned premiums		6,930		6,051
Future policy benefits for life and annuity contracts		496		492
Insurance and reinsurance balances payable		2,145		1,903
Deposit liabilities		217		212
Securities lending collateral		1,208		698
Payable for investments purchased		570		369
Accounts payable, accrued expenses and other liabilities		1,436		1,468
Short-term debt		546		546
Long-term debt		1,349		1,349
Trust preferred securities		487		475

Total liabilities		43,081		40,718

Shareholders’ equity
Total shareholders’ equity, excl. AOCI		8,543		8,115
Accumulated other comprehensive income (AOCI)		854		720

Total shareholders’ equity		9,397		8,835

Total liabilities and shareholders’ equity	$	52,478	$	49,553

Diluted book value per ordinary share	$	31.36	$	29.46
Diluted tangible book value per ordinary share	$	22.41	$	20.25

Page 5

ACE Limited

Consolidated Premiums by Line of Business

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


	1Q-04			% of Total Consolidated		1Q-03		% of Total Consolidated		% Change 1Q-04 vs. 1Q-03
Net premiums written
Property and all other		988		30	%	$	904	31	%	20	%
Casualty		1,698		52	%		1,203	41	%	34	%
Personal accident		283		9	%		250	9	%	13	%

Total P&C		2,979		91	%		2,357	81	%	26	%

Global Re - life		51		2	%		47	1	%	9	%
Financial guaranty		(7	)	0	%		120	4	%	-106	%
Financial solutions		215		7	%		406	14	%	-47	%

Total Consolidated	$	3,238		100	%	$	2,930	100	%	11	%


	1Q-04			% of Total Consolidated		1Q-03		% of Total Consolidated		% Change 1Q-04 vs. 1Q-03
Net premiums earned
Property and all other	$	752		29	%	$	728	35	%	19	%
Casualty		1,363		52	%		870	42	%	44	%
Personal accident		255		10	%		217	10	%	18	%

Total P&C		2,370		91	%		1,815	87	%	31	%

Global Re - life		51		2	%		48	2	%	6	%
Financial guaranty		87		3	%		78	4	%	12	%
Financial solutions		92		4	%		131	7	%	-30	%

Total Consolidated	$	2,600		100	%	$	2,072	100	%	25	%

Page 6

ACE Limited

Consolidating Statement of Operations

Three months ended March 31, 2004 and 2003

(in millions of U.S. dollars)

(Unaudited)


	Insurance - North American			Insurance - Overseas General			Global Reinsurance			Corporate & Other			Consolidated P&C			Financial Services			ACE Consolidated
March 31, 2004
Gross premiums written	$	1,905		$	1,674		$	576		$	—		$	4,155		$	208		$	4,363
Net premiums written		1,212			1,198			569			—			2,979			208			3,187
Net premiums earned		1,007			1,034			329			—			2,370			179			2,549
Losses and loss expenses		696			601			159			—			1,456			86			1,542
Policy acquisition costs		101			184			64			—			349			11			360
Administrative expenses		103			138			19			30			290			24			314

Underwriting income (loss)		107			111			87			(30	)		275			58			333
Life underwriting income		—			—			11			—			11			—			11
Net investment income - property and casualty		104			48			27			(2	)		177			53			230
Other income (expense)		(3	)		(3	)		—			—			(6	)		(11	)		(17	)
Interest expense		5			—			—			37			42			2			44
Income tax expense (benefit)		55			44			3			(13	)		89			13			102

Income (loss) excluding net realized gains (losses)		148			112			122			(56	)		326			85			411
Net realized gains (losses)		52			24			(10	)		(14	)		52			5			57
Tax effect of net realized gains (losses)		(7	)		(7	)		—			—			(14	)		(7	)		(21	)

Net income (loss)	$	193		$	129		$	112		$	(70	)	$	364		$	83		$	447

March 31, 2003
Gross premiums written	$	1,664		$	1,406		$	462		$	—		$	3,532		$	532		$	4,064
Net premiums written		933			981			443			—			2,357			526			2,883
Net premiums earned		753			814			248			—			1,815			209			2,024
Losses and loss expenses		512			494			116			—			1,122			161			1,283
Policy acquisition costs		83			152			46			—			281			11			292
Administrative expenses		88			114			15			24			241			18			259

Underwriting income (loss)		70			54			71			(24	)		171			19			190
Life underwriting income		—			—			2			—			2			—			2
Net investment income - property and casualty		101			35			19			(7	)		148			51			199
Other income (expense)		(6	)		(1	)		1			—			(6	)		—			(6	)
Interest expense		6			—			—			37			43			2			45
Income tax expense (benefit)		39			23			4			(14	)		52			9			61

Income (loss) excluding net realized gains (losses)		120			65			89			(54	)		220			59			279
Net realized gains (losses)		(18	)		(13	)		3			(9	)		(37	)		(3	)		(40	)
Tax effect of net realized gains (losses)		3			5			—			—			8			—			8

Net income (loss)	$	105		$	57		$	92		$	(63	)	$	191		$	56		$	247

Page 7

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - North American


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Gross premiums written	$	1,905		$	1,764		$	1,819		$	1,648		$	1,664		$	6,895
Net premiums written		1,212			1,048			1,065			969			933			4,015
Net premiums earned		1,007			991			990			920			753			3,654
Losses and loss expenses		696			660			712			637			512			2,521
Policy acquisition costs		101			108			95			101			83			387
Administrative expenses		103			109			103			102			88			402

Underwriting income		107			114			80			80			70			344
Net investment income - property and casualty		104			103			98			101			101			403
Other income (expense)		(3	)		(8	)		—			—			(6	)		(14	)
Interest expense		5			6			5			5			6			22
Income tax expense (benefit)		55			50			48			42			39			179

Income excluding net realized gains (losses)		148			153			125			134			120			532
Net realized gains (losses)		52			24			8			25			(18	)		39
Tax effect of net realized gains (losses)		(7	)		—			—			(3	)		3			—

Net income	$	193		$	177		$	133		$	156		$	105		$	571


Combined ratio
Loss and loss expense ratio		69.1	%		66.6	%		71.9	%		69.2	%		68.0	%		69.0	%
Policy acquisition cost ratio		10.0	%		10.9	%		9.6	%		10.9	%		11.0	%		10.6	%
Administrative expense ratio		10.3	%		11.1	%		10.4	%		11.1	%		11.6	%		11.0	%

Combined ratio		89.4	%		88.6	%		91.9	%		91.2	%		90.6	%		90.6	%


Large losses and other items
Large losses (before tax)	$	—		$	—		$	20		$	—		$	—		$	20
Prior period development	$	15		$	14		$	30		$	22		$	25		$	91

