UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
Current Report
 
Pursuant To Section 13 or 15 (d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) – February 3, 2009
 
ACE LIMITED
(Exact name of registrant as specified in its charter)

Switzerland	 	1-11778	 	98-0091805	
(State or other jurisdiction of Incorporation)	 	(Commission File Number)	 	(I.R.S. Employer Identification No.)	
 
Bärengasse 32
Zürich CH-8001,
Switzerland
Telephone: +41 (0)43 456 76 00
(Address of principal executive offices)
 
Not applicable
(Former name or former address, if changed since last report)
 
Mainaustrasse 30
Zurich CH-8008,
Switzerland

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02.	Results of Operations and Financial Condition	
 
On February 3, 2009, ACE Limited issued a press release reporting its fourth quarter 2008 results and the availability of its fourth quarter financial supplement. The press release and the financial supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are hereby incorporated herein by reference.
 
Item 9.01.	Financial Statements, Pro Forma Financial Information and Exhibits.	
 
(c)	Exhibits	

Exhibit
Number	  	Description	
		
99.1	  	Press release, dated February 3, 2009, reporting fourth quarter results	
		
99.2	  	Fourth Quarter 2008 Financial Supplement	

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ACE LIMITED	
		
By:	 	/s/ Philip V. Bancroft        	
	 	Philip V. Bancroft	
	 	Chief Financial Officer	
 
DATE: February 3, 2009

EXHIBIT INDEX

Number	  	Description	  	Method of Filing	
			
99.1	  	Press release, dated February 3, 2009, reporting fourth quarter results	  	Furnished herewith	
			
99.2	  	Fourth Quarter 2008 Financial Supplement	  	Furnished herewith	

Exhibit 99.1

	  	ACE Limited	  	+41 (0)43 456 76 00  main	    		
	  	Bärengasse 32	  	+41 (0)43 456 76 01 fax	    		
	  	CH-8001 Zürich	  		    		
	  	Switzerland	  	www.acelimited.com	    		

	  		  		    		
FOR IMMEDIATE RELEASE

	 		 		 	Investor Contact:	  	Helen M. Wilson	
	 		 		 		  	(441) 299-9283	
	 		 		 		  	helen.wilson@ace.bm	
					
	 		 		 	Media Contact:	  	Stephen M. Wasdick	
	 		 		 		  	(212) 827-4444	
	 		 		 		  	stephen.wasdick@ace-ina.com	
ACE REPORTS FOURTH QUARTER 2008 RESULTS;
OPERATING INCOME OF $624 MILLION, NET INCOME OF $20 MILLION;
FULL YEAR OPERATING INCOME OF $2.6 BILLION, NET INCOME OF $1.2 BILLION
ZURICH, Switzerland, February 3, 2009 — ACE Limited (NYSE: ACE) today reported net income for the fourth quarter ended December 31, 2008, of $0.06 per share, compared with $1.69 per share for the same quarter last year. Income excluding net realized gains (losses) for the fourth quarter was $1.87 per share, compared with $2.05 per share for the same quarter of last year. (1) The quarter was marked by financial market volatility in both the credit and equity markets, which impacted net income and book value. The net realized and unrealized loss after tax was $1.2 billion for the quarter due to the mark-to-market pricing impact caused by continued widening of credit spreads and the decline in global equity markets. Book value decreased $910 million for the quarter including a net foreign currency translation loss of $310 million. Annualized return on average equity was 16.7%. (2) The property and casualty (P&C) combined ratio was 86.9%.
Fourth Quarter Summary
(in millions, except per share amounts )
(Unaudited)

 	  	 	 	 	 	 	 	 	 	 	(Per Share - Diluted)	 	
 	  	2008	 	 	2007	 	 	Change	 	 	2008	 	 	2007	 	 	Change	 	
Net income	  	$	20	 	 	$	572	 	 	NM	 	 	$	0.06	 	 	$	1.69	 	 	NM	 	
							
Net realized gains (losses), net of tax	  	 	(604	)	 	 	(121	)	 			 	 	(1.81	)	 	 	(0.36	)	 			
							
Income excluding net realized gains (losses), net of tax (1)	  	 	624	 	 	 	693	 	 	(10	)%	 	 	1.87	 	 	 	2.05	 	 	(9	)%	
Net income for the year was $3.53 per share, compared with $7.66 per share for 2007. For 2008, income excluding net realized gains (losses) was $7.72 per share, compared with $8.07 per share for 2007. (1) The P&C combined ratio for the year was 89.6%. Book value decreased $1.7 billion during the year excluding the redemption of preferred shares. The results for the year reflect the acquisition of Combined Insurance effective April 1, 2008.

