11. Information provided in connection with outstanding debt of subsidiaries

The following tables present condensed consolidating financial information at March 31, 2012 and December 31, 2011, and for the three months ended March 31, 2012 and 2011, for ACE Limited (the Parent Guarantor) and ACE INA Holdings Inc. (the Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantor's investment accounts and earnings. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Subsidiary Issuer is presented on a consolidated basis and consists principally of the net assets, results of operations, and cash flows of operating insurance company subsidiaries.

Condensed Consolidating Balance Sheet at March 31, 2012

(in millions of U.S. dollars)


	ACE Limited (Parent Guarantor)		ACE INA Holdings Inc. (Subsidiary Issuer)		Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
Assets
Investments	$	34	$	29,078	$	27,680		$	—		$	56,792
Cash		162		496		57			—			715
Insurance and reinsurance balances receivable		—		4,050		437			—			4,487
Reinsurance recoverable on losses and loss expenses		—		16,685		(4,628	)		—			12,057
Reinsurance recoverable on policy benefits		—		1,140		(897	)		—			243
Value of business acquired		—		669		—			—			669
Goodwill and other intangible assets		—		4,306		554			—			4,860
Investments in subsidiaries		25,197		—		—			(25,197	)		—
Due from subsidiaries and affiliates, net		376		—		—			(376	)		—
Other assets		15		7,683		2,228			—			9,926

Total assets	$	25,784	$	64,107	$	25,431		$	(25,573	)	$	89,749

Liabilities
Unpaid losses and loss expenses	$	—	$	30,691	$	6,556		$	—		$	37,247
Unearned premiums		—		5,726		938			—			6,664
Future policy benefits		—		3,766		592			—			4,358
Due to subsidiaries and affiliates, net		—		281		95			(376	)		—
Short-term debt		130		851		550			—			1,531
Long-term debt		—		3,360		—			—			3,360
Trust preferred securities		—		309		—			—			309
Other liabilities		223		8,233		2,393			—			10,849

Total liabilities		353		53,217		11,124			(376	)		64,318

Total shareholders' equity		25,431		10,890		14,307			(25,197	)		25,431

Total liabilities and shareholders' equity	$	25,784	$	64,107	$	25,431		$	(25,573	)	$	89,749

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

⁽²⁾	Includes ACE Limited parent company eliminations.

Condensed Consolidating Balance Sheet at December 31, 2011

(in millions of U.S. dollars)


	ACE Limited (Parent Guarantor)		ACE INA Holdings Inc. (Subsidiary Issuer)		Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
Assets
Investments	$	33	$	28,848	$	26,795		$	—		$	55,676
Cash		106		382		126			—			614
Insurance and reinsurance balances receivable		—		3,944		443			—			4,387
Reinsurance recoverable on losses and loss expenses		—		17,146		(4,757	)		—			12,389
Reinsurance recoverable on policy benefits		—		941		(692	)		—			249
Value of business acquired		—		676		—			—			676
Goodwill and other intangible assets		—		4,248		551			—			4,799
Investments in subsidiaries		23,871		—		—			(23,871	)		—
Due from subsidiaries and affiliates, net		498		—		—			(498	)		—
Other assets		8		7,018		1,505			—			8,531

Total assets	$	24,516	$	63,203	$	23,971		$	(24,369	)	$	87,321

Liabilities
Unpaid losses and loss expenses	$	—	$	30,837	$	6,640		$	—		$	37,477
Unearned premiums		—		5,416		918			—			6,334
Future policy benefits		—		3,673		601			—			4,274
Due to subsidiaries and affiliates, net		—		316		182			(498	)		—
Short-term debt		—		850		401			—			1,251
Long-term debt		—		3,360		—			—			3,360
Trust preferred securities		—		309		—			—			309
Other liabilities		184		7,769		2,031			—			9,984

Total liabilities		184		52,530		10,773			(498	)		62,989

Total shareholders' equity		24,332		10,673		13,198			(23,871	)		24,332

Total liabilities and shareholders' equity	$	24,516	$	63,203	$	23,971		$	(24,369	)	$	87,321

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

⁽²⁾	Includes ACE Limited parent company eliminations.

Condensed Consolidating Statement of Operations

For the Three Months Ended March 31, 2012

(in millions of U.S. dollars)


	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)		Other ACE Limited Subsidiaries and Eliminations⁽¹⁾		Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
Net premiums written	$	—		$	2,098	$	1,474	$	—		$	3,572
Net premiums earned		—			1,952		1,429		—			3,381
Net investment income		—			265		279		—			544
Equity in earnings of subsidiaries		928			—		—		(928	)		—
Net realized gains including OTTI		20			26		214		—			260
Losses and loss expenses		—			1,182		622		—			1,804
Policy benefits		—			86		61		—			147
Policy acquisition costs and administrative expenses		12			640		440		—			1,092
Interest (income) expense		(9	)		66		5		—			62
Other (income) expense		(30	)		25		2		—			(3	)
Income tax expense		2			85		23		—			110

Net income	$	973		$	159	$	769	$	(928	)	$	973



Comprehensive income	$	1,271		$	287	$	641	$	(928	)	$	1,271

Condensed Consolidating Statement of Operations

For the Three Months Ended March 31, 2011

(in millions of U.S. dollars)