% Change versus prior year period
Gross premiums written		14	%		8	%		2	%		15	%		32	%		13	%
Net premiums written		30	%		28	%		23	%		35	%		82	%		38	%
Net premiums earned		34	%		34	%		51	%		52	%		59	%		48	%

Other ratios
Net premiums written/gross premiums written		64	%		59	%		59	%		59	%		56	%		58	%

Page 8

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - Overseas General


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Gross premiums written	$	1,674		$	1,341		$	1,200		$	1,244		$	1,406		$	5,191
Net premiums written		1,198			982			872			916			981			3,751
Net premiums earned		1,034			1,007			882			860			814			3,563
Losses and loss expenses		601			603			529			518			494			2,144
Policy acquisition costs		184			197			170			163			152			682
Administrative expenses		138			130			121			121			114			486

Underwriting income	$	111		$	77		$	62		$	58		$	54		$	251
Net investment income - property and casualty		48			44			39			37			35			155
Other income (expense)		(3	)		(3	)		(3	)		—			(1	)		(7	)
Interest expense		—			—			—			—			—			—
Income tax expense		44			24			12			25			23			84

Income excluding net realized gains (losses)	$	112		$	94		$	86		$	70		$	65		$	315
Net realized gains (losses)		24			1			4			2			(13	)		(6	)
Tax effect of net realized gains (losses)		(7	)		—			—			—			5			5

Net income	$	129		$	95		$	90		$	72		$	57		$	314

Combined ratio
Loss and loss expense ratio		58.1	%		59.8	%		59.9	%		60.3	%		60.7	%		60.2	%
Policy acquisition cost ratio		17.9	%		19.6	%		19.3	%		18.9	%		18.7	%		19.2	%
Administrative expense ratio		13.3	%		12.9	%		13.7	%		14.0	%		14.0	%		13.6	%

Combined ratio		89.3	%		92.3	%		92.9	%		93.2	%		93.4	%		93.0	%

Large losses and other items
Large losses (before tax)	$	—		$	—		$	10		$	—		$	—		$	10
Prior period development	$	(8	)	$	11		$	35		$	12		$	(1	)	$	57
% Change versus prior year period
Gross premiums written		19	%		11	%		19	%		32	%		46	%		26	%
Net premiums written		22	%		23	%		26	%		49	%		60	%		38	%
Net premiums earned		27	%		50	%		36	%		52	%		60	%		49	%
Other ratios
Net premiums written/gross premiums written		72	%		73	%		73	%		74	%		70	%		72	%

Page 9

ACE Limited

Segment Results - Consecutive Quarters - 2

(in millions of U.S. dollars)

(Unaudited)

Insurance - Overseas General


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Gross premiums written
ACE Global Markets	$	391		$	458		$	351		$	422		$	346		$	1,577
ACE International		1,283			883			849			822			1,060		$	3,614

Total	$	1,674		$	1,341		$	1,200		$	1,244		$	1,406		$	5,191

Net premiums written
ACE Global Markets	$	272		$	294		$	253		$	295		$	256		$	1,098
ACE International		926			688			619			621			725		$	2,653

Total	$	1,198		$	982		$	872		$	916		$	981		$	3,751

Net premiums earned
ACE Global Markets	$	280		$	295		$	244		$	256		$	248		$	1,043
ACE International		754			712			638			604			566		$	2,520

Total	$	1,034		$	1,007		$	882		$	860		$	814		$	3,563

Net premiums written/gross premiums written
ACE Global Markets		69.6	%		64.2	%		72.1	%		69.9	%		74.0	%		69.6	%
ACE International		72.2	%		77.9	%		72.9	%		75.5	%		68.4	%		73.4	%

Total NPW/GPW		71.6	%		73.2	%		72.7	%		73.6	%		69.8	%		72.3	%

Loss ratio
ACE Global Markets		60.6	%		63.2	%		61.2	%		61.4	%		61.2	%		61.8	%
ACE International		57.2	%		58.4	%		59.4	%		59.8	%		60.4	%		59.5	%

Total loss ratio		58.1	%		59.8	%		59.9	%		60.3	%		60.7	%		60.2	%

Expense ratio
ACE Global Markets		33.0	%		33.1	%		35.7	%		35.7	%		36.7	%		35.3	%
ACE International		30.4	%		32.3	%		32.0	%		31.7	%		30.9	%		31.8	%

Total expense ratio		31.2	%		32.5	%		33.0	%		32.9	%		32.7	%		32.8	%

Combined ratio
ACE Global Markets		93.6	%		96.3	%		96.9	%		97.1	%		97.9	%		97.1	%
ACE International		87.6	%		90.7	%		91.4	%		91.5	%		91.3	%		91.3	%

Total combined ratio		89.3	%		92.3	%		92.9	%		93.2	%		93.4	%		93.0	%

Page 10

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Global Reinsurance


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Property and casualty
Gross premiums written	$	576		$	225		$	276		$	349		$	462		$	1,312
Net premiums written		569			220			217			345			443			1,225
Net premiums earned		329			309			274			269			248			1,100
Losses and loss expenses		159			166			134			143			116			559
Policy acquisition costs		64			58			56			51			46			211
Administrative expenses		19			17			16			14			15			62

P&C underwriting income		87			68			68			61			71			268
Life
Gross premiums written		53			49			49			46			49			193
Net premiums written		51			47			47			44			47			185
Net premiums earned		51			48			46			42			48			184
Losses and loss expenses		42			44			45			44			48			181
Policy acquisition costs		5			5			5			2			4			16
Administrative expenses		1			1			—			1			1			3
Net investment income		8			8			10			8			7			33

Life underwriting income		11			6			6			3			2			17
Total underwriting income		98			74			74			64			73			285
Net investment income - property and casualty		27			24			23			21			19			87
Other income (expense)		—			1			1			—			1			3
Interest expense		—			—			—			—			—			—
Income tax expense		3			4			3			3			4			14

Income excluding net realized gains (losses)		122			95			95			82			89			361
Net realized gains (losses)		(10	)		8			10			13			3			34
Tax effect of net realized gains (losses)		—			(1	)		—			1			—			—

Net income	$	112		$	102		$	105		$	96		$	92		$	395

P&C combined ratio
Loss and loss expense ratio		48.5	%		53.9	%		48.9	%		53.1	%		46.7	%		50.9	%
Policy acquisition cost ratio		19.4	%		18.9	%		20.4	%		18.8	%		18.6	%		19.2	%
Administrative expense ratio		5.6	%		5.5	%		5.7	%		5.3	%		6.0	%		5.6	%