Full Year Summary
(in millions, except per share amounts )
(Unaudited)

 	  	 	 	 	 	 	 	 	 	 	(Per Share - Diluted)	 	
 	  	2008	 	 	2007	 	 	Change	 	 	2008	 	 	2007	 	 	Change	 	
Net income	  	$	1,197	 	 	$	2,578	 	 	(54	)%	 	$	3.53	 	 	$	7.66	 	 	(54	)%	
							
Net realized gains (losses), net of tax	  	 	(1,394	)	 	 	(134	)	 			 	 	(4.19	)	 	 	(0.41	)	 			
							
Income excluding net realized gains (losses), net of tax (1)	  	$	2,591	 	 	$	2,712	 	 	(4	)%	 	$	7.72	 	 	$	8.07	 	 	(4	)%	
Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, stated: “ACE produced strong operating results in one of the most difficult quarters in modern history for financial services companies. Our core property and casualty and accident and health businesses performed extremely well with total operating income in the quarter of $624 million. The P&C combined ratio was 86.9%.
“Net income suffered from other-than-temporary-impairment losses related mostly to interest rate spreads in the period. Book value, which declined 6% in the quarter and 10% for the year, was impacted by realized and unrealized investment losses, extreme foreign exchange fluctuation and a loss from a fair value increase in the liabilities associated with our life reinsurance business. We believe most of the losses in the portfolio and life reinsurance business will recover in value over time. Even with this year’s decline, our book value has grown at a compound annual growth rate of 12% the last five years.
“ACE experienced in this quarter the volatility that can accompany the business activity of a global risk-taking organization. Global presence and risk-taking discipline are our sources of strength, and we are using them to our advantage. In the quarter, we began to improve our price-to-exposure from firming insurance prices and gain market share in certain classes from weakened competitors. While the recessionary conditions are formidable, we are encouraged by government efforts to stimulate the economy.”
Other operating highlights were as follows:
 
 	•	 	Net premiums written and earned in the quarter were up 8% and 6%, respectively, over the prior year quarter. Excluding the impact of foreign exchange, net premiums written and earned increased 13% and 10%, respectively, over the prior year quarter.	
 
 	•	 	Net P&C premiums written and earned, which include international accident and health (A&H), decreased 1% and 3%, respectively, over the prior year quarter. Excluding the impact of foreign exchange, net P&C premiums written and earned increased 3% and 1%, respectively, over the prior year quarter.	
 
 	•	 	The P&C combined ratio for the quarter was 86.9% compared with 88.1% for the prior year quarter; for the year, the P&C combined ratio was 89.6% compared with 87.9% for 2007.	
 
 	•	 	Positive net prior period development in the quarter of $252 million pre-tax included a $68 million take-down of a reserve on a single, large structured transaction that settled in the quarter. The company also incurred a pre-tax charge of $51 million for asbestos, environmental and other run-off (A&E) losses as a result of both internal and external actuarial reviews.	
 
Page 2/7

 	•	 	Pre-tax underwriting income excluding the life insurance and reinsurance segment increased 7% over the prior year quarter to $375 million compared with $351 million for the same quarter last year.	
 
 	•	 	The P&C expense ratio reported in the quarter increased by 1.4 percentage points from the prior year quarter. Excluding A&H, the expense ratio was flat compared with the prior year quarter.	
 
 	•	 	Operating cash flow was $960 million for the quarter. For the year, operating cash flow was $4.1 billion.	
 
 	•	 	Reinsurance recoverables decreased $308 million for the quarter largely due to foreign exchange; year-to-date, reinsurance recoverables decreased $437 million.	
 
 	•	 	Net loss reserves decreased $889 million during the quarter primarily due to the impact of foreign exchange revaluation of approximately $700 million; year-to-date, net loss reserves increased $501 million, and $1.4 billion excluding the impact of foreign exchange.	
 
 	•	 	Net investment income increased 3% over the prior year quarter to $521 million.	
 
 	•	 	Return on average equity for the fourth quarter was 16.7% and for the year was 16.8%. (2)	
 
 	•	 	Book value decreased $1.7 billion or 10% from December 31, 2007 excluding the redemption of the preferred shares while book value per share ( 3 ) decreased from $48.89 at December 31, 2007 to $43.30.	
 