	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
Net premiums written	$	—		$	2,023		$	1,423		$	—		$	3,446
Net premiums earned		—			1,938			1,371			—			3,309
Net investment income		1			262			281			—			544
Equity in earnings of subsidiaries		239			—			—			(239	)		—
Net realized gains (losses) including OTTI		(1	)		(13	)		(31	)		—			(45	)
Losses and loss expenses		—			1,301			962			—			2,263
Policy benefits		—			40			51			—			91
Policy acquisition costs and administrative expenses		18			588			452			—			1,058
Interest (income) expense		(8	)		67			4			—			63
Other (income) expense		(22	)		13			(4	)		—			(13	)
Income tax expense		1			68			27			—			96

Net income	$	250		$	110		$	129		$	(239	)	$	250



Comprehensive income	$	438		$	210		$	29		$	(239	)	$	438

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

⁽²⁾	Includes ACE Limited parent company eliminations.

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2012

(in millions of U.S. dollars)


	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
Net cash flows from operating activities	$	19		$	66		$	487		$	—		$	572

Cash flows from investing activities
Purchases of fixed maturities available for sale		—			(2,650	)		(2,833	)		—			(5,483	)
Purchases of fixed maturities held to maturity		—			(31	)		(1	)		—			(32	)
Purchases of equity securities		—			(10	)		(9	)		—			(19	)
Sales of fixed maturities available for sale		—			1,935			1,860			—			3,795
Sales of equity securities		—			24			2			—			26
Maturities and redemptions of fixed maturities available for sale		—			497			579			—			1,076
Maturities and redemptions of fixed maturities held to maturity		—			267			78			—			345
Net derivative instruments settlements		(1	)		(1	)		(193	)		—			(195	)
Advances from (to) affiliates		66			—			—			(66	)		—
Acquisition of subsidiaries		—			(25	)		—			—			(25	)
Other		—			90			(193	)		—			(103	)

Net cash flows from (used for) investing activities		65			96			(710	)		(66	)		(615	)

Cash flows from financing activities
Dividends paid on Common Shares		(159	)		—			—			—			(159	)
Common Shares repurchased		—			—			(11	)		—			(11	)
Net proceeds from issuance (repayment) of short-term debt		130			1			150			—			281
Proceeds from share-based compensation plans		1			—			27			—			28
Advances (to) from affiliates		—			(48	)		(18	)		66			—

Net cash flows (used for) from financing activities		(28	)		(47	)		148			66			139

Effect of foreign currency rate changes on cash and cash equivalents		—			(1	)		6			—			5

Net increase (decrease) in cash		56			114			(69	)		—			101
Cash – beginning of period		106			382			126			—			614

Cash – end of period	$	162		$	496		$	57		$	—		$	715

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

⁽²⁾	Includes ACE Limited parent company eliminations.

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2011

(in millions of U.S. dollars)


	ACE Limited (Parent Guarantor)			ACE INA Holdings Inc. (Subsidiary Issuer)			Other ACE Limited Subsidiaries and Eliminations⁽¹⁾			Consolidating Adjustments⁽²⁾			ACE Limited Consolidated
Net cash flows from operating activities	$	509		$	217		$	777		$	(500	)	$	1,003

Cash flows from investing activities
Purchases of fixed maturities available for sale		—			(3,418	)		(3,815	)		—			(7,233	)
Purchases of fixed maturities held to maturity		—			(176	)		(1	)		—			(177	)
Purchases of equity securities		—			(121	)		(22	)		—			(143	)
Sales of fixed maturities available for sale		6			2,760			2,662			—			5,428
Sales of equity securities		—			307			10			—			317
Maturities and redemptions of fixed maturities available for sale		—			440			501			—			941
Maturities and redemptions of fixed maturities held to maturity		—			298			98			—			396
Net derivative instruments settlements		(1	)		4			(88	)		—			(85	)
Advances (to) from affiliates		(99	)		—			—			99			—
Acquisition of subsidiaries (net of cash acquired of $39)		—			(8	)		(37	)		—			(45	)
Other		—			(28	)		(2	)		—			(30	)

Net cash flows (used for) from investing activities		(94	)		58			(694	)		99			(631	)

Cash flows from financing activities
Dividends paid on Common Shares		(112	)		—			—			—			(112	)
Common Shares repurchased		—			—			(68	)		—			(68	)
Net proceeds from issuance (repayments) of short-term debt		(300	)		—			400			—			100
Proceeds from share-based compensation plans		43			—			—			—			43
Advances from (to) affiliates		—			127			(28	)		(99	)		—
Dividends to parent company		—			—			(500	)		500			—

Net cash flows (used for) from financing activities		(369	)		127			(196	)		401			(37	)

Effect of foreign currency rate changes on cash and cash equivalents		—			5			3			—			8

Net increase (decrease) in cash		46			407			(110	)		—			343
Cash – beginning of period⁽³⁾		308			573			(109	)		—			772

Cash – end of period⁽³⁾	$	354		$	980		$	(219	)	$	—		$	1,115

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

⁽²⁾	Includes ACE Limited parent company eliminations.

⁽³⁾

ACE maintains two notional multi-currency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At March 31, 2011 and December 31, 2010, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.