Third quarter 2004 Financial Supplement

EX-99.2 3 dex992.htm THIRD QUARTER 2004 FINANCIAL SUPPLEMENT Third quarter 2004 Financial Supplement

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Financial Supplement

September 30, 2004


Investor Contact		This report is for informational purposes only. It should be read in conjunction 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.
Helen M. Wilson
Phone: (441) 299-9283
Fax: (441) 292-8675
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, judicial, legislative and other governmental developments, litigation tactics, and credit developments among reinsurers and the Company’s forward-looking statements concerning taxes could be affected by changes in tax laws and regulations. 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.

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ACE Limited

Financial Supplement Table of Contents


		Page
I.	Financial Highlights
	- Consolidated Financial Highlights	1
	- Consolidated Financial Highlights 2004 Excluding Third Quarter Catastrophe Loss Charges	2
	- Consolidated Financial Highlights 2003 Excluding Catastrophe Loss Charges	3

II.	Consolidated Results
	- Consolidated Results - Consecutive Quarters	4-5
	- Computation of Basic and Diluted Earnings Per Share	6
	- Summary Consolidated Balance Sheets	7
	- Consolidated Premiums by Line of Business	8
	- Consolidating Statement of Operations	9-10
	- Consolidating Schedule of Third Quarter Catastrophe Loss Charges	11

III.	Segment Results
	- Insurance-North American	12
	- Insurance-Overseas General	13-14
	- Global Reinsurance	15-16
	- Financial Services	17-18

IV.	Balance Sheet Details
	- Loss Reserve Rollforward	19
	- Asbestos and Environmental Reserves	20
	- Reinsurance Recoverable Analysis	21-24
	- Investment Portfolio	25-26
	- Realized and Unrealized Gains (Losses)	27
	- Capital Structure	28

V.	Other Disclosures
	- Non-GAAP Financial Measures	29
	- Diluted Book Value per Ordinary Share	30
	- Comprehensive Income	31
	- Glossary	32


		ACE Limited
		Consolidated Financial Highlights
		(in millions of U.S. dollars, except per share data and ratios)
		(Unaudited)


	Three months ended September 30						% Change 3Q-04 vs. 3Q-03		Nine months ended September 30						% Change YTD -04 vs. YTD-03
	2004			2003			% Change 3Q-04 vs. 3Q-03		2004			2003			% Change YTD -04 vs. YTD-03
Gross premiums written	$	3,982		$	3,451		15	%	$	12,438		$	10,969		13	%

Net premiums written	$	2,768		$	2,306		20	%	$	8,873		$	7,642		16	%

Net premiums earned	$	2,853		$	2,397		19	%	$	8,241		$	6,775		22	%

Net investment income	$	252		$	216		17	%	$	726		$	633		15	%

Net income (loss)	$	(3	)	$	355		-101	%	$	857		$	973		-12	%

Income excluding net realized gains (losses)⁽¹⁾	$	31		$	304		-90	%	$	822		$	869		-5	%

Comprehensive income	$	299		$	210		42	%	$	745		$	1,201		-38	%

Operating cash flow	$	1,782		$	1,058		68	%	$	4,062		$	2,620		55	%

Combined ratio
Loss and loss expense ratio		80.0	%		64.6	%				68.1	%		64.2	%
Underwriting and administrative expense ratio		25.2	%		26.8	%				25.7	%		27.1	%

Combined ratio		105.2	%		91.4	%				93.8	%		91.3	%

Annualized ROE*		0.9	%		15.2	%				12.2	%		15.9	%
Annualized ROE, excluding FAS 115*		0.9	%		16.8	%				13.2	%		17.3	%

Diluted earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	0.07		$	1.04		-93	%	$	2.76		$	3.08		-10	%
Net income (loss)	$	(0.05	)	$	1.22		-104	%	$	2.88		$	3.46		-17	%

Diluted book value per ordinary share	$	31.29		$	27.76		13	%	$	31.29		$	27.76		13	%
Diluted tangible book value per ordinary share	$	22.44		$	18.43		22	%	$	22.44		$	18.43		22	%

Weighted average basic ordinary shares outstanding		281.0			275.4					280.0			268.5
Weighted average diluted ordinary shares outstanding		285.6			281.9					285.3			274.2

Debt/ total capitalization		16.8	%		17.7	%				16.8	%		17.7	%

(1)	See page 29 Non-GAAP Financial Measures.

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


Financial Highlights		Page 1


		ACE Limited
		Consolidated Financial Highlights Excluding Third Quarter Catastrophe Loss Charges
		(in millions of U.S. dollars, except per share data and ratios)
		(Unaudited)


	Three months ended September 30, 2004									Nine months ended September 30, 2004
	As reported			Q3 Catastrophe loss charge			Adjusted			As reported			Q3 Catastrophe loss charge			Adjusted
Net premiums earned	$	2,793		$	11		$	2,804		$	8,076		$	11		$	8,087

Losses and loss expenses	$	2,234		$	(468	)	$	1,766		$	5,501		$	(468	)	$	5,033

Income tax expense	$	54		$	73		$	127		$	304		$	73		$	377

Net income (loss)	$	(3	)	$	406		$	403		$	857		$	406		$	1,263

Income excluding net realized gains (losses)⁽¹⁾	$	31		$	406		$	437		$	822		$	406		$	1,228

Combined ratio
Loss and loss expense ratio		80.0	%		-17.0	%		63.0	%		68.1	%		-5.9	%		62.2	%
Underwriting and administrative expense ratio		25.2	%		-0.1	%		25.1	%		25.7	%		0.0	%		25.7	%

Combined ratio		105.2	%		-17.1	%		88.1	%		93.8	%		-5.9	%		87.9	%

Annualized ROE*		0.9	%								12.2	%
Annualized ROE, excluding FAS 115*		0.9	%								13.2	%

Diluted earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	0.07		$	1.42		$	1.49		$	2.76		$	1.42		$	4.18
Net income (loss)	$	(0.05	)	$	1.42		$	1.37		$	2.88		$	1.42		$	4.30

Weighted average basic ordinary shares outstanding		281.0						281.0			280.0						280.0
Weighted average diluted ordinary shares outstanding		285.6						285.6			285.3						285.3

(1)	See page 29 Non-GAAP Financial Measures.

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


Financial Highlights (2)		Page 2


		ACE Limited
		Consolidated Financial Highlights Excluding Catastrophe Loss Charges
		(in millions of U.S. dollars, except per share data and ratios)
		(Unaudited)


	Three months ended September 30, 2003									Nine months ended September 30, 2003
	As reported			Q3 Catastrophe loss charge			Adjusted			As reported			Q3 Catastrophe loss charge			Adjusted
Net premiums earned	$	2,351		$	—		$	2,351		$	6,639		$	—		$	6,639

Losses and loss expenses	$	1,519		$	(42	)	$	1,477		$	4,261		$	(77	)	$	4,184

Income tax expense	$	67		$	7		$	74		$	207		$	7		$	214

Net income	$	355		$	35		$	390		$	973		$	70		$	1,043

Income excluding net realized gains (losses)⁽¹⁾	$	304		$	35		$	339		$	869		$	70		$	939

Combined ratio
Loss and loss expense ratio		64.6	%		-1.8	%		62.8	%		64.2	%		-1.2	%		63.0	%
Underwriting and administrative expense ratio		26.8	%		0.0	%		26.8	%		27.1	%		0.0	%		27.1	%

Combined ratio		91.4	%		-1.8	%		89.6	%		91.3	%		-1.2	%		90.1	%

Annualized ROE*		15.2	%								15.9	%
Annualized ROE, excluding FAS 115*		16.8	%								17.3	%

Diluted earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	1.04		$	0.12		$	1.16		$	3.08		$	0.25		$	3.33
Net income (loss)	$	1.22		$	0.12		$	1.34		$	3.46		$	0.25		$	3.71

Weighted average basic ordinary shares outstanding		275.4						275.4			268.5						268.5
Weighted average diluted ordinary shares outstanding		281.9						281.9			274.2						274.2

(1)	See page 29 Non-GAAP Financial Measures.