 	•	 	Net realized and unrealized losses after tax from our investment portfolio totaled approximately $1 billion for the quarter. This includes $608 million of unrealized losses and $404 million of realized losses. Net realized losses from derivative accounting related to the guaranteed minimum income benefits (GMIBs) of our life reinsurance business were approximately $207 million.	
Details of our financial results for our business segments are available in the ACE Limited Financial Supplement. Key segment items include:
 
 	•	 	Insurance-North American: Net premiums written decreased 5% over the prior year quarter. The combined ratio was 83.0% compared with 89.1% for the same quarter last year.	
 
 	•	 	Insurance-Overseas General: Net premiums written increased 7% over the prior year quarter, 19% on a constant-dollar basis. Excluding the results of Combined Insurance, net premiums written decreased 2%. The combined ratio was 90.7% compared with 87.5% for the same quarter last year.	
 
 	•	 	Global Reinsurance: Net premiums written decreased 28% over the prior year quarter. The combined ratio was 72.3% compared with 73.6% for the same quarter last year.	
 
 	•	 	Life Insurance and Reinsurance: Net premiums written increased $260 million over the prior year quarter; excluding the results of Combined Insurance, net premiums written increased 7%. Income excluding net realized gains (losses) decreased to $4 million in the quarter.	
Please refer to the ACE Limited Financial Supplement dated December 31, 2008, which is posted on the company’s website in the Investor Information section, and access Financial Reports for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio and capital structure. The URL reference is: http://media.corporate-ir.net/media_files/irol/10/100907/fin_supp_december_31_2008.xls . (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser’s URL address field.)
ACE will host its fourth quarter earnings conference call and webcast on Wednesday, February 4, 2009, beginning at 8:30 a.m. ET. The earnings conference call will be available via live and archived webcast at www.acelimited.com or by dialing 877-795-3647 (within the United States) or 719-325-4758 (international); passcode 3327455. Please refer to the ACE Limited website in the Investor Information section under
 
Page 3/7

Calendar of Events for details. A replay of the call will be available for approximately one month. To listen to the replay, dial: 888-203-1112 (in the United States) or 719-457-0820 (international); passcode 3327455.
The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited, the ACE Group of Companies conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries. Additional information can be found at: www.acelimited.com.

1	Non-GAAP Financial Measures:	
Operating Income or Income excluding net realized gains (losses), net of tax is a common performance measurement for insurance companies. 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) and net realized gains (losses) included in Other (income) expense related to partially-owned insurance companies because the amount of these gains (losses) do not relate to their respective operations.
Underwriting income is calculated by subtracting losses and loss expenses, future policy benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting income and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other income (expense), interest and income tax expense and net realized gains (losses). We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
Tangible shareholders’ equity is shareholders’ equity less goodwill and other intangible assets. See reconciliation of Non-GAAP Financial Measures on page 29 in the financial supplement.
These measures should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).
 
2	Calculated using income excluding net realized gains (losses) less perpetual preferred securities divided by average common shareholders’ equity for the period. To annualize a quarterly rate, multiply by four.	
 
3	Book value per common share is common shareholders’ equity divided by the shares outstanding. Tangible book value per common share is common shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.	
Combined Insurance – Combined Insurance Company of America and certain of its subsidiaries.
NM – not meaningful comparison.
Cautionary Statement Regarding Forward-Looking Statements :
Forward-looking statements made in this press release, such as those related to our investment portfolio and life reinsurance business, economic conditions, government action, and company performance 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 could be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, market acceptance, changes in demand, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, integration activities and unexpected financial or operational performance with respect to acquired companies, unexpected effects or difficulties relating to the Company’s re-domestication to Switzerland, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war and economic, political, regulatory, insurance and reinsurance business conditions, as well as management’s response to these factors, and other factors identified in the Company’s filings with the Securities and Exchange Commission. 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.
(tables to follow)
 
Page 4/7

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

 	  	December 31
2008	  	December 31
2007	
 	  	(Unaudited)	  	 	
Assets	  			  			
Total investments	  	$	39,715	  	$	41,779	
Cash	  	 	867	  	 	510	
Insurance and reinsurance balances receivable	  	 	3,453	  	 	3,540	
Reinsurance recoverable on losses and loss expenses	  	 	13,917	  	 	14,354	
Other assets	  	 	14,105	  	 	11,907	
	  	 	 	  	 	 	