P&C combined ratio		73.5	%		78.3	%		75.0	%		77.2	%		71.3	%		75.7	%

Large losses and other items
Large losses (before tax)	$	—		$	35		$	12		$	30		$	5		$	82
Prior period development	$	(13	)	$	(11	)	$	(3	)	$	(13	)	$	—		$	(27	)

Page 11

ACE Limited

Segment Results - Consecutive Quarters - 2

(in millions of U.S. dollars)

(Unaudited)

Global Reinsurance - Property & Casualty


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
% Change versus prior year period
Gross premiums written		25	%		99	%		48	%		63	%		24	%		48	%
Net premiums written		28	%		134	%		66	%		75	%		25	%		58	%
Net premiums earned		33	%		42	%		41	%		79	%		116	%		62	%
Other ratios
Net premiums written/gross premiums written		99	%		98	%		79	%		99	%		96	%		93	%

Global Reinsurance - By Division

Gross premiums written
Tempest Europe	$	126		$	63		$	60		$	97		$	123		$	343
Tempest USA		253			148			147			133			100			528
Tempest Bermuda		197			14			69			119			239			441

Total GPW	$	576		$	225		$	276		$	349		$	462		$	1,312

Net premiums written
Tempest Europe	$	122		$	53		$	52		$	94		$	115		$	314
Tempest USA		252			148			144			132			99			523
Tempest Bermuda		195			19			21			119			229			388

Total NPW	$	569		$	220		$	217		$	345		$	443		$	1,225

Net premiums earned
Tempest Europe	$	75		$	72		$	55		$	63		$	69		$	259
Tempest USA		169			138			127			112			86			463
Tempest Bermuda		85			99			92			94			93			378

Total NPE	$	329		$	309		$	274		$	269		$	248		$	1,100

Net premiums written/gross premiums written
Tempest Europe		88	%		84	%		87	%		97	%		93	%		92	%
Tempest USA		106	%		100	%		98	%		99	%		99	%		99	%
Tempest Bermuda		98	%		136	%		30	%		100	%		96	%		88	%

Total NPW/GPW		99	%		98	%		79	%		99	%		96	%		93	%

Page 12

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Financial Services


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Gross premiums written	$	208		$	289		$	107		$	118		$	532		$	1,046
Net premiums written		208			276			105			132			526			1,039
Net premiums earned		179			472			205			215			209			1,101
Losses and loss expenses		86			428			144			161			161			894
Policy acquisition costs		11			16			17			17			11			61
Administrative expenses		24			24			22			20			18			84

Underwriting income		58			4			22			17			19			62
Net investment income		53			53			49			49			51			202
Other income		(11	)		—			(1	)		1			—			—
Interest expense		2			1			2			1			2			6
Income tax expense		13			(1	)		11			8			9			27

Income excluding net realized gains (losses)		85			57			57			58			59			231
Net realized gains (losses)		5			92			29			72			(3	)		190
Tax effect of net realized gains (losses)		(7	)		(11	)		(6	)		(20	)		—			(37	)

Net income	$	83		$	138		$	80		$	110		$	56		$	384

Combined ratio
Loss and loss expense ratio		48.0	%		90.6	%		70.2	%		74.9	%		77.0	%		81.2	%
Policy acquisition cost ratio		5.9	%		3.2	%		8.7	%		7.8	%		5.2	%		5.5	%
Administrative expense ratio		13.7	%		5.1	%		10.6	%		9.5	%		8.6	%		7.7	%

Combined ratio		67.6	%		98.9	%		89.5	%		92.2	%		90.8	%		94.4	%

Large losses and other items
Loss portfolio transfers⁽¹⁾	$	—		$	270		$	4		$	—		$	—		$	274
Prior period development	$	(2	)	$	44		$	(2	)	$	(9	)	$	10		$	43

% Change versus prior year period
Gross premiums written		-61	%		21	%		-78	%		-63	%		9	%		-32	%
Net premiums written		-60	%		21	%		-78	%		-58	%		11	%		-31	%
Net premiums earned		-14	%		62	%		-45	%		-6	%		-11	%		-2	%
Other ratios
Net premiums written/gross premiums written		100	%		96	%		98	%		112	%		99	%		99	%

⁽¹⁾	Total premiums typically included in gross premiums written, net premiums written, and net premiums earned in the quarter it is written; usually accrued at 100% loss ratio.

Page 13

ACE Limited

Segment Results - Consecutive Quarters - 2

(in millions of U.S. dollars)

(Unaudited)

Financial Services


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Gross premiums written
Financial guaranty	$	(7	)	$	158		$	112		$	119		$	121		$	510
Financial solutions		215			131			(5	)		(1	)		411			536

Total GPW	$	208		$	289		$	107		$	118		$	532		$	1,046

Net premiums written
Financial guaranty	$	(7	)	$	159		$	111		$	119		$	120		$	509
Financial solutions		215			117			(6	)		13			406			530

Total NPW	$	208		$	276		$	105		$	132		$	526		$	1,039

Net premiums earned
Financial guaranty	$	87		$	88		$	80		$	82		$	78		$	328
Financial solutions		92			384			125			133			131			773

Total NPE	$	179		$	472		$	205		$	215		$	209		$	1,101

Loss ratio
Financial guaranty		18.8	%		71.3	%		46.4	%		49.7	%		50.1	%		54.8	%
Financial solutions		75.6	%		95.0	%		85.4	%		90.5	%		92.9	%		92.3	%

Total loss ratio		48.0	%		90.6	%		70.2	%		74.9	%		77.0	%		81.2	%

Expense ratio
Financial guaranty		30.9	%		38.0	%		33.7	%		35.3	%		27.6	%		33.9	%
Financial solutions		9.0	%		1.5	%		10.1	%		6.1	%		5.7	%		4.4	%

Total expense ratio		19.6	%		8.3	%		19.3	%		17.3	%		13.8	%		13.2	%

Combined ratio
Financial guaranty		49.7	%		109.3	%		80.1	%		85.0	%		77.7	%		88.7	%
Financial solutions		84.6	%		96.5	%		95.5	%		96.6	%		98.6	%		96.7	%

Total combined ratio		67.6	%		98.9	%		89.5	%		92.2	%		90.8	%		94.4	%

Page 14

ACE Limited

Financial Guaranty Profile

(in millions of U.S. dollars)

(Unaudited)