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


Financial Highlights (3)		Page 3


		ACE Limited
		Consolidated Results - Consecutive Quarters
		(in millions of U.S. dollars)
		(Unaudited)

ACE Limited Consolidated


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Property and Casualty⁽¹⁾
Gross premiums written	$	3,854		$	3,969		$	4,155		$	3,330		$	3,295		$	11,978		$	10,068		$	13,398
Net premiums written		2,641			2,798			2,979			2,250			2,154			8,418			6,741			8,991
Net premiums earned		2,682			2,600			2,370			2,307			2,146			7,652			6,010			8,317
Losses and loss expenses		2,118			1,636			1,456			1,429			1,375			5,210			3,795			5,224
Policy acquisition costs		378			381			349			363			321			1,108			917			1,280
Administrative expenses		321			298			290			295			271			909			778			1,073

P& C underwriting income (loss)	$	(135	)	$	285		$	275		$	220		$	179		$	425		$	520		$	740

Financial Services underwriting income (loss)		(11	)		26			58			4			22			73			58			62
Life underwriting income (loss) excluding investment income		5			3			3			(2	)		(4	)		11			(14	)		(16	)
Net investment income		252			236			238			228			216			726			633			861
Other (income) expense		(21	)		6			17			19			3			2			8			27
Net realized gains (losses)		(33	)		43			57			128			57			67			124			252
Interest expense		48			47			44			44			45			139			133			177
Income tax expense		54			127			123			71			67			304			207			278

Net income (loss)	$	(3	)	$	413		$	447		$	444		$	355		$	857		$	973		$	1,417

Net realized gains (losses)		(33	)		43			57			128			57			67			124			252
Tax expense on net realized gains (losses)		1			10			21			12			6			32			20			32

Income excluding net realized gains (losses)⁽²⁾	$	31		$	380		$	411		$	328		$	304		$	822		$	869		$	1,197

% Change versus prior year period⁽¹⁾
Gross premiums written		17	%		22	%		18	%		13	%		11	%		19	%		23	%		21	%
Net premiums written		23	%		25	%		26	%		32	%		27	%		25	%		43	%		40	%
Net premiums earned		25	%		27	%		31	%		41	%		44	%		27	%		54	%		50	%

Other ratios
Net premiums written/gross premiums written		69	%		70	%		72	%		68	%		65	%		70	%		67	%		67	%
Effective tax rate on income excluding net realized gains (losses)		63	%		24	%		20	%		15	%		17	%		25	%		18	%		17	%

ROE
Annualized ROE*		0.9	%		16.9	%		18.7	%		15.8	%		15.2	%		12.2	%		15.9	%		15.8	%
Annualized ROE, excluding FAS 115*		0.9	%		17.7	%		20.4	%		17.3	%		16.8	%		13.2	%		17.3	%		17.2	%

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

(2)	See page 29 Non-GAAP Financial Measures.

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


Financial Highlights		Page 6


		ACE Limited
		Consolidated Results - Consecutive Quarters
		(in millions of U.S. dollars)
		(Unaudited)

ACE Limited Consolidated


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Combined ratio
Loss and loss expense ratio		80.0	%		63.1	%		60.5	%		66.8	%		64.6	%		68.1	%		64.2	%		65.0	%
Policy acquisition cost ratio		13.6	%		14.3	%		14.1	%		13.6	%		14.4	%		14.0	%		14.5	%		14.2	%
Administrative expense ratio		11.6	%		11.3	%		12.3	%		11.5	%		12.4	%		11.7	%		12.6	%		12.3	%

Combined ratio		105.2	%		88.7	%		86.9	%		91.9	%		91.4	%		93.8	%		91.3	%		91.5	%


Property and Casualty ⁽¹⁾
	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Combined ratio
Loss and loss expense ratio		78.9	%		62.9	%		61.5	%		61.9	%		64.0	%		68.1	%		63.1	%		62.8	%
Policy acquisition cost ratio		14.1	%		14.6	%		14.7	%		15.8	%		15.0	%		14.5	%		15.3	%		15.4	%
Administrative expense ratio		12.0	%		11.5	%		12.2	%		12.8	%		12.6	%		11.9	%		12.9	%		12.9	%

Combined ratio		105.0	%		89.0	%		88.4	%		90.5	%		91.6	%		94.5	%		91.3	%		91.1	%

Large losses and other items
Catastrophe and other large losses	$	457		$	—		$	—		$	35		$	42		$	457		$	77		$	112
Prior period development⁽²⁾	$	12		$	25		$	(6	)	$	14		$	62		$	31		$	107		$	121

(1)	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.


Consolidated Results 2		Page 5


		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 September 30						Nine months ended September 30
	2004			2003			2004			2003
Numerator
Income excluding net realized gains (losses)⁽¹⁾	$	31		$	304		$	822		$	869
Perpetual preferred dividend		(11	)		(11	)		(33	)		(15	)
Mezzanine equity dividend		—			—			—			(10	)

Income to ordinary shares, excl. net realized gains (losses)		20			293			789			844
Net realized gains (losses), net of income tax		(34	)		51			35			104

Net income (loss) available to the holders of ordinary shares	$	(14	)	$	344		$	824		$	948

Rollforward of ordinary shares
Ordinary shares - beginning of period		283,604,445			277,755,290			279,897,193			262,679,356
Mezzanine equity conversion		—			—			—			11,814,274
Issued under employee stock purchase plan		114,102			152,251			239,731			288,400
Stock (cancelled) granted		(68,327	)		12,631			843,359			1,066,771
Issued for option exercises		462,646			560,738			3,132,583			2,632,109

Ordinary shares - end of period		284,112,866			278,480,910			284,112,866			278,480,910

Denominator
Weighted average shares outstanding		280,993,760			275,404,544			279,988,076			268,474,758
Effect of other dilutive securities		4,623,319			6,485,692			5,298,054			5,731,326

Adj. wtd. avg. shares outstanding and assumed conversions		285,617,079			281,890,236			285,286,130			274,206,084

Basic earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	0.07		$	1.06		$	2.82		$	3.14
Net realized gains (losses)		(0.12	)		0.19			0.12			0.39

Net income (loss)	$	(0.05	)	$	1.25		$	2.94		$	3.53

Diluted earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	0.07		$	1.04		$	2.76		$	3.08
Net realized gains (losses)		(0.12	)		0.18			0.12			0.38

Net income	$	(0.05	)	$	1.22		$	2.88		$	3.46

(1)	See page 29 Non-GAAP Financial Measures.


Earnings per share		Page 6


		ACE Limited
		Summary Consolidated Balance Sheets
		(in millions of U.S. dollars, except per share data)


	September 30 2004		June 30 2004		March 31 2004		December 31 2003
	(Unaudited)		(Unaudited)		(Unaudited)		(Audited)
Assets
Fixed maturities available for sale, at fair value	$	20,791	$	18,348	$	19,920	$	18,645
Equity securities, at fair value		960		953		539		544
Securities on loan, at fair value		1,044		1,515		1,183		684
Short-term investments		3,360		4,040		3,290		2,928
Other investments		1,228		1,216		643		645

Total investments		27,383		26,072		25,575		23,446

Cash		626		663		614		562
Insurance and reinsurance balances receivable		3,379		3,567		3,493		2,837
Reinsurance recoverable		14,268		14,374		14,062		14,081
Deferred policy acquisition costs		975		969		1,108		1,005
Prepaid reinsurance premiums		1,653		1,652		1,578		1,372
Goodwill		2,612		2,614		2,699		2,711
Deferred tax assets		1,015		1,115		997		1,090
Other assets		2,544		2,625		2,352		2,449

Total assets	$	54,455	$	53,651	$	52,478	$	49,553

Liabilities
Unpaid losses and loss expenses	$	29,603	$	28,224	$	27,697	$	27,155
Unearned premiums		6,466		6,555		6,930		6,051
Future policy benefits for life and annuity contracts		521		505		496		492
Insurance and reinsurance balances payable		2,273		2,280		2,145		1,903
Deposit liabilities		220		221		217		212
Securities lending collateral		1,068		1,542		1,208		698
Payable for investments purchased		879		726		570		369
Accounts payable, accrued expenses and other liabilities		1,539		1,496		1,436		1,468
Short-term debt		146		546		546		546
Long-term debt		1,849		1,849		1,349		1,349
Trust preferred securities		412		487		487		475