Total assets	  	$	72,057	  	$	72,090	
	  	 	 	  	 	 	
Liabilities	  			  			
Unpaid losses and loss expenses	  	$	37,176	  	$	37,112	
Unearned premium	  	 	5,950	  	 	6,227	
Other liabilities	  	 	14,485	  	 	12,074	
	  	 	 	  	 	 	
Total liabilities	  	$	57,611	  	$	55,413	
	  	 	 	  	 	 	
Shareholders’ equity	  			  			
Total shareholders’ equity	  	$	14,446	  	$	16,677	
	  	 	 	  	 	 	
Total liabilities and shareholders’ equity	  	$	72,057	  	$	72,090	
	  	 	 	  	 	 	
Book value per common share (3) 	  	$	43.30	  	$	48.89	
 
Page 5/7

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

 	    	Three Months Ended
December 31	 	 	Year Ended
December 31	 	
 	    	2008	 	 	2007	 	 	2008	 	 	2007	 	
Gross premiums written	    	$	4,320	 	 	$	4,144	 	 	$	19,242	 	 	$	17,740	 	
Net premiums written	    	 	3,052	 	 	 	2,827	 	 	 	13,080	 	 	 	11,979	 	
Net premiums earned	    	 	3,226	 	 	 	3,057	 	 	 	13,203	 	 	 	12,297	 	
					
Losses and loss expenses	    	 	1,760	 	 	 	1,788	 	 	 	7,603	 	 	 	7,351	 	
Future policy benefits	    	 	156	 	 	 	60	 	 	 	399	 	 	 	168	 	
Policy acquisition costs	    	 	517	 	 	 	457	 	 	 	2,135	 	 	 	1,771	 	
Administrative expenses	    	 	444	 	 	 	385	 	 	 	1,737	 	 	 	1,455	 	
	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income (1)	    	 	349	 	 	 	367	 	 	 	1,329	 	 	 	1,552	 	
					
Net investment income	    	 	521	 	 	 	504	 	 	 	2,062	 	 	 	1,918	 	
Net realized gains (losses)	    	 	(644	)	 	 	(66	)	 	 	(1,633	)	 	 	(61	)	
Interest expense	    	 	54	 	 	 	43	 	 	 	230	 	 	 	175	 	
Other income (expense)	    	 	(65	)	 	 	(49	)	 	 	39	 	 	 	(81	)	
Income tax expense	    	 	87	 	 	 	141	 	 	 	370	 	 	 	575	 	
	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	    	 	20	 	 	 	572	 	 	 	1,197	 	 	 	2,578	 	
Preference shares dividend	    	 	—  	 	 	 	(12	)	 	 	(24	)	 	 	(45	)	
	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available to holders of common shares	    	$	20	 	 	$	560	 	 	$	1,173	 	 	$	2,533	 	
	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share:	    				 				 				 				
Income excluding net realized gains (losses) (1)	    	$	1.87	 	 	$	2.05	 	 	$	7.72	 	 	$	8.07	 	
Net income	    	$	0.06	 	 	$	1.69	 	 	$	3.53	 	 	$	7.66	 	
					
Weighted average diluted shares outstanding	    	 	332.8	 	 	 	331.3	 	 	 	332.5	 	 	 	330.4	 	
					
Loss and loss expense ratio	    	 	57.8	%	 	 	60.4	%	 	 	60.6	%	 	 	61.6	%	
Policy acquisition cost ratio	    	 	15.6	%	 	 	15.1	%	 	 	16.2	%	 	 	14.5	%	
Administrative expense ratio	    	 	13.5	%	 	 	12.6	%	 	 	12.8	%	 	 	11.8	%	
Combined ratio	    	 	86.9	%	 	 	88.1	%	 	 	89.6	%	 	 	87.9	%	
 
Page 6/7

ACE Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)