	Gross Par Written ⁽⁷⁾				Net Par Outstanding/Average Ratings
	Three months ended March 31, 2004				March 31, 2004					December 31, 2003
Sector	Par Outstanding		% of total		Par Outstanding		% of total		Average Rating	Par Outstanding		% of total		Average Rating
Municipal Exposure
Tax Backed	$	822	18	%	$	21,611	24	%	A+	$	21,090	24	%	A+
Municipal Utilities		161	3	%		11,157	12	%	A+		11,114	13	%	A+
Special Revenue		207	4	%		9,078	10	%	A		9,060	10	%	A
Healthcare		507	11	%		6,028	7	%	A+		5,828	7	%	A
Structured Municipal ⁽¹⁾		—	0	%		3,266	4	%	AAA		3,378	4	%	AAA
Other Municipal ⁽²⁾		236	5	%		2,777	3	%	A-		2,378	3	%	A-

Total Municipal	$	1,933	41	%	$	53,917	60	%	A+	$	52,848	61	%	A
Non-Municipal Exposure
Senior Layer CDO’s ⁽³⁾	$	67	1	%	$	16,317	18	%	AA+	$	16,601	16	%	AA+
Consumer Receivables⁽⁴⁾		2,036	44	%		10,696	12	%	A+		9,461	10	%	A
Single Name Corporate CDS		—	0	%		2,081	2	%	A+		2,305	5	%	A+
Commercial Receivables ⁽⁵⁾		292	6	%		5,478	6	%	AA-		5,322	4	%	A+
Other Structured Finance ⁽⁶⁾		346	7	%		1,882	2	%	A+		1,920	3	%	A
Funded Equity CDO’s ⁽³⁾		—	0	%		221	0	%	NM		407	1	%	NM

Total Non-Municipal	$	2,741	59	%	$	36,675	40	%	AA	$	36,016	39	%	AA-

Total Exposure	$	4,674	100	%	$	90,592	100	%		$	88,864	100	%

⁽¹⁾	Structured Municipal: includes excess of loss reinsurance on portfolios of municipal credits where the company attached in excess of the AAA rating level.

⁽²⁾	Other Municipal: primarily includes first mortgage bonds on investor-owned utilities and government-sponsored project finance.

⁽³⁾

For ACE, collateralized debt obligations (CDO’s) are structured financings backed by a pool of investment grade assets. These financings are typically structured in multiple tranches (layers) from equity (first loss) through super senior (high excess). Losses on defaulted pool assets are allocated successively first to the equity tranche then to higher rated tranches. Market supply and demand factors influence pricing and the amount and position in the structure where ACE chooses to participate.

⁽⁴⁾	Consumer Receivables: principally includes auto loan receivables, residential mortgage-backed securities and credit card receivables.

⁽⁵⁾	Commercial Receivables: principally includes equipment leases and commercial mortgage-backed securities.

⁽⁶⁾	Other Structured Finance: predominantly trade receivable securitization, secured structured lending, and future flow transactions.

⁽⁷⁾	Gross par approximates net par as the company is a net line writer.

Note - Ratings are internally determined based on rating agency guidelines

Page 15

ACE Limited

Financial Guaranty Profile - 2

(in millions of U.S. dollars)

(Unaudited)

Distribution by Ratings of Financial Guaranty Portfolio


	At March 31, 2004
	Net Par Outstanding		% of total
AAA	$	26,920	30	%
AA		18,486	20	%
A		30,202	33	%
BBB		13,215	15	%
Below investment grade		1,552	2	%
Funded equity		217	0	%

Total	$	90,592	100	%

Geographic Distribution of Financial Guaranty Portfolio as of March 31, 2004


	Net Par Outstanding		% of total
Domestic
California	$	7,269	8.0	%
New York		5,580	6.2	%
Texas		3,273	3.6	%
Illinois		2,824	3.1	%
Florida		2,810	3.1	%
New Jersey		2,216	2.4	%
Pennsylvania		2,039	2.3	%
Massachusetts		1,698	1.9	%
Puerto Rico		1,503	1.7	%
Washington		1,333	1.5	%
Other - Muni		19,128	21.1	%
Other - Non Muni		33,573	37.1	%

Total Domestic	$	83,246	91.9	%

International
United Kingdom	$	3,749	4.1	%
Australia		532	0.6	%
Brazil		352	0.4	%
France		324	0.4	%
Netherlands		295	0.3	%
Other		2,094	2.3	%

Total International	$	7,346	8.1	%

Net Par Outstanding	$	90,592	100	%

Page 16

ACE Limited

Financial Services Portfolio

25 Largest Municipal Exposures

(in millions of U.S. dollars)

(Unaudited)


Obligor Name	Net Par In Force ⁽¹⁾		Rating
California State General Obligation & Leases	$	900	BBB
New Jersey State General Obligation & Leases		724	AA
Long Island Power Authority		720	A-
New York City General Obligation		695	A
Denver Colorado Airport System		632	A
Jefferson County Alabama Sewer		607	A
Chicago Illinois General Obligation		589	A+
Puerto Rico Electric Power Authority		555	A-
New York City Municipal Water Finance Authority		548	AA
New York State Metro Trans Auth - Trans Revenue		539	A
Massachusetts State GO & Bay Transportation & Leases		516	AA-
San Francisco California Airport		505	A+
Energy Northwest (FKA WPPSS)		469	AA-
New York State General Obligation		448	AA
Puerto Rico General Obligation & Leases		430	A-
Houston Texas Water & Sewer System		393	A+
Los Angeles County Metro Trans - Sales Tax - 1st		365	AA
Dade County Florida Water & Sewer System		327	A
Mental Health Services Facilities - New York		320	AA-
Intermountain Power Agency		320	A+
Illinois State General Obligation & Leases		307	AA
Puerto Rico Government Development Bank		300	AAA
Chicago Illinois Public Building - Board of Education		300	A+
New Jersey State Turnpike		298	A
District of Columbia General Obligation		297	A-

⁽¹⁾	Excludes Net Par In Force for transactions insured by an AAA monoline financial guaranty company

Page 17

ACE Limited

Financial Services Portfolio - 2

25 Largest Asset-Backed Exposures (Non - Municipal)

(in millions of U.S. dollars)

(Unaudited)