Total liabilities		44,976		44,431		43,081		40,718

Shareholders’ equity
Total shareholders’ equity, excl. AOCI		8,871		8,915		8,543		8,115
Accumulated other comprehensive income (AOCI)		608		305		854		720

Total shareholders’ equity		9,479		9,220		9,397		8,835

Total liabilities and shareholders’ equity	$	54,455	$	53,651	$	52,478	$	49,553

Diluted book value per ordinary share	$	31.29	$	30.46	$	31.36	$	29.46
Diluted tangible book value per ordinary share	$	22.44	$	21.61	$	22.41	$	20.25


Consol Bal Sheet		Page 7


		ACE Limited
		Consolidated Premiums by Line of Business
		(in millions of U.S. dollars)
		(Unaudited)

ACE Limited Consolidated


	3Q-04		% of Total Consolidated		3Q-03		% of Total Consolidated		% Change 3Q-04 vs .3Q-03		YTD 2004		% of Total Consolidated		YTD 2003		% of Total Consolidated		% Change YTD-04 vs. YTD-03
Net premiums written
Property and all other	$	750	27	%	$	814	35	%	-8	%	$	2,714	30	%	$	2,625	34	%	3	%
Casualty		1,628	59	%		1,119	48	%	45	%		4,860	55	%		3,398	45	%	43	%
Personal accident		263	10	%		221	10	%	19	%		844	10	%		718	9	%	18	%

Total P&C		2,641	96	%		2,154	93	%	23	%		8,418	95	%		6,741	88	%	25	%

Global Re - life		59	2	%		47	2	%	26	%		165	2	%		138	2	%	20	%
Financial Services		68	2	%		105	5	%	-35	%		290	3	%		763	10	%	-62	%

Total Consolidated	$	2,768	100	%	$	2,306	100	%	20	%	$	8,873	100	%	$	7,642	100	%	16	%

Net premiums earned
Property and all other	$	839	29	%	$	818	34	%	3	%	$	2,450	30	%	$	2,367	35	%	4	%
Casualty		1,553	54	%		1,096	46	%	42	%		4,366	54	%		2,971	44	%	47	%
Personal accident		290	10	%		232	10	%	25	%		836	10	%		672	10	%	24	%

Total P&C		2,682	94	%		2,146	90	%	25	%		7,652	93	%		6,010	89	%	27	%

Global Re - life		60	2	%		46	2	%	30	%		165	2	%		136	2	%	21	%
Financial Services		111	4	%		205	8	%	-46	%		424	5	%		629	9	%	-33	%

Total Consolidated	$	2,853	100	%	$	2,397	100	%	19	%	$	8,241	100	%	$	6,775	100	%	22	%


Line of Business		Page 8


		ACE Limited
		Consolidating Statement of Operations
		Three months ended September 30, 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
September 30, 2004
Gross premiums written	$	2,219		$	1,292	$	343		$	—		$	3,854		$	68		$	3,922
Net premiums written		1,349			980		312			—			2,641			68			2,709
Net premiums earned		1,234			1,086		362			—			2,682			111			2,793
Losses and loss expenses		1,010			653		436			19			2,118			116			2,234
Policy acquisition costs		114			199		65			—			378			2			380
Administrative expenses		129			139		16			37			321			4			325

Underwriting income (loss)		(19	)		95		(155	)		(56	)		(135	)		(11	)		(146	)

Life underwriting income (includes investment income)		—			—		13			—			13			—			13
Net investment income - property and casualty		120			61		31			3			215			29			244
Other (income) expense		(2	)		3		—			—			1			(22	)		(21	)
Net realized gains (losses)		9			2		(35	)		(6	)		(30	)		(3	)		(33	)
Interest expense		5			—		—			41			46			2			48
Income tax expense (benefit)		33			42		(1	)		(20	)		54			—			54

Net income (loss)		74			113		(145	)		(80	)		(38	)		35			(3	)

Net realized gains (losses)		9			2		(35	)		(6	)		(30	)		(3	)		(33	)
Tax expense (benefit) on net realized gains (losses)		2			1		—			—			3			(2	)		1

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	67		$	112	$	(110	)	$	(74	)	$	(5	)	$	36		$	31


September 30, 2003
Gross premiums written	$	1,819		$	1,200	$	276		$	—		$	3,295		$	107		$	3,402
Net premiums written		1,065			872		217			—			2,154			105			2,259
Net premiums earned		990			882		274			—			2,146			205			2,351
Losses and loss expenses		712			529		134			—			1,375			144			1,519
Policy acquisition costs		95			170		56			—			321			17			338
Administrative expenses		103			121		16			31			271			22			293

Underwriting income (loss)		80			62		68			(31	)		179			22			201

Life underwriting income (includes investment income)		—			—		6			—			6			—			6
Net investment income - property and casualty		98			39		23			(3	)		157			49			206
Other (income) expense		—			3		(1	)		—			2			1			3
Net realized gains (losses)		8			4		10			6			28			29			57
Interest expense		5			—		—			38			43			2			45
Income tax expense (benefit)		48			12		3			(13	)		50			17			67

Net income (loss)		133			90		105			(53	)		275			80			355

Net realized gains (losses)		8			4		10			6			28			29			57
Tax expense (benefit) on net realized gains (losses)		—			—		—			—			—			6			6

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	125		$	86	$	95		$	(59	)	$	247		$	57		$	304

(1)	See page 28 Non-GAAP Financial Measures.

Segment 2004 Qtr

Page 9


		ACE Limited
		Consolidating Statement of Operations
		Nine months ended September 30, 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
September 30, 2004
Gross premiums written	$	6,226	$	4,466		$	1,286		$	—		$	11,978		$	291		$	12,269
Net premiums written		3,890		3,283			1,245			—			8,418			290			8,708
Net premiums earned		3,419		3,196			1,037			—			7,652			424			8,076
Losses and loss expenses		2,543		1,879			769			19			5,210			291			5,501
Policy acquisition costs		326		579			203			—			1,108			22			1,130
Administrative expenses		347		416			50			96			909			38			947

Underwriting income (loss)		203		322			15			(115	)		425			73			498

Life underwriting income (includes investment income)		—		—			35			—			35			—			35
Net investment income - property and casualty		331		164			87			2			584			118			702
Other (income) expense		4		10			—			(1	)		13			(11	)		2
Net realized gains (losses)		92		29			(33	)		9			97			(30	)		67
Interest expense		15		—			—			119			134			5			139
Income tax expense (benefit)		164		154			3			(48	)		273			31			304

Net income (loss)		443		351			101			(174	)		721			136			857

Net realized gains (losses)		92		29			(33	)		9			97			(30	)		67
Tax expense (benefit) on net realized gains (losses)		17		9			—			—			26			6			32

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	368	$	331		$	134		$	(183	)	$	650		$	172		$	822

September 30, 2003
Gross premiums written	$	5,131	$	3,850		$	1,087		$	—		$	10,068		$	757		$	10,825
Net premiums written		2,967		2,769			1,005			—			6,741			763			7,504
Net premiums earned		2,663		2,556			791			—			6,010			629			6,639
Losses and loss expenses		1,861		1,541			393			—			3,795			466			4,261
Policy acquisition costs		279		485			153			—			917			45			962
Administrative expenses		293		356			45			84			778			60			838

Underwriting income (loss)	$	230	$	174		$	200		$	(84	)	$	520		$	58		$	578

Life underwriting income		—		—			11			—			11			—			11
Net investment income - property and casualty		300		111			63			(15	)		459			149			608
Other (income) expense		6		4			(2	)		—			8			—			8
Net realized gains (losses)		15		(7	)		26			(8	)		26			98			124
Interest expense		16		—			—			112			128			5			133
Income tax expense (benefit)		129		55			9			(40	)		153			54			207

Net income (loss)		394		219			293			(179	)		727			246			973

Net realized gains (losses)		15		(7	)		26			(8	)		26			98			124
Tax expense (benefit) on net realized gains (losses)		—		(5	)		(1	)		—			(6	)		26			20

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	379	$	221		$	266		$	(171	)	$	695		$	174		$	869

(1)	See page 28 Non-GAAP Financial Measures.