 	    	Three Months Ended
December 31	 	  	Year Ended
December 31	 	
 	    	2008	 	  	2007	 	  	2008	 	  	2007	 	
Gross Premiums Written	    				  				  				  				
North American	    	$	2,167	 	  	$	2,274	 	  	$	10,053	 	  	$	9,840	 	
Overseas General	    	 	1,609	 	  	 	1,584	 	  	 	6,941	 	  	 	6,291	 	
Global Reinsurance	    	 	130	 	  	 	177	 	  	 	921	 	  	 	1,218	 	
Life	    	 	414	 	  	 	109	 	  	 	1,327	 	  	 	391	 	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	    	$	4,320	 	  	$	4,144	 	  	$	19,242	 	  	$	17,740	 	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net Premiums Written	    				  				  				  				
North American	    	$	1,304	 	  	$	1,373	 	  	$	5,636	 	  	$	5,833	 	
Overseas General	    	 	1,251	 	  	 	1,169	 	  	 	5,332	 	  	 	4,568	 	
Global Reinsurance	    	 	126	 	  	 	174	 	  	 	914	 	  	 	1,197	 	
Life	    	 	371	 	  	 	111	 	  	 	1,198	 	  	 	381	 	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	    	$	3,052	 	  	$	2,827	 	  	$	13,080	 	  	$	11,979	 	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net Premiums Earned	    				  				  				  				
North American	    	$	1,377	 	  	$	1,418	 	  	$	5,679	 	  	$	6,007	 	
Overseas General	    	 	1,250	 	  	 	1,229	 	  	 	5,337	 	  	 	4,623	 	
Global Reinsurance	    	 	240	 	  	 	312	 	  	 	1,017	 	  	 	1,299	 	
Life	    	 	359	 	  	 	98	 	  	 	1,170	 	  	 	368	 	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	    	$	3,226	 	  	$	3,057	 	  	$	13,203	 	  	$	12,297	 	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Income Excluding Net Realized Gains (Losses) (1) 	    				  				  				  				
North American	    	$	333	 	  	$	329	 	  	$	1,122	 	  	$	1,269	 	
Overseas General	    	 	225	 	  	 	210	 	  	 	1,012	 	  	 	818	 	
Global Reinsurance	    	 	133	 	  	 	146	 	  	 	518	 	  	 	559	 	
Life	    	 	4	 	  	 	33	 	  	 	168	 	  	 	166	 	
Corporate	    	 	(71	)	  	 	(25	)	  	 	(229	)	  	 	(100	)	
	    	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	    	$	624	 	  	$	693	 	  	$	2,591	 	  	$	2,712	 	

Page 7/7

Exhibit 99.2

 

			
		
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 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.	
		
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, such as statements concerning exposures, reserves and recoverables, could be affected by continued adverse economic and insurance industry developments such as those of recent months, as well as the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers. The Company’s forward-looking statements could also be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, market acceptance, changes in demand, worldwide and national economic and stock market conditions, rating agency action, investment portfolio performance, possible terrorism or the outbreak and effects of war, integration of recent acquisitions, or unexpected effects or difficulties relating to the Company’s recent re-domestication to Switzerland. 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	
	  	- Summary Consolidated Balance Sheets	  	3	
	  	- Consolidated Premiums and Income Excluding Net Realized Gains (Losses) by Line of Business	  	4	
	  	- Consolidating Statement of Operations	  	5-6	
			
III.	  	Segment Results	  		
	  	- Insurance - North American	  	7	
	  	- Insurance - Overseas General	  	8	
	  	- Global Reinsurance	  	9	
	  	- Life Insurance and Reinsurance	  	10-11	
			
IV.	  	Balance Sheet Details	  		
	  	- Loss Reserve Rollforward	  	12	
	  	- Reinsurance Recoverable Analysis	  	13-15	
	  	- Investment Portfolio	  	16-23	
	  	- Net Realized and Unrealized Gains (Losses)	  	24-25	
	  	- Capital Structure	  	26-27	
	  	- Computation of Basic and Diluted Earnings Per Share	  	28	
			
V.	  	Other Disclosures	  		
	  	- Non-GAAP Financial Measures	  	29	
	  	- Book Value and Book Value per Common Share	  	30	
	  	- Comprehensive Income	  	31	
	  	- Glossary	  	32	

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

 	  	Three months ended December 31	 	 	% Change
4Q-08 vs.
4Q-07	 	 	Year ended December 31	 	 	% Change
2008 vs.
2007	 	
 	  	2008	 	 	2007	 	 			 	2008	 	 	2007	 	 			
Gross premiums written	  	$	4,320	 	 	$	4,144	 	 	4	%	 	$	19,242	 	 	$	17,740	 	 	8	%	
							
Net premiums written	  	$	3,052	 	 	$	2,827	 	 	8	%	 	$	13,080	 	 	$	11,979	 	 	9	%	
							
Net premiums earned	  	$	3,226	 	 	$	3,057	 	 	6	%	 	$	13,203	 	 	$	12,297	 	 	7	%	
							