Obligor Name	Net Par In Force		Rating
SALS 2002-6 - Synthetic CDO	$	740	AAA
Argent Securities Inc. 2003-W6		736	AAA
Absolute CDO OF ABS		594	AAA
Triplas CDO OF ABS		584	AAA
Taurus 2001-06 - Synthetic CDO		571	A+
Sears Credit Card Master Trust 2002-3 Class A - Credit Cards		550	AAA
Dresdner 2001 - 1 - Synthetic CDO		500	AAA
Houston CDO Portfolio 2000-1		470	AA
Stars 2001-3 - Synthetic CDO		440	AAA
Merrill Lynch Synthetic CDO Taurus 8		440	AAA
Merrill Lynch Dots 4 - Synthetic CDO		430	AAA
SALS 2003-9 - Synthetic CDO		410	AAA
Providian Gateway Master Trust		392	BB-
Magrathea V - Synthetic CDO		360	AAA
Lehman Sprint 2001-1 Super Senior - Synthetic CDO		360	AAA
Taurus 2001-01 - Synthetic CDO		347	AAA
Option One Mortgage Loan Trust 2003-1 Cl A-1		344	AAA
ING Equity Trust (Pilgrim Principal Protection)		322	AAA
Europa II Limited Class A1 - Synthetic CDO		301	AAA
Bistro 2000-07 Class A-1 - Synthetic CDO		300	AAA
Hights 2001-1 - Synthetic CDO		295	BBB+
Metris Master Credit Card Trust		281	BB
CDO ^2 - CDO of CDOs		281	AAA
Halcyon Synthetic CDO		278	AAA
Morgan Stanley Dean Witter 2003-NC9 Class A1		276	AAA

Page 18

ACE Limited

Financial Services Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

Largest Single Name Corporate CDS


Obligor Name	Net Par In Force ⁽¹⁾		Rating	Rating	Gross Par Written ⁽²⁾ Three months ended March 31, 2004		Net Par Outstanding
General Electric Company	$	60	AAA	AAA	$	—	$	420
ABN AMRO Bank NV		53	AA-	AA		—		377
Fortis NV		52	A+	A		—		1,019
Japan Republic Sovereign Obligation		50	AA-	BBB		—		265
American International Group, Inc. (AIG)		50	AAA	Below investment grade		—		—

FNMA - Fannie Mae		45	AAA	Total	$	—	$	2,081

Allianz AG		41	AA-
France Telecom		40	BBB+
Deutsche Telekom AG		40	BBB+
Citigroup, Inc.		39	AA-

⁽¹⁾	Excludes Net Par In Force for transactions insured by an AAA monoline financial guaranty company

⁽²⁾	Gross par approximates net par as the company is a net line writer

Page 19

ACE Limited

Financial Services Portfolio - 4

(in millions of U.S. dollars)

(Unaudited)

Maturity Profile of Select Par Insured Categories

(Outstanding Net Par)


	2004⁽¹⁾		2005		2006		2007		2008
Senior Layer CDO’s
Beginning outstanding par	$	16,317	$	16,217	$	14,211	$	11,545	$	8,513
Scheduled runoff amount		228		2,312		3,402		4,061		2,228

Ending outstanding par	$	16,089	$	13,777	$	10,376	$	6,314	$	4,086


Single Name Corporate CDS
Beginning outstanding par	$	2,081	$	1,681	$	692	$	506	$	279
Scheduled runoff amount		400		989		186		227		100

Ending outstanding par	$	1,681	$	692	$	506	$	279	$	179


Funded Equity CDO’s
Beginning outstanding par	$	221	$	221	$	221	$	221	$	163
Scheduled runoff amount		—		—		—		58		50

Ending outstanding par	$	221	$	221	$	221	$	163	$	113

⁽¹⁾	Beginning balance as of January 1, 2004


CDO’s Rating	Gross Par Written ⁽²⁾ Three months ended March 31, 2004		Net Par Outstanding
AAA	$	7	$	12,522
AA		60		1,933
A		—		1,021
BBB		—		735
Below investment grade		—		106
Funded Equity		—		221

Total	$	67	$	16,538

⁽²⁾	Gross par approximates net par as the company is a net line writer

Page 20

ACE Limited

Loss Reserve Rollforward

(in millions of U.S. dollars)

(Unaudited)


	Total									Ongoing									Run-off ⁽¹⁾
	Unpaid Losses									Unpaid Losses									Unpaid Losses
	Gross			Ceded			Net			Gross			Ceded			Net			Gross			Ceded			Net
Balance at December 31, 2002	$	24,315		$	12,997		$	11,318		$	15,832		$	6,798		$	9,034		$	8,483		$	6,199		$	2,284
Losses and loss expenses incurred		2,390			1,107			1,283			2,365			1,104			1,261			25			3			22
Losses and loss expenses paid		(2,155	)		(984	)		(1,171	)		(1,910	)		(893	)		(1,017	)		(245	)		(91	)		(154	)
Other (incl. foreign exch. revaluation)		86			16			70			79			16			63			7			—			7

Balance at March 31, 2003		24,636			13,136			11,500			16,366			7,025			9,341			8,270			6,111			2,159

Losses and loss expenses incurred		2,511			1,052			1,459			2,463			1,020			1,443			48			32			16
Losses and loss expenses paid		(2,415	)		(1,357	)		(1,058	)		(1,964	)		(1,134	)		(830	)		(451	)		(223	)		(228	)
Other (incl. foreign exch. revaluation)		208			123			85			208			123			85			—			—			—

Balance at June 30, 2003		24,940			12,954			11,986			17,073			7,034			10,039			7,867			5,920			1,947

Losses and loss expenses incurred		2,552			1,033			1,519			2,472			977			1,495			80			56			24
Losses and loss expenses paid		(1,833	)		(863	)		(970	)		(1,557	)		(663	)		(894	)		(276	)		(200	)		(76	)
Other (incl. foreign exch. revaluation)		(22	)		(19	)		(3	)		(12	)		(19	)		7			(10	)		—			(10	)

Balance at September 30, 2003		25,637			13,105			12,532			17,976			7,329			10,647			7,661			5,776			1,885

Losses and loss expenses incurred		2,812			956			1,856			2,779			932			1,847			33			24			9
Losses and loss expenses paid		(1,810	)		(1,104	)		(706	)		(1,433	)		(797	)		(636	)		(377	)		(307	)		(70	)
Other (incl. foreign exch. revaluation) ⁽²⁾		516			235			281			513			235			278			3			—			3

Balance at December 31, 2003		27,155			13,192			13,963			19,835			7,699			12,136			7,320			5,493			1,827

Losses and loss expenses incurred		2,298			756			1,542			2,256			724			1,532			42			32			10
Losses and loss expenses paid		(1,873	)		(781	)		(1,092	)		(1,652	)		(682	)		(970	)		(221	)		(99	)		(122	)
Other (incl. foreign exch. revaluation)		117			110			7			117			110			7			—			—			—

Balance at March 31, 2004	$	27,697		$	13,277		$	14,420		$	20,556		$	7,851		$	12,705		$	7,141		$	5,426		$	1,715

⁽¹⁾	The run-off reserves primarily include Brandywine group, the Commercial Insurance Service - Middle Market Worker’s Comp. reserves and the pre-1997 Westchester Specialty reserves.