Segment 2004 YTD

Page 10


		ACE Limited
		Segment Results - Third Quarter Catastrophe Loss Charges
		(in millions of U.S. dollars)
		(Unaudited)


	Insurance - North American			Insurance - Overseas General			Global Reinsurance			Consolidated P&C			Financial Services			Total
Catastrophe Loss Charges - By Event
Net loss
Hurricane - Charley	$	31		$	—		$	65		$	96		$	—		$	96
Hurricane - Frances		22			6			48			76			5			81
Hurricane - Ivan		40			20			76			136			5			141
Hurricane - Jeanne		33			18			63			114			1			115
Typhoons		—			9			26			35			—			35

Total	$	126		$	53		$	278		$	457		$	11		$	468

Reinstatement premiums earned	$	13		$	13		$	(15	)	$	11		$	—		$	11

Total impact before income tax	$	139		$	66		$	263		$	468		$	11		$	479
Income tax benefit		(41	)		(21	)		(11	)		(73	)		—			(73	)

Total impact after income tax	$	98		$	45		$	252		$	395		$	11		$	406

Effective tax rate		29	%		32	%		4	%		16	%		0	%		15	%

Catastrophe Losses

Page 11


		ACE Limited
		Segment Results - Consecutive Quarters
		(in millions of U.S. dollars)
		(Unaudited)


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Insurance - North American
Gross premiums written	$	2,219		$	2,102		$	1,905		$	1,764		$	1,819		$	6,226		$	5,131		$	6,895
Net premiums written		1,349			1,329			1,212			1,048			1,065			3,890			2,967			4,015
Net premiums earned		1,234			1,178			1,007			991			990			3,419			2,663			3,654
Losses and loss expenses		1,010			837			696			660			712			2,543			1,861			2,521
Policy acquisition costs		114			111			101			108			95			326			279			387
Administrative expenses		129			115			103			109			103			347			293			402

Underwriting income (loss)		(19	)		115			107			114			80			203			230			344

Net investment income		120			107			104			103			98			331			300			403
Other (income) expense		(2	)		3			3			8			—			4			6			14
Net realized gains (losses)		9			31			52			24			8			92			15			39
Interest expense		5			5			5			6			5			15			16			22
Income tax expense		33			69			62			50			48			164			129			179

Net income		74			176			193			177			133			443			394			571

Net realized gains (losses)		9			31			52			24			8			92			15			39
Tax expense on net realized gains (losses)		2			8			7			—			—			17			—			—

Income excluding net realized gains (losses) ⁽¹⁾	$	67		$	153		$	148		$	153		$	125		$	368		$	379		$	532

Combined ratio
Loss and loss expense ratio		81.8	%		71.1	%		69.1	%		66.6	%		71.9	%		74.4	%		69.9	%		69.0	%
Policy acquisition cost ratio		9.3	%		9.5	%		10.0	%		10.9	%		9.6	%		9.5	%		10.4	%		10.6	%
Administrative expense ratio		10.5	%		9.7	%		10.3	%		11.1	%		10.4	%		10.2	%		11.0	%		11.0	%

Combined ratio		101.6	%		90.3	%		89.4	%		88.6	%		91.9	%		94.1	%		91.3	%		90.6	%

Large losses and other items
Large losses (before tax)	$	126		$	—		$	—		$	—		$	20		$	126		$	20		$	20
Prior period development	$	42		$	42		$	15		$	14		$	30		$	99		$	77		$	91

% Change versus prior year period
Gross premiums written		22	%		28	%		14	%		8	%		2	%		21	%		15	%		13	%
Net premiums written		27	%		37	%		30	%		28	%		23	%		31	%		41	%		38	%
Net premiums earned		25	%		28	%		34	%		34	%		51	%		28	%		54	%		48	%

Other ratios
Net premiums written/gross premiums written		61	%		63	%		64	%		59	%		59	%		62	%		58	%		58	%

(1) See page 29 Non-GAAP Financial Measures.


Insurance-North American		Page 12


		ACE Limited
		Segment Results - Consecutive Quarters
		(in millions of U.S. dollars)
		(Unaudited)


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Insurance - Overseas General
Gross premiums written	$	1,292		$	1,500		$	1,674		$	1,341		$	1,200		$	4,466		$	3,850		$	5,191
Net premiums written		980			1,105			1,198			982			872			3,283			2,769			3,751
Net premiums earned		1,086			1,076			1,034			1,007			882			3,196			2,556			3,563
Losses and loss expenses		653			625			601			603			529			1,879			1,541			2,144
Policy acquisition costs		199			196			184			197			170			579			485			682
Administrative expenses		139			139			138			130			121			416			356			486

Underwriting income	$	95		$	116		$	111		$	77		$	62		$	322		$	174		$	251

Net investment income		61			55			48			44			39			164			111			155
Other (income) expense		3			4			3			3			3			10			4			7
Net realized gains (losses)		2			3			24			1			4			29			(7	)		(6	)
Interest expense		—			—			—			—			—			—			—			—
Income tax expense		42			61			51			24			12			154			55			79

Net income	$	113		$	109		$	129		$	95		$	90		$	351		$	219		$	314

Net realized gains (losses)		2			3			24			1			4			29			(7	)		(6	)
Tax expense (benefit) on net realized gains (losses)		1			1			7			—			—			9			(5	)		(5	)

Income excluding net realized gains (losses) ⁽¹⁾	$	112		$	107		$	112		$	94		$	86		$	331		$	221		$	315

Combined ratio
Loss and loss expense ratio		60.1	%		58.1	%		58.1	%		59.8	%		59.9	%		58.8	%		60.3	%		60.2	%
Policy acquisition cost ratio		18.3	%		18.2	%		17.9	%		19.6	%		19.3	%		18.1	%		19.0	%		19.2	%
Administrative expense ratio		12.8	%		13.0	%		13.3	%		12.9	%		13.7	%		13.0	%		13.9	%		13.6	%

Combined ratio		91.2	%		89.3	%		89.3	%		92.3	%		92.9	%		89.9	%		93.2	%		93.0	%


Large losses and other items
Large losses (before tax)	$	53		$	—		$	—		$	—		$	10		$	53		$	10		$	10
Prior period development	$	(8	)	$	(4	)	$	(8	)	$	11		$	35		$	(20	)	$	46		$	57

% Change versus prior year period
Gross premiums written		8	%		21	%		19	%		11	%		19	%		16	%		32	%		26	%
Net premiums written		12	%		21	%		22	%		23	%		26	%		19	%		44	%		38	%
Net premiums earned		23	%		25	%		27	%		50	%		36	%		25	%		48	%		49	%

Other ratios
Net premiums written/gross premiums written		76	%		74	%		72	%		73	%		73	%		74	%		72	%		72	%

(1)	See page 29 Non-GAAP Financial Measures.


Insurance-Overseas General		Page 13


		ACE Limited
		Segment Results - Consecutive Quarters - 2
		(in millions of U.S. dollars)
		(Unaudited)

Insurance - Overseas General


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Gross premiums written
ACE Global Markets	$	307		$	424		$	391		$	458		$	351		$	1,122		$	1,119		$	1,577
ACE International		985			1,076			1,283			883			849			3,344			2,731			3,614

Total	$	1,292		$	1,500		$	1,674		$	1,341		$	1,200		$	4,466		$	3,850		$	5,191

Net premiums written
ACE Global Markets	$	236		$	315		$	272		$	294		$	253		$	823		$	804		$	1,098
ACE International		744			790			926			688			619			2,460			1,965			2,653

Total	$	980		$	1,105		$	1,198		$	982		$	872		$	3,283		$	2,769		$	3,751

Net premiums earned
ACE Global Markets	$	294		$	286		$	280		$	295		$	244		$	860		$	748		$	1,043
ACE International		792			790			754			712			638			2,336			1,808			2,520