Net investment income	  	$	521	 	 	$	504	 	 	3	%	 	$	2,062	 	 	$	1,918	 	 	8	%	
							
Net income	  	$	20	 	 	$	572	 	 	-97	%	 	$	1,197	 	 	$	2,578	 	 	-54	%	
							
Income excluding net realized gains (losses) (1)	  	$	624	 	 	$	693	 	 	-10	%	 	$	2,591	 	 	$	2,712	 	 	-4	%	
							
Comprehensive income (loss)	  	$	(873	)	 	$	685	 	 	NM	 	 	$	(1,482	)	 	$	2,643	 	 	NM	 	
							
Operating cash flow	  	$	961	 	 	$	823	 	 	17	%	 	$	4,101	 	 	$	4,701	 	 	-13	%	
							
Combined ratio	  				 				 			 				 				 			
Loss and loss expense ratio	  	 	57.8	%	 	 	60.4	%	 			 	 	60.6	%	 	 	61.6	%	 			
Underwriting and administrative expense ratio	  	 	29.1	%	 	 	27.7	%	 			 	 	29.0	%	 	 	26.3	%	 			
	  	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 			
Combined ratio	  	 	86.9	%	 	 	88.1	%	 			 	 	89.6	%	 	 	87.9	%	 			
							
Annualized ROE*	  	 	16.7	%	 	 	17.2	%	 			 	 	16.8	%	 	 	17.9	%	 			
Annualized ROE, excluding FAS 115*	  	 	15.3	%	 	 	17.8	%	 			 	 	16.2	%	 	 	18.6	%	 			
							
Effective tax rate on income excluding net realized gains (losses)	  	 	22	%	 	 	17	%	 			 	 	18	%	 	 	18	%	 			
							
Diluted earnings per share	  				 				 			 				 				 			
Income excluding net realized gains (losses) (1)	  	$	1.87	 	 	$	2.05	 	 	-9	%	 	$	7.72	 	 	$	8.07	 	 	-4	%	
Net income	  	$	0.06	 	 	$	1.69	 	 	-96	%	 	$	3.53	 	 	$	7.66	 	 	-54	%	
							
Book value per common share	  	$	43.30	 	 	$	48.89	 	 	-11	%	 	$	43.30	 	 	$	48.89	 	 	-11	%	
Tangible book value per common share	  	$	32.07	 	 	$	40.28	 	 	-20	%	 	$	32.07	 	 	$	40.28	 	 	-20	%	
							
Weighted average basic common shares outstanding	  	 	329.4	 	 	 	325.6	 	 			 	 	328.6	 	 	 	324.9	 	 			
Weighted average diluted common shares outstanding	  	 	332.8	 	 	 	331.3	 	 			 	 	332.5	 	 	 	330.4	 	 			
							
Debt/total capitalization	  	 	18.2	%	 	 	11.4	%	 			 	 	18.2	%	 	 	11.4	%	 			
 
(1)	See page 29 Non-GAAP Financial Measures.	
 
*	Calculated using income excluding net realized gains (losses)	

Financial Highlights	  	Page 1	

					
	  	ACE Limited
Consolidated Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)	  		
 