⁽²⁾	Other includes approximately $220 million of gross losses and $140 million of reinsurance recoverable related to ACE increasing its participation in the Lloyds syndicate to 100%.

Page 21

ACE Limited

Asbestos and Environmental Reserves

(in millions of U.S. dollars)

(Unaudited)


	Asbestos									Asbestos - December 31, 2003*
	Gross			Ceded			Net			Gross 3 year survival ratio	Gross 1 year survival ratio
Balance at December 31, 2003	$	2,899		$	2,622		$	277		10.3x	9.9x
Prior period development		—			—			—
Losses and loss expenses paid		(96	)		(48	)		(48	)
Foreign exchange revaluation		21			11			10

Balance at March 31, 2004	$	2,824		$	2,585		$	239


	Environmental & Other Latent Exposures
	Gross			Ceded			Net
Balance at December 31, 2003	$	1,148		$	898		$	250
Prior period development		—			—			—
Losses and loss expenses paid		(47	)		(13	)		(34	)
Foreign exchange revaluation		3			1			2

Balance at March 31, 2004	$	1,104		$	886		$	218

*	The survival ratios are adversely affected by the timing of certain previously agreed upon settlements. These payments were anticipated in our 2002 asbestos study.

Page 22

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	March 31 2004			December 31 2003			December 31 2002
Reinsurance recoverable on paid losses & loss expenses
Active operations⁽¹⁾	$	761		$	835		$	951
Brandywine⁽²⁾		405			419			385
Westchester⁽³⁾		26			23			27

Total	$	1,192		$	1,277		$	1,363

Reinsurance recoverable on unpaid losses & loss expenses
Active operations⁽¹⁾	$	8,954		$	8,494		$	7,839
Brandywine⁽²⁾		4,340			4,729			5,237
Westchester⁽³⁾		539			541			491

Total	$	13,833		$	13,764		$	13,567

Gross reinsurance recoverable
Active operations⁽¹⁾	$	9,715		$	9,329		$	8,790
Brandywine⁽²⁾		4,745			5,148			5,622
Westchester⁽³⁾		565			564			518

Total	$	15,025		$	15,041		$	14,930

Bad debt reserve
Active operations⁽¹⁾	$	(510	)	$	(482	)	$	(431	)
Brandywine⁽²⁾		(424	)		(449	)		(478	)
Westchester⁽³⁾		(29	)		(29	)		(30	)

Total	$	(963	)	$	(960	)	$	(939	)

Net reinsurance recoverable
Active operations⁽¹⁾	$	9,205		$	8,847		$	8,359
Brandywine⁽²⁾		4,321			4,699			5,144
Westchester⁽³⁾		536			535			488

Total	$	14,062		$	14,081		$	13,991

⁽¹⁾	Active operations include the run-off operations of CIS and certain other divisions.

⁽²⁾

The Active operations’ obligations with respect to further funding of the run-off of Century Indemnity Company, a Brandywine subsidiary, are limited under the Brandywine Restructuring Order (the “Order”). Under the Order, the Company provided $800 million aggregate excess of loss reinsurance agreement, with respect to the Brandywine Runoff. (Refer to the “Asbestos and Environmental Claims” section of the “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” incorporated into our filed Form 10-K for the year ended December 31, 2003 for additional information about the Order and other Company obligations.) At March 31, 2004, approximately $466 million in losses and recoverable bad debt reserves were ceded by Century to the aggregate excess of loss reinsurance agreement.

⁽³⁾	As part of the Westchester acquisition, National Indemnity provided reinsurance protection for all losses occurring prior to 1997. At December 31, 2003, the remaining unimpaired limit in the reinsurance cover was approximately $600 million.

Page 23

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Reinsurance Recoverable for Active Operations


	December 31, 2003
Categories	Recoverable		Bad Debt		% of Gross
Top 10 reinsurers	$	4,306	$	59	1.4	%
Other reinsurers balances >$20 million		2,442		87	3.6	%
Other reinsurers balances <$20 million		748		106	14.2	%
Mandatory pools and government agencies		753		4	0.5	%
Captives		782		1	0.1	%
Other⁽¹⁾		298		225	75.5	%

Total	$	9,329	$	482	5.2	%

At December 31, 2003, $6.9 billion of the active operations’ recoverables were from rated reinsurers, of which 85% were rated the equivalent of A- or better by nationally recognized rating agencies. The Company held collateral of $1.7 billion, of which $1.2 billion was matched and usable against existing recoverables.


Top 10 Reinsurers (net of collateral)⁽²⁾	Other Reinsurers Balances Greater Than $20 million (net of collateral)⁽²⁾
AXA	ABB Group	Independence Blue Cross (Amerihealth)
Berkshire Hathaway Insurance Group	AIOI Insurance	ING - Internationale Nederlanden Group
CIGNA	Allianz Group	Korean Reinsurance Company (KRIC)
Electric Insurance Company	American International Group	Liberty Mutual Insurance Companies
GE Global Insurance Group (Employers Re)	Arch Capital	Overseas Partners Ltd.
Hannover	AVIVA	PMA Capital Insurance Company
Lloyd’s of London	Chubb Insurance Group	QBE Insurance
Munich Re	CNA Insurance Companies	RenaissanceRe Holdings Ltd
Swiss Re Group	Converium Group	Royal & Sun Alliance Insurance Group plc
XL Capital Group	DaimlerChrysler Group	SCOR Group
	EQUITAS	Sompo Japan
	Everest Re Group	St. Paul Companies
	Fairfax Financial	Trenwick Group
	FM Global Group	White Mountains Insurance Group
	Gerling Group	WR Berkley Corp
	Hartford Insurance Group	Zurich Financial Services Group

⁽¹⁾ Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our estimation of this reserve considers the credit quality of the reinsurer, and whether we have received collateral or other credit protections such as parental guarantees.

⁽²⁾ Excludes recoverable amounts from companies who are in supervision, rehabilitation or liquidation, or are captive reinsurers, mandatory pools or voluntary pools.