Total	$	1,086		$	1,076		$	1,034		$	1,007		$	882		$	3,196		$	2,556		$	3,563

Net premiums written/gross premiums written
ACE Global Markets		76.9	%		74.3	%		69.6	%		64.2	%		72.1	%		73.4	%		71.8	%		69.6	%
ACE International		75.5	%		73.4	%		72.2	%		77.9	%		72.9	%		73.6	%		72.0	%		73.4	%

Total NPW/GPW		75.9	%		73.7	%		71.6	%		73.2	%		72.7	%		73.5	%		71.9	%		72.3	%

Loss ratio
ACE Global Markets		74.4	%		60.7	%		60.6	%		63.2	%		61.2	%		65.4	%		61.3	%		61.8	%
ACE International		54.8	%		57.1	%		57.2	%		58.4	%		59.4	%		56.4	%		59.9	%		59.5	%

Total loss ratio		60.1	%		58.1	%		58.1	%		59.8	%		59.9	%		58.8	%		60.3	%		60.2	%

Expense ratio
ACE Global Markets		30.1	%		31.4	%		33.0	%		33.1	%		35.7	%		31.5	%		36.1	%		35.3	%
ACE International		31.4	%		31.0	%		30.4	%		32.3	%		32.0	%		30.9	%		31.6	%		31.8	%

Total expense ratio		31.1	%		31.2	%		31.2	%		32.5	%		33.0	%		31.1	%		32.9	%		32.8	%

Combined ratio
ACE Global Markets		104.5	%		92.1	%		93.6	%		96.3	%		96.9	%		96.9	%		97.4	%		97.1	%
ACE International		86.2	%		88.1	%		87.6	%		90.7	%		91.4	%		87.3	%		91.5	%		91.3	%

Total combined ratio		91.2	%		89.3	%		89.3	%		92.3	%		92.9	%		89.9	%		93.2	%		93.0	%


Insurance-Overseas General 2		Page 14


		ACE Limited
		Segment Results - Consecutive Quarters
		(in millions of U.S. dollars)
		(Unaudited)

Global Reinsurance


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Property and casualty
Gross premiums written	$	343		$	367		$	576		$	225		$	276		$	1,286		$	1,087		$	1,312
Net premiums written		312			364			569			220			217			1,245			1,005			1,225
Net premiums earned		362			346			329			309			274			1,037			791			1,100
Losses and loss expenses		436			174			159			166			134			769			393			559
Policy acquisition costs		65			74			64			58			56			203			153			211
Administrative expenses		16			15			19			17			16			50			45			62

P&C underwriting income (loss)		(155	)		83			87			68			68			15			200			268

Life
Gross premiums written		60			56			53			49			49			169			144			193
Net premiums written		59			55			51			47			47			165			138			185
Net premiums earned		60			54			51			48			46			165			136			184
Losses and loss expenses		48			44			42			44			45			134			137			181
Policy acquisition costs		6			6			5			5			5			17			11			16
Administrative expenses		1			1			1			1			—			3			2			3
Net investment income		8			8			8			8			10			24			25			33

Life underwriting income		13			11			11			6			6			35			11			17

Total underwriting income (loss)		(142	)		94			98			74			74			50			211			285
Net investment income - property and casualty		31			29			27			24			23			87			63			87
Other (income) expense		—			—			—			(1	)		(1	)		—			(2	)		(3	)
Net realized gains (losses)		(35	)		12			(10	)		8			10			(33	)		26			34
Interest expense		—			—			—			—			—			—			—			—
Income tax expense		(1	)		1			3			5			3			3			9			14

Net income (loss)		(145	)		134			112			102			105			101			293			395

Net realized gains (losses)		(35	)		12			(10	)		8			10			(33	)		26			34
Tax expense (benefit) on net realized gains (losses)		—			—			—			1			—			—			(1	)		—

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	(110	)	$	122		$	122		$	95		$	95		$	134		$	266		$	361

P&C combined ratio
Loss and loss expense ratio		120.2	%		50.2	%		48.5	%		53.9	%		48.9	%		74.1	%		49.6	%		50.9	%
Policy acquisition cost ratio		18.0	%		21.4	%		19.4	%		18.9	%		20.4	%		19.6	%		19.3	%		19.2	%
Administrative expense ratio		4.5	%		4.5	%		5.6	%		5.5	%		5.7	%		4.8	%		5.7	%		5.6	%

P&C combined ratio		142.7	%		76.1	%		73.5	%		78.3	%		75.0	%		98.5	%		74.6	%		75.7	%

Large losses and other items
Large losses (before tax)	$	278		$	—		$	—		$	35		$	12		$	278		$	47		$	82
Prior period development	$	(22	)	$	(13	)	$	(13	)	$	(11	)	$	(3	)	$	(48	)	$	(16	)	$	(27	)

(1)	See page 29 Non-GAAP Financial Measures.


Global Reinsurance		Page 15


		ACE Limited
		Segment Results - Consecutive Quarters - 2
		(in millions of U.S. dollars)
		(Unaudited)

Global Reinsurance - Property & Casualty


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
% Change versus prior year period
Gross premiums written		24	%		5	%		25	%		99	%		48	%		18	%		40	%		48	%
Net premiums written		44	%		6	%		28	%		134	%		66	%		24	%		47	%		58	%
Net premiums earned		32	%		29	%		33	%		42	%		41	%		31	%		72	%		62	%

Other ratios
Net premiums written/gross premiums written		91	%		99	%		99	%		98	%		79	%		97	%		92	%		93	%

Global Reinsurance - By Division

Gross premiums written
Tempest Europe	$	76		$	60		$	126		$	63		$	60		$	262		$	280		$	343
Tempest USA		205			224			253			148			147			682			380			528
Tempest Bermuda		62			83			197			14			69			342			427			441

Total	$	343		$	367		$	576		$	225		$	276		$	1,286		$	1,087		$	1,312

Net premiums written
Tempest Europe	$	74		$	54		$	122		$	53		$	52		$	250		$	261		$	314
Tempest USA		204			224			252			148			144			680			375			523
Tempest Bermuda		34			86			195			19			21			315			369			388

Total	$	312		$	364		$	569		$	220		$	217		$	1,245		$	1,005		$	1,225

Net premiums earned
Tempest Europe	$	77		$	75		$	75		$	72		$	55		$	227		$	187		$	259
Tempest USA		194			189			169			138			127			552			325			463
Tempest Bermuda		91			82			85			99			92			258			279			378

Total	$	362		$	346		$	329		$	309		$	274		$	1,037		$	791		$	1,100

Net premiums written/gross premiums written
Tempest Europe		97	%		90	%		97	%		84	%		87	%		95	%		93	%		92	%
Tempest USA		100	%		100	%		100	%		100	%		98	%		100	%		99	%		99	%
Tempest Bermuda		55	%		104	%		99	%		136	%		30	%		92	%		86	%		88	%

Total NPW/GPW		91	%		99	%		99	%		98	%		79	%		97	%		92	%		93	%


Global Reinsurance 2		Page 16


		ACE Limited
		Segment Results - Consecutive Quarters
		(in millions of U.S. dollars)
		(Unaudited)

Financial Services


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Gross premiums written	$	68		$	15		$	208		$	289		$	107		$	291		$	757		$	1,046
Net premiums written		68			14			208			276			105			290			763			1,039
Net premiums earned		111			134			179			472			205			424			629			1,101
Losses and loss expenses		116			89			86			428			144			291			466			894
Policy acquisition costs		2			9			11			16			17			22			45			61
Administrative expenses		4			10			24			24			22			38			60			84

Underwriting income (loss)		(11	)		26			58			4			22			73			58			62

Net investment income		29			36			53			53			49			118			149			202
Other (income) expense		(22	)		—			11			—			1			(11	)		—			—
Net realized gains (losses)		(3	)		(32	)		5			92			29			(30	)		98			190
Interest expense		2			1			2			1			2			5			5			6
Income tax expense		—			11			20			10			17			31			54			64

Net income		35			18			83			138			80			136			246			384

Net realized gains (losses)		(3	)		(32	)		5			92			29			(30	)		98			190
Tax expense (benefit) on net realized gains (losses)		(2	)		1			7			11			6			6			26			37

Income excluding net realized gains (losses) ⁽¹⁾	$	36		$	51		$	85		$	57		$	57		$	172		$	174		$	231