ACE Limited Consolidated
																													
 	  	4Q-08	 	 	3Q-08	 	 	2Q-08	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Consolidated Results Excluding Life Segment	  				 				 				 				 				 				 				
Gross premiums written	  	$	3,906	 	 	 	4,839	 	 	$	4,866	 	 	$	4,304	 	 	$	4,035	 	 	$	17,915	 	 	$	17,349	 	
Net premiums written	  	 	2,681	 	 	 	2,928	 	 	 	3,224	 	 	 	3,049	 	 	 	2,716	 	 	 	11,882	 	 	 	11,598	 	
Net premiums earned	  	 	2,867	 	 	 	3,265	 	 	 	3,061	 	 	 	2,840	 	 	 	2,959	 	 	 	12,033	 	 	 	11,929	 	
Losses and loss expenses	  	 	1,654	 	 	 	2,265	 	 	 	1,785	 	 	 	1,579	 	 	 	1,788	 	 	 	7,283	 	 	 	7,351	 	
Future policy benefits	  	 	2	 	 	 	5	 	 	 	5	 	 	 	—  	 	 	 	—  	 	 	 	12	 	 	 	—  	 	
Policy acquisition costs	  	 	448	 	 	 	533	 	 	 	506	 	 	 	460	 	 	 	448	 	 	 	1,947	 	 	 	1,726	 	
Administrative expenses	  	 	388	 	 	 	396	 	 	 	392	 	 	 	362	 	 	 	372	 	 	 	1,538	 	 	 	1,405	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income excluding life segment	  	$	375	 	 	$	66	 	 	$	373	 	 	$	439	 	 	$	351	 	 	$	1,253	 	 	$	1,447	 	
Life underwriting income excluding investment income	  	 	(26	)	 	 	45	 	 	 	41	 	 	 	16	 	 	 	16	 	 	 	76	 	 	 	105	 	
Net investment income	  	 	521	 	 	 	520	 	 	 	532	 	 	 	489	 	 	 	504	 	 	 	2,062	 	 	 	1,918	 	
Net realized gains (losses)	  	 	(644	)	 	 	(510	)	 	 	(126	)	 	 	(353	)	 	 	(66	)	 	 	(1,633	)	 	 	(61	)	
Interest expense	  	 	54	 	 	 	68	 	 	 	62	 	 	 	46	 	 	 	43	 	 	 	230	 	 	 	175	 	
Other income (expense) (1)	  	 	(65	)	 	 	(6	)	 	 	125	 	 	 	(15	)	 	 	(49	)	 	 	39	 	 	 	(81	)	
Income tax expense (benefit)	  	 	87	 	 	 	(7	)	 	 	137	 	 	 	153	 	 	 	141	 	 	 	370	 	 	 	575	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	20	 	 	$	54	 	 	$	746	 	 	$	377	 	 	$	572	 	 	$	1,197	 	 	$	2,578	 	
Net realized gains (losses)	  	 	(644	)	 	 	(510	)	 	 	(126	)	 	 	(353	)	 	 	(66	)	 	 	(1,633	)	 	 	(61	)	
Net realized gains (losses) in other income (expense) (1)	  	 	(48	)	 	 	(23	)	 	 	120	 	 	 	(28	)	 	 	(57	)	 	 	21	 	 	 	(95	)	
Tax expense (benefit) on net realized gains (losses)	  	 	(88	)	 	 	(83	)	 	 	(14	)	 	 	(33	)	 	 	(2	)	 	 	(218	)	 	 	(22	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (2)	  	$	624	 	 	$	504	 	 	$	738	 	 	$	725	 	 	$	693	 	 	$	2,591	 	 	$	2,712	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
% Change versus prior year period (3) 	  				 				 				 				 				 				 				
Net premiums written	  	 	-1	%	 	 	8	%	 	 	8	%	 	 	-4	%	 	 	-3	%	 	 	2	%	 	 	-1	%	
Net premiums earned	  	 	-3	%	 	 	7	%	 	 	5	%	 	 	-5	%	 	 	0	%	 	 	1	%	 	 	3	%	
								
Other ratios	  				 				 				 				 				 				 				
Net premiums written/gross premiums written	  	 	69	%	 	 	61	%	 	 	66	%	 	 	71	%	 	 	67	%	 	 	66	%	 	 	67	%	
Effective tax rate on income excluding net realized gains (losses)	  	 	22	%	 	 	13	%	 	 	17	%	 	 	20	%	 	 	17	%	 	 	18	%	 	 	18	%	
								
Combined ratio (3) 	  				 				 				 				 				 				 				
Loss and loss expense ratio	  	 	57.8	%	 	 	69.5	%	 	 	58.5	%	 	 	55.6	%	 	 	60.4	%	 	 	60.6	%	 	 	61.6	%	
Policy acquisition cost ratio	  	 	15.6	%	 	 	16.3	%	 	 	16.5	%	 	 	16.2	%	 	 	15.1	%	 	 	16.2	%	 	 	14.5	%	
Administrative expense ratio	  	 	13.5	%	 	 	12.1	%	 	 	12.8	%	 	 	12.8	%	 	 	12.6	%	 	 	12.8	%	 	 	11.8	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined ratio	  	 	86.9	%	 	 	97.9	%	 	 	87.8	%	 	 	84.6	%	 	 	88.1	%	 	 	89.6	%	 	 	87.9	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Expense ratio	  	 	29.1	%	 	 	28.4	%	 	 	29.3	%	 	 	29.0	%	 	 	27.7	%	 	 	29.0	%	 	 	26.3	%	
Expense ratio excluding A&H	  	 	24.3	%	 	 	24.0	%	 	 	25.2	%	 	 	25.7	%	 	 	24.2	%	 	 	24.8	%	 	 	22.9	%	
								