Page 24

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Consolidated Reinsurance Recoverable


	December 31, 2003
Categories	Recoverable		Bad Debt		% of Gross
Top 10 reinsurers	$	7,798	$	84	1.1	%
Other reinsurers balances >$20 million		3,373		147	4.4	%
Other reinsurers balances <$20 million		979		150	15.3	%
Mandatory pools and government agencies		779		4	0.5	%
Structured settlements		429		2	0.5	%
Captives		801		1	0.1	%
Other⁽¹⁾		882		572	64.9	%

Total	$	15,041	$	960	6.4	%

At December 31, 2003, $11.3 billion of consolidated recoverables were from rated reinsurers, of which 89% were rated the equivalent of A- or better by nationally recognized rating agencies.


Top 10 Reinsurers (net of collateral)⁽²⁾	Other Reinsurers Balances Greater Than $20 million (net of collateral)⁽²⁾
AXA	ABB Group	IRB - Brasil Resseguros S.A.
Berkshire Hathaway Insurance Group	AIOI Insurance	Korean Reinsurance Company (KRIC)
CIGNA	Allianz Group	Liberty Mutual Insurance Companies
EQUITAS	American International Group	Mitsui Sumitomo Insurance Company Ltd.
GE Global Insurance Group	Arch Capital	Overseas Partners Ltd.
Hannover	AVIVA	Partner Reinsurance Company of the U.S.
Lloyd’s of London	Chubb Insurance Group	PMA Capital Insurance Company
Munich Re	CNA Insurance Companies	QBE Insurance
St. Paul Companies	Constellation Reinsurance Company	RenaissanceRe Holdings Ltd
Swiss Re Group	Converium Group	Royal & Sun Alliance Insurance Group plc
	DaimlerChrysler Group	SCOR Group
	Dominion Ins. Co. Ltd.	Sompo Japan
	Electric Insurance Company	Toa Reinsurance Company
	Everest Re Group	Tokio Marine & Fire Insurance Company Ltd.
	Fairfax Financial	Travelers Property Casualty Group
	FM Global Group	Trenwick Group
	Gerling Group	White Mountains Insurance Group
	Great American P&C Insurance Companies	WR Berkley Corp
	Hartford Insurance Group	XL Capital Group
	Independence Blue Cross (Amerihealth)	Zurich Financial Services Group
	ING - Internationale Nederlanden Group

⁽²⁾ Excludes recoverable amounts from companies who are in supervision, rehabilitation or liquidation, or are captive reinsurers, mandatory pools or voluntary pools.

Page 25

ACE Limited

Reinsurance Recoverable Analysis - 4

(in millions of U.S. dollars)

(Unaudited)

Detail on Reinsurance Recoverable on Paid Losses and Loss Expenses


	General Collections⁽¹⁾			Other⁽²⁾			Total
Gross balance at December 31, 2003	$	730		$	547		$	1,277
Bad debt reserve at 12/31/03		45			358			403
% of gross		6.2	%		65.4	%		31.6	%

Net balance at December 31, 2003	$	685		$	189		$	874

Gross balance at March 31, 2004	$	639		$	553		$	1,192
Bad debt reserve at 3/31/04		44			378			422
% of gross		6.9	%		68.4	%		35.4	%

Net balance at March 31, 2004	$	595		$	175		$	770

⁽¹⁾	General collections balances represent amounts in process of collection in the normal course of business, for which we have no indication of dispute or credit issues.

⁽²⁾

Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our estimation of this reserve considers the credit quality of the reinsurer, and whether we have received collateral or other credit protections such as parental guarantees.

Page 26

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	March 31 2004			December 31 2003
Market Value
Fixed maturities	$	19,920		$	18,645
Securities on loan		1,183			684
Short-term investments		3,290			2,928
Cash		614			562

Total	$	25,007		$	22,819

Asset Allocation by Market Value
Treasury	$	1,491		$	1,715
Agency		1,723			1,512
Corporate		7,201			6,304
Mortgage-backed securities		4,536			3,894
Asset-backed securities		800			737
Municipal		1,498			1,445
Non-US		3,854			3,723
Cash & cash equivalent		3,904			3,489

Total	$	25,007		$	22,819

Credit Quality by Market Value
AAA	$	13,211		$	12,315
AA		4,200			3,389
A		3,847			3,534
BBB		2,002			1,783
BB		653			709
B		1,045			1,029
Other		49			60

Total	$	25,007		$	22,819

Cost/Amortized Cost
Fixed maturities	$	19,129		$	18,006
Securities on loan		1,113			650
Short term investments		3,290			2,928
Cash		614			562

Subtotal		24,146			22,146
Equity securities		414			401
Other investments		595			602

Total	$	25,155		$	23,149

Avg. duration of fixed maturities, adj. for int. rate swaps		3.4 years			3.4 years
Avg. market yield of fixed maturities		4.0	%		4.0	%
Avg. credit quality		AA			AA

Page 27

ACE Limited

Investment Portfolio - 2

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 10 Exposures - Fixed Maturity Investments and Single Name Credit Default Swaps


March 31, 2004			December 31, 2003
General Electric	$	257	General Electric	$	303
Citigroup Inc		214	Citigroup Inc		186
HSBC Holdings Plc		189	General Motors		167
Morgan Stanley		145	HSBC Holdings Plc		144
General Motors		129	Verizon Communications		119
Verizon Communications		124	AIG		108
Goldman Sachs Group Inc		120	DaimlerChrysler		101
Bank of America Corp		116	Morgan Stanley		95
American International Group		115	Ford Motor Co		94
Ford Motor Co		97	Deutsche Telekom		84

Page 28

ACE Limited

Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended March 31, 2004
	Net Realized Gains (Losses) ⁽¹⁾			Net Unrealized Gains (Losses)			Net Impact
Investment Portfolio Gains (Losses)
Fixed maturities	$	55		$	175		$	230
Interest rate swaps		(14	)		—			(14	)
Equity securities		28			(4	)		24
Equity and fixed income derivatives		13			—			13
Foreign exchange gains (losses)		5			—			5
Other		(7	)		4			(3	)

Total inv. portfolio gains (losses)		80			175			255
Other FAS 133 adjustments		(23	)		—			(23	)

Total gains (losses)		57			175			232
Income tax (expense) benefit		(21	)		(48	)		(69	)

Net gains (losses)	$	36		$	127		$	163

⁽¹⁾	Includes impairments of $1M for fixed maturities and $1M for equities.