Combined ratio
Loss and loss expense ratio		104.7	%		66.1	%		48.0	%		90.6	%		70.2	%		68.6	%		74.0	%		81.2	%
Policy acquisition cost ratio		2.3	%		7.0	%		5.9	%		3.2	%		8.7	%		5.3	%		7.2	%		5.5	%
Administrative expense ratio		2.7	%		7.5	%		13.7	%		5.1	%		10.6	%		8.8	%		9.6	%		7.7	%

Combined ratio		109.7	%		80.6	%		67.6	%		98.9	%		89.5	%		82.7	%		90.8	%		94.4	%

Large losses and other items
Loss portfolio transfers⁽²⁾	$	19		$	—		$	—		$	270		$	4		$	19		$	4		$	274
Large losses (before tax)	$	11		$	—		$	—		$	—		$	—		$	11		$	—		$	—
Prior period development	$	(14	)	$	(5	)	$	(2	)	$	44		$	(2	)	$	(21	)	$	1		$	43

% Change versus prior year period
Gross premiums written		-36	%		-87	%		-61	%		21	%		-78	%		-62	%		-42	%		-32	%
Net premiums written		-35	%		-89	%		-60	%		21	%		-78	%		-62	%		-40	%		-31	%
Net premiums earned		-46	%		-38	%		-14	%		62	%		-45	%		-33	%		-25	%		-2	%

Other ratios
Net premiums written/gross premiums written		100	%		93	%		100	%		96	%		98	%		100	%		101	%		99	%

(1)	See page 29 Non-GAAP Financial Measures.

(2)	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.


Financial Services		Page 17


		ACE Limited
		Financial Services
		Sale of Assured Guaranty
		(in millions of U.S. dollars)
		(Unaudited)

Sale of Assured Guaranty Ltd.

On April 28, 2004, the Company completed the sale of 65.3 percent of its financial and mortgage guaranty reinsurance and insurance businesses (transferred business) through the initial public offering (IPO) of 49 million common shares of Assured Guaranty Ltd. (Assured Guaranty) at $18.00 per share. Assured Guaranty was incorporated in Bermuda in August 2003 for the sole purpose of becoming a holding company for the transferred business.

Pursuant to the completion of the IPO on April 28, 2004, the Company received proceeds, net of related offering costs, of approximately $835 million. The transaction resulted in a pre-tax loss of $6.7 million, that reduces net realized gains in the consolidated income statement, and an after-tax loss of $18.1 million, which consists of the following:


Loss on sale of financial and mortgage guaranty businesses	$	(49.7	)
Income tax expense		11.4

After tax reduction in book value		(61.1	)

Realization of accumulated other comprehensive income on companies sold		43.0

After tax loss	$	(18.1	)

A description of each component of the loss is as follows:

*	The loss on the sale of the financial and mortgage guaranty businesses of $49.7 million represents the difference between the carrying value of the Company’s interest in Assured Guaranty sold and net proceeds of the Offering.

Income tax expense of $11.4 million principally relates to federal income taxes incurred from the transfer of ACE’s U.S. financial and mortgage guaranty operations to Assured Guaranty and attributed to the Assured Guaranty shares sold by the Company. The income tax expense results from a higher basis in the assets of the transferred subsidiaries for financial reporting purposes compared to the corresponding tax basis. In connection with its sale and pursuant to a tax allocation agreement, Assured Guaranty will make a tax election that will have the effect of increasing the tax basis of tangible and intangible assets to fair value. Future tax benefits that Assured Guaranty derives from this election will be payable to ACE and recognized by ACE when realized by Assured Guaranty.

*	The realization of accumulated other comprehensive income on companies sold of $43.0 million principally relates to the unrealized appreciation of available-for-sale securities included in the carrying value of the interest in Assured Guaranty sold; such gains had no effect on shareholders’ equity.


Financial Services 2		Page 18


		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

Losses and loss expenses incurred		2,452			727			1,725			2,482			761			1,721			(30	)		(34	)		4
Losses and loss expenses paid		(1,692	)		(593	)		(1,099	)		(1,401	)		(479	)		(922	)		(291	)		(114	)		(177	)
Other (incl. foreign exch. revaluation) (3)		(233	)		166			(399	)		(233	)		166			(399	)		—			—			—

Balance at June 30, 2004	$	28,224		$	13,577		$	14,647		$	21,404		$	8,299		$	13,105		$	6,820		$	5,278		$	1,542

Losses and loss expenses incurred		3,310			1,076			2,234			3,281			1,058			2,223			29			18			11
Losses and loss expenses paid		(1,958	)		(1,079	)		(879	)		(1,750	)		(887	)		(863	)		(208	)		(192	)		(16	)
Other (incl. foreign exch. revaluation)		27			48			(21	)		(396	)		(375	)		(21	)		423			423			—

Balance at September 30, 2004	$	29,603		$	13,622		$	15,981		$	22,539		$	8,095		$	14,444		$	7,064		$	5,527		$	1,537

(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%.

(3)	Other includes reductions in reserves related to the sale of Assured Guaranty Ltd.


Loss Reserve Rollforward		Page 19


		ACE Limited
		Asbestos and Environmental Reserves
		(in millions of U.S. dollars)
		(Unaudited)


										Asbestos - December 31, 2003*
	Asbestos									Gross 3 year survival ratio		Gross 1 year survival ratio
	Gross			Ceded			Net			Gross 3 year survival ratio		Gross 1 year survival ratio
Balance at December 31, 2003 (1)	$	3,026		$	2,726		$	300		10.7	x	10.3	x
Prior period development		—			—			—
Losses and loss expenses paid		(96	)		(48	)		(48	)
Foreign exchange revaluation		21			11			10

Balance at March 31, 2004	$	2,951		$	2,689		$	262

Prior period development		6			4			2
Losses and loss expenses paid		(138	)		(88	)		(50	)
Foreign exchange revaluation		(7	)		2			(9	)

Balance at June 30, 2004	$	2,812		$	2,607		$	205

Prior period development		—			—			—
Losses and loss expenses paid		(66	)		(33	)		(33	)
Foreign exchange revaluation and other		(16	)		(16	)		—

Balance at September 30, 2004	$	2,730		$	2,558		$	172


	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

Prior period development		—			—			—
Losses and loss expenses paid		(56	)		(18	)		(38	)
Foreign exchange revaluation		(3	)		(1	)		(2	)

Balance at June 30, 2004	$	1,045		$	867		$	178

Prior period development		—			—			—
Losses and loss expenses paid		(38	)		(15	)		(23	)
Foreign exchange revaluation		—			—			—

Balance at September 30, 2004	$	1,007		$	852		$	155

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

(1)	Reclassification of pre-1987 asbestos claims from general liability for comparative purposes.


Loss Reserves - A&E		Page 20


		ACE Limited
		Reinsurance Recoverable Analysis
		(in millions of U.S. dollars)
		(Unaudited)

Net Reinsurance Recoverable by Division


	September 30 2004			June 30 2004			March 31 2004			December 31 2003
Reinsurance recoverable on paid losses & loss expenses
Active operations	$	534		$	716		$	761		$	835
Brandywine		502			478			405			419
Westchester		23			28			26			23

Total	$	1,059		$	1,222		$	1,192		$	1,277

Reinsurance recoverable on unpaid losses & loss expenses
Active operations	$	9,049		$	9,397		$	8,954		$	8,494
Brandywine		4,707			4,229			4,340			4,729
Westchester		482			525			539			541

Total	$	14,238		$	14,151		$	13,833		$	13,764

Gross reinsurance recoverable
Active operations	$	9,583		$	10,113		$	9,715		$	9,329
Brandywine		5,209			4,707			4,745			5,148
Westchester		505			553			565			564

Total	$	15,297		$	15,373		$	15,025		$	15,041

Bad debt reserve
Active operations	$	(545	)	$	(554	)	$	(510	)	$	(482	)
Brandywine		(459	)		(416	)		(424	)		(449	)
Westchester		(25	)		(29	)		(29	)		(29	)

Total	$	(1,029	)	$	(999	)	$	(963	)	$	(960	)