	Three months ended March 31, 2003
	Net Realized Gains (Losses) ⁽²⁾			Net Unrealized Gains (Losses)			Net Impact
Investment Portfolio Gains (Losses)
Fixed maturities	$	12		$	56		$	68
Interest rate swaps		(9	)		—			(9	)
Equity securities		(50	)		34			(16	)
Equity and fixed income derivatives		—			—			—
Foreign exchange gains (losses)		9			—			9
Other		—			(2	)		(2	)

Total inv. portfolio gains (losses)		(38	)		88			50
Other FAS 133 adjustments		(2	)		—			(2	)

Total gains (losses)		(40	)		88			48
Income tax (expense) benefit		8			(9	)		(1	)

Net gains (losses)	$	(32	)	$	79		$	47

⁽²⁾	Includes impairments of $18M for fixed maturities and $46M for equities.

Page 29

ACE Limited

Capital Structure

(in millions of U.S. dollars)

(Unaudited)


	March 31 2004			December 31 2003			December 31 2002
Total short-term debt	$	546		$	546		$	146
Total long-term debt		1,349			1,349			1,749

Total debt		1,895			1,895			1,895
Total trust preferreds		487			475			475
Mezzanine equity ⁽¹⁾		—			—			311
Perpetual preferred ⁽²⁾		557			557			—
Ordinary shareholders’ equity		8,840			8,278			6,389

Total shareholders’ equity	$	9,397		$	8,835		$	6,389

Total capitalization	$	11,779		$	11,205		$	9,070
Tangible shareholders’ equity ⁽³⁾	$	6,698		$	6,124		$	3,672

Leverage ratios
Debt/ total capitalization		16.1	%		16.9	%		20.9	%
Debt plus trust preferreds/ total capitalization		20.2	%		21.2	%		26.1	%
Debt/ tangible equity		28.3	%		30.9	%		51.6	%
Debt plus trust preferreds and mezzanine equity/ tangible equity		35.6	%		38.7	%		73.0	%
Debt plus total preferred stock/ total capitalization		25.0	%		26.1	%		26.1	%

⁽¹⁾	The FELINE PRIDES converted in the second quarter of 2003.

⁽²⁾	Preferred shares $575 million, net of issuance costs $18 million.

⁽³⁾	Tangible equity is equal to shareholders’ equity less goodwill.

Page 30

ACE Limited

Non-GAAP Financial Measures

(in millions of U.S. dollars)

(Unaudited)

Regulation G - Non-GAAP Financial Measures

In presenting our results, we have included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations; however, they should not be viewed as a substitute for measures determined in accordance with GAAP. A reconciliation of book value per share to diluted book value per ordinary share is provided on page 33. The following non-GAAP measure is a common performance measurement and is defined as income (loss) excluding net realized gains (losses) on investments and the tax effect of net realized gains (losses) on investments. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

We exclude net realized gains (losses) on investments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. We believe these amounts are largely independent of our business and including them would distort the analysis of trends. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).


	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Net income, as reported	$	447		$	444		$	355		$	371		$	247		$	1,417
Net realized gains (losses)		57			128			57			107			(40	)		252
Tax effect of net realized gains (losses)		(21	)		(12	)		(6	)		(22	)		8			(32	)

Income excluding net realized gains (losses)	$	411		$	328		$	304		$	286		$	279		$	1,197

Page 31

ACE Limited

Diluted Book Value per Ordinary Share

(in millions of U.S. dollars, except share and per share data)

(Unaudited)

Reconciliation of Book Value per Ordinary Share to Diluted Book Value per Ordinary Share


	March 31 2004			December 31 2003
Shareholders’ equity	$	9,397		$	8,835
Net proceeds from assumed conversions of options		622			390
Proceeds from issuance of preferred shares		(557	)		(557	)

Numerator for diluted book value per share calculation		9,462			8,668
Less: goodwill		2,699			2,711

Numerator for diluted tangible book value per share	$	6,763		$	5,957

Ordinary shares outstanding - end of period		282,714,909			279,897,193
Shares issued from assumed conversions of options		18,951,480			14,305,419

Denominator for diluted and diluted tangible book value		301,666,389			294,202,612

Book value per ordinary share	$	33.24		$	29.57
Diluted book value per ordinary share	$	31.36		$	29.46
Diluted tangible book value per ordinary share	$	22.41		$	20.25

Page 32

ACE Limited

Comprehensive Income

(in millions of U.S. dollars)

(Unaudited)


Consolidated Statement of Comprehensive Income	1Q-04			4Q-03			3Q-03			2Q-03			1Q-03			Full Year 2003
Net income	$	447		$	444		$	355		$	371		$	247		$	1,417
Net unrealized appreciation (depreciation) on investments
Unrealized appreciation (depreciation) on investments		236			3			(165	)		354			112			304
Reclassification adjustment for net realized gains (losses) included in net income		(61	)		(19	)		(24	)		(14	)		(24	)		(81	)
Cumulative translation adjustment		2			62			(1	)		57			26			144
Minimum pension liability adjustment		(2	)		8			(3	)		(59	)		—			(54	)
Income tax (expense) benefit related to other comprehensive income items		(41	)		(2	)		48			(63	)		(16	)		(33	)

Other comprehensive income (loss)		134			52			(145	)		275			98			280

Comprehensive income	$	581		$	496		$	210		$	646		$	345		$	1,697

Page 33

ACE Limited

Glossary

Annualized return on ordinary shareholders’ equity (ROE): Income (loss) excluding net realized gains (losses) less perpetual preferred securities and mezzanine equity dividends divided by average ordinary shareholders’ equity for the period. To annualize a quarterly rate multiply by four.

Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio for the property and casualty and financial services operations.

Diluted book value per ordinary share: Ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued.

Diluted tangible book value per ordinary share: Ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options less goodwill divided by the sum of shares outstanding and the number of options assumed issued.

Effective tax rate: Income tax expense divided by the sum of income tax expense and income (loss) excluding net realized gains (losses).

FAS 115: Unrealized gains (losses) on investments and the deferred tax component included in shareholders’ equity.

Life underwriting income: Net premium earned and net investment income less future policy benefits, acquisition costs and administrative expenses.

NM: Not meaningful.

Ordinary shareholders’ equity: Shareholders’ equity less perpetual preferred shares.

Property and casualty combined ratios: Loss and loss expense ratios, policy acquisition cost ratios and administrative expense ratios excluding life reinsurance business and financial services segment.

Return on ordinary shareholders’ equity (ROE): Income (loss) excluding net realized gains (losses) less perpetual preferred securities and mezzanine equity dividends divided by average ordinary shareholders’ equity.

Tangible equity: Shareholders’ equity less goodwill.

Total capitalization: Short-term debt, long-term debt, trust preferreds, mezzanine equity, perpetual preferred shares and shareholders’ equity.

Page 34