Net reinsurance recoverable
Active operations	$	9,038		$	9,559		$	9,205		$	8,847
Brandywine		4,750			4,291			4,321			4,699
Westchester		480			524			536			535

Total	$	14,268		$	14,374		$	14,062		$	14,081


Reinsurance Recoverable		Page 21


		ACE Limited
		Reinsurance Recoverable Analysis
		(in millions of U.S. dollars)
		(Unaudited)

Reinsurance Recoverable for Active Operations


	June 30, 2004
	Recoverable		Bad Debt		% of Gross
Categories
Top 10 reinsurers	$	4,532	$	75	1.7	%
Other reinsurers balances >$20 million		2,513		75	3.0	%
Other reinsurers balances <$20 million		897		89	9.9	%
Mandatory pools and government agencies		684		3	0.4	%
Captives		994		2	0.2	%
Other⁽¹⁾		493		310	62.9	%

Total	$	10,113	$	554	5.5	%

At June 30, 2004, $7.3 billion of the active operations’ recoverables were from rated reinsurers, of which 84.0% were rated the equivalent of A- or better by nationally recognized rating agencies. The Company held collateral of $2.7 billion, of which $1.5 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⁾
Berkshire Hathaway Insurance Group	AIOI Insurance	Gerling Group
CIGNA	Allianz Group	Hartford Insurance Group
Electric Insurance Company	American International Group	Independence Blue Cross (Amerihealth)
GE Global Insurance Group	Arch Capital	ING - Internationale Nederlanden Group
Hannover	Aspen Insurance Holdings Ltd	Liberty Mutual Insurance Companies
Lloyd’s of London	AVIVA	Overseas Partners Ltd
Munich Re	AXA	Platinum Underwriters
St. Paul Travelers Companies	Chubb Insurance Group	Renaissance Re Holdings Ltd
Swiss Re Group	CNA Insurance Companies	Royal & Sun Alliance Insurance Group
XL Capital Group	Converium Group	SCOR Group
	DaimlerChrysler Insurance Company	Sompo Japan
	Endurance Specialty	Toa Reinsurance Company
	Equitas	Trenwick Group
	Everest Re Group	White Mountains Insurance Group
	Fairfax Financial	WR Berkley Corp
	FM Global 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 the reserve for other, considers the merits of the underlying matter, 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.


Rein Rec-Active		Page 22


		ACE Limited
		Reinsurance Recoverable Analysis
		(in millions of U.S. dollars)
		(Unaudited)

Consolidated Reinsurance Recoverable


	June 30, 2004
	Recoverable		Bad Debt		% of Gross
Categories
Top 10 reinsurers	$	7,964	$	104	1.3	%
Other reinsurers balances >$20 million		3,263		138	4.2	%
Other reinsurers balances <$20 million		1,044		107	10.2	%
Mandatory pools and government agencies		706		3	0.4	%
Structured settlements		424		2	0.5	%
Captives		1,013		2	0.2	%
Other⁽¹⁾		959		643	67.0	%

Total	$	15,373	$	999	6.5	%

At June 30, 2004, $11.3 billion of consolidated recoverables were from rated reinsurers, of which 88% 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⁾
Berkshire Hathaway Insurance Group	AIOI Insurance	Hartford Insurance Group
CIGNA	Allianz Group	Independence Blue Cross (Amerihealth)
Equitas	American International Group	ING - Internationale Nederlanden Group
GE Global Insurance Group	Arch Capital	Liberty Mutual Insurance Companies
Hannover	Aspen Insurance Holdings Ltd	Millea Holdings
Lloyd’s of London	AVIVA	Mitsui Sumitomo Insurance Company Ltd
Munich Re	AXA	Overseas Partners Ltd
St. Paul Travelers Companies	Chubb Insurance Group	Partner Re
Swiss Re Group	CNA Insurance Companies	Platinum Underwriters
XL Capital Group	Constellation Reinsurance Company	QBE Insurance
	Converium Group	Renaissance Re Holdings Ltd
	DaimlerChrysler Insurance Company	Royal & Sun Alliance Insurance Group
	Dominion Ins. Co. Ltd	SCOR Group
	Electric Insurance Company	Sompo Japan
	Endurance Specialty	Toa Reinsurance Company
	Everest Re Group	Trenwick Group
	Fairfax Financial	White Mountains Insurance Group
	FM Global Group	WR Berkley Corp
	Gerling Group	Zurich Financial Services Group
	Great American P&C Insurance Companies

⁽¹⁾

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


Rein Rec-Consolidated		Page 23


		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

Gross balance at June 30, 2004	$	619		$	603		$	1,222
Bad debt reserve at 6/30/04		35			405			440
% of gross		5.7	%		67.2	%		36.0	%

Net balance at June 30, 2004	$	584		$	198		$	782

Gross balance at September 30, 2004	$	550		$	509		$	1,059
Bad debt reserve at 9/30/04		46			382			428
% of gross		8.4	%		75.0	%		40.4	%

Net balance at September 30, 2004	$	504		$	127		$	631

⁽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⁾


Reinsurance Recoverable 4		Page 24


		ACE Limited
		Investment Portfolio
		(in millions of U.S. dollars)
		(Unaudited)


Market Value	September 30 2004			June 30 2004			March 31 2004			December 31 2003
Fixed maturities	$	20,791		$	18,348		$	19,920		$	18,645
Securities on loan		1,044			1,515			1,183			684
Short-term investments		3,360			4,040			3,290			2,928
Cash		626			663			614			562

Total	$	25,821		$	24,566		$	25,007		$	22,819

Asset Allocation by Market Value
Treasury	$	1,491		$	1,773		$	1,491		$	1,715
Agency		1,506			1,217			1,723			1,512
Corporate		7,418			6,809			7,201			6,304
Mortgage-backed securities		4,940			4,405			4,536			3,894
Asset-backed securities		958			832			800			737
Municipal		591			623			1,498			1,445
Non-US		4,955			4,203			3,854			3,723
Cash & cash equivalent		3,962			4,704			3,904			3,489

Total	$	25,821		$	24,566		$	25,007		$	22,819

Credit Quality by Market Value
AAA	$	13,250		$	12,780		$	13,211		$	12,315
AA		4,146			4,159			4,200			3,389
A		4,378			3,901			3,847			3,534
BBB		2,248			2,048			2,002			1,783
BB		752			664			653			709
B		994			973			1,045			1,029
Other		53			41			49			60

Total	$	25,821		$	24,566		$	25,007		$	22,819

Cost/Amortized Cost
Fixed maturities	$	20,325		$	18,226		$	19,129		$	18,006
Securities on loan		1,000			1,488			1,113			650
Short term investments		3,360			4,040			3,290			2,928
Cash		626			663			614			562

Subtotal		25,311			24,417			24,146			22,146
Equity securities		849			846			414			401
Other investments		1,159			1,143			595			602

Total	$	27,319		$	26,406		$	25,155		$	23,149

Avg. duration of fixed maturities, adj. for int. rate swaps		3.4 years			3.6 years			3.4 years			3.4 years
Avg. market yield of fixed maturities		4.0	%		4.6	%		3.6	%		4.0	%
Avg. credit quality		AA			AA			AA			AA


Investments		Page 25


		ACE Limited
		Investment Portfolio - 2
		(in millions of U.S. dollars)
		(Unaudited)

Investment portfolio


Top 10 Exposures - Fixed Maturity Investments excluding Assured Guaranty
September 30, 2004			June 30, 2004			(Restated) March 31, 2004			Including Assured Guaranty (Single Name Credit Default Swaps) (As Originally Reported) March 31, 2004
Citigroup Inc	$	225	HSBC Holdings Plc	$	187	HSBC Holdings Plc	$	200	General Electric	$	257
HSBC Holdings Plc		219	Citigroup Inc		174	General Electric		195	Citigroup Inc		214
General Electric		219	General Electric		167	Citigroup Inc		166	HSBC Holdings Plc		189
JP Morgan Chase & Co.		148	General Motors		130	Goldman Sachs Group Inc		123	Morgan Stanley		145
General Motors		131	Goldman Sachs Group Inc		124	Morgan Stanley		117	General Motors		129
Goldman Sachs Group Inc		130	Bank of America Corp		121	General Motors		114	Verizon Communications		124
Morgan Stanley		124	Morgan Stanley		114	Bank of America Corp		106	Goldman Sachs Group Inc		120
Bank of America Corp		121	JP Morgan Chase & Co.		102	Ford Motor Co		89	Bank of America Corp		116
Wells Fargo & Co.		108	Ford Motor Co		100	Verizon Communications		83	American International Group		115
Ford Motor Co		104	Verizon Communications		91	Vodafone Group PLC		82	Ford Motor Co		97


Investments 2		Page 26


		ACE Limited
		Realized and Unrealized Gains (Losses)
		(in millions of U.S. dollars)
		(Unaudited)


	Three months ended September 30, 2004									Nine months ended September 30, 2004
	Net Realized Gains (Losses) (1)			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses) (1)			Net Unrealized Gains (Losses)			Net Impact
Investment Portfolio Gains (Losses)
Fixed maturities	$	19		$	360		$	379		$	67		$	(169	)	$	(102	)
Interest rate swaps		(4	)		—			(4	)		9			—			9
Equity securities		7			5			12			75			(26	)		49
Equity and fixed income derivatives		(2	)		—			(2	)		14			—			14
Foreign exchange gains (losses)		1			—			1			(2	)		—			(2	)
Other		(10	)		(4	)		(14	)		(21	)		26			5

Total inv. portfolio gains (losses)		11			361			372			142			(169	)		(27	)
Other FAS 133 adjustments		(44	)		—			(44	)		(75	)		—			(75	)

Total gains (losses)		(33	)		361			328			67			(169	)		(102	)
Income tax (expense) benefit		(1	)		(77	)		(78	)		(32	)		46			14

Net gains (losses)	$	(34	)	$	284		$	250		$	35		$	(123	)	$	(88	)

(1)	The quarter includes impairments of $11M for fixed maturities, $3M for equities and $10M for other investments. Year to date includes impairments for $15M for fixed maturities, $5M for equities and $10M for other investments.


	Three months ended September 30, 2003									Nine months ended September 30, 2003
	Net Realized Gains (Losses) (2)			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses) (2)			Net Unrealized Gains (Losses)			Net Impact
Investment Portfolio Gains (Losses)
Fixed maturities	$	16		$	(220	)	$	(204	)	$	77		$	90		$	167
Interest rate swaps		5			—			5			(9	)		—			(9	)
Equity securities		1			27			28			(53	)		140			87
Equity and fixed income derivatives		8			—			8			28			—			28
Foreign exchange gains (losses)		3			—			3			18			—			18
Other		(2	)		4			2			(13	)		9			(4	)

Total inv. portfolio gains (losses)		31			(189	)		(158	)		48			239			287
Other FAS 133 adjustments		26			—			26			76			—			76

Total gains (losses)		57			(189	)		(132	)		124			239			363
Income tax (expense) benefit		(6	)		48			42			(20	)		(28	)		(48	)

Net gains (losses)	$	51		$	(141	)	$	(90	)	$	104		$	211		$	315

(2)	The quarter includes impairments of $6M for fixed maturities and $7M for equities and $4M for other. Year to date includes impairments of $25M for fixed maturities and $61M for equities and $20M for other.


Investments Gains (Losses)		Page 27


		ACE Limited
		Capital Structure
		(in millions of U.S. dollars)
		(Unaudited)


	September 30 2004			June 30 2004			March 31 2004			December 31 2003			December 31 2002
Total short-term debt	$	146		$	546		$	546		$	546		$	146
Total long-term debt	$	1,849			1,849			1,349			1,349			1,749

Total debt		1,995			2,395			1,895			1,895			1,895

Total trust preferreds		412			487			487			475			475

Mezzanine equity ⁽¹⁾		—			—			—			—			311

Perpetual preferred ⁽²⁾		557			557			557			557			—
Ordinary shareholders’ equity		8,922			8,663			8,840			8,278			6,389

Total shareholders’ equity	$	9,479		$	9,220		$	9,397		$	8,835		$	6,389

Total capitalization	$	11,886		$	12,102		$	11,779		$	11,205		$	9,070
Tangible shareholders’ equity ⁽³⁾	$	6,867		$	6,606		$	6,698		$	6,124		$	3,672

Leverage ratios
Debt/ total capitalization		16.8	%		19.8	%		16.1	%		16.9	%		20.9	%
Debt plus trust preferreds/ total capitalization		20.3	%		23.8	%		20.2	%		21.2	%		26.1	%
Debt/ tangible equity		29.1	%		36.3	%		28.3	%		30.9	%		51.6	%
Debt plus trust preferreds and mezzanine equity/ tangible equity		35.1	%		43.6	%		35.6	%		38.7	%		73.0	%
Debt plus total preferred stock/ total capitalization		24.9	%		28.4	%		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.


Capital Structure		Page 28


		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 30.

In presenting our segment operating results we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting losses and loss expenses, life and annuity benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense and net realized gains (losses).

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 benefit (expense) on 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).


	3Q-04			2Q-04		1Q-04		4Q-03		3Q-03		YTD 2004		YTD 2003		Full Year 2003
Net income (loss) , as reported	$	(3	)	$	413	$	447	$	444	$	355	$	857	$	973	$	1,417
Net realized gains (losses)		(33	)		43		57		128		57		67		124		252
Tax expense on net realized gains (losses)		1			10		21		12		6		32		20		32

Income excluding net realized gains (losses)	$	31		$	380	$	411	$	328	$	304	$	822	$	869	$	1,197


Reconciliation Non-GAAP		Page 29


		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


	September 30 2004			June 30 2004			March 31 2004			December 31 2003
Shareholders’ equity	$	9,479		$	9,220		$	9,397		$	8,835
Net proceeds from assumed conversions of options		315			331			622			390
Proceeds from issuance of preferred shares		(557	)		(557	)		(557	)		(557	)

Numerator for diluted book value per share calculation		9,237			8,994			9,462			8,668
Less: goodwill		2,612			2,614			2,699			2,711

Numerator for diluted tangible book value per share	$	6,625		$	6,380		$	6,763		$	5,957

Ordinary shares outstanding - end of period		284,112,866			283,604,445			282,714,909			279,897,193
Shares issued from assumed conversions of options		11,061,417			11,670,422			18,951,480			14,305,419

Denominator for diluted and diluted tangible book value		295,174,283			295,274,867			301,666,389			294,202,612

Book value per ordinary share	$	31.40		$	30.55		$	31.27		$	29.57
Diluted book value per ordinary share	$	31.29		$	30.46		$	31.36		$	29.46
Diluted tangible book value per ordinary share	$	22.44		$	21.61		$	22.41		$	20.25


Reconciliation Book Value		Page 30


		ACE Limited
		Comprehensive Income
		(in millions of U.S. dollars)
		(Unaudited)

Consolidated Statement of Comprehensive Income


	3Q-04			2Q-04			1Q-04			4Q-03			3Q-03			YTD 2004			YTD 2003			Full Year 2003
Net income (loss)	$	(3	)	$	413		$	447		$	444		$	355		$	857		$	973		$	1,417
Net unrealized appreciation (depreciation) on investments
Unrealized appreciation (depreciation) on investments		393			(622	)		236			3			(165	)		7			301			304
Reclassification adjustment for net realized gains (losses) included in net income		(32	)		(83	)		(61	)		(19	)		(24	)		(176	)		(62	)		(81	)
Cumulative translation adjustment		21			(24	)		2			62			(1	)		(1	)		82			144
Minimum pension liability adjustment		3			1			(2	)		8			(3	)		2			(62	)		(54	)
Income tax (expense) benefit related to other comprehensive income items		(83	)		180			(41	)		(2	)		48			56			(31	)		(33	)

Other comprehensive income (loss)		302			(548	)		134			52			(145	)		(112	)		228			280

Comprehensive income (loss)	$	299		$	(135	)	$	581		$	496		$	210		$	745		$	1,201		$	1,697


Comprehensive Income		Page 31

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. Calculated on a GAAP basis.

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.

P & C: Property and casualty.

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. Calculated on a GAAP basis.

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.

YTD: Year to date.


Glossary		Page 32