Large losses and other items (3) 	  				 				 				 				 				 				 				
Catastrophe losses (before tax)	  	$	67	 	 	$	411	 	 	$	58	 	 	$	31	 	 	$	23	 	 	$	567	 	 	$	159	 	
Prior period development - unfavorable (favorable) (4)	  	$	(252	)	 	$	(277	)	 	$	(104	)	 	$	(137	)	 	$	(89	)	 	$	(770	)	 	$	(217	)	
Loss and loss expense ratio excluding catastrophe losses and prior period development	  	 	64.4	%	 	 	65.2	%	 	 	60.0	%	 	 	60.9	%	 	 	62.7	%	 	 	62.7	%	 	 	62.1	%	
 
(1)	Net realized investment and derivative losses related to our unconsolidated insurance affiliates.	
 
(2)	See page 29 Non-GAAP Financial Measures.	
 
(3)	Presented excluding the Life Insurance and Reinsurance segment to allow for comparison and analysis with earnings guidance. This is a non-GAAP measure.	
 
(4)	For Q1 08, prior period favorable development of $181 million less $44 million of profit share commission on Crop business settlement.	

Consolidated Results	  	Page 2	

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

 	  	December 31
2008	 	 	September 30
2008	 	 	June 30
2008	 	 	March 31
2008	  	December 31
2007	
 	  	(Unaudited)	 	 	(Unaudited)	 	 	(Unaudited)	 	 	(Unaudited)	  	(Audited)	
Assets	  				 				 				 			  			
Fixed maturities available for sale, at fair value	  	$	31,155	 	 	$	33,158	 	 	$	34,870	 	 	$	32,619	  	$	33,184	
Fixed maturities held to maturity, at amortized cost	  	 	2,860	 	 	 	2,881	 	 	 	2,932	 	 	 	2,913	  	 	2,987	
Equity securities, at fair value	  	 	988	 	 	 	1,229	 	 	 	1,490	 	 	 	1,660	  	 	1,837	
Short-term investments, at fair value	  	 	3,350	 	 	 	3,014	 	 	 	3,137	 	 	 	4,795	  	 	2,631	
Other investments	  	 	1,362	 	 	 	1,529	 	 	 	1,414	 	 	 	1,243	  	 	1,140	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	
Total investments	  	 	39,715	 	 	 	41,811	 	 	 	43,843	 	 	 	43,230	  	 	41,779	
						
Cash	  	 	867	 	 	 	479	 	 	 	582	 	 	 	511	  	 	510	
Securities lending collateral	  	 	1,230	 	 	 	2,050	 	 	 	2,118	 	 	 	2,361	  	 	2,109	
Insurance and reinsurance balances receivable	  	 	3,453	 	 	 	3,499	 	 	 	4,086	 	 	 	3,748	  	 	3,540	
Reinsurance recoverable on losses and loss expenses	  	 	13,917	 	 	 	14,225	 	 	 	13,839	 	 	 	13,937	  	 	14,354	
Deferred policy acquisition costs	  	 	1,214	 	 	 	1,263	 	 	 	1,292	 	 	 	1,220	  	 	1,121	
Value of business acquired	  	 	823	 	 	 	923	 	 	 	1,288	 	 	 	—  	  	 	—  	
Prepaid reinsurance premiums	  	 	1,539	 	 	 	1,770	 	 	 	1,964	 	 	 	1,742	  	 	1,600	
Goodwill and other intangible assets	  	 	3,747	 	 	 	3,817	 	 	 	3,612	 	 	 	2,879	  	 	2,838	
Deferred tax assets	  	 	1,835	 	 	 	1,457	 	 	 	1,029	 	 	 	1,054	  	 	1,087	
Investments in partially owned insurance companies	  	 	832	 	 	 	867	 	 	 	900	 	 	 	776	  	 	773	
Other assets	  	 	2,885	 	 	 	2,994	 	 	 	3,223	 	 	 	2,461	  	 	2,379	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	
Total assets	  	$	72,057	 	 	$	75,155	 	 	$	77,776	 	 	$	73,919	  	$	72,090	

Liabilities	  				 				 				 			  			
Unpaid losses and loss expenses	  	$	37,176	 	 	$	38,373	 	 	$	37,696	 	 	$	37,182	  	$	37,112	
Unearned premiums	  	 	5,950	 	 	 	6,459	 	 	 	7,054	 	 	 	6,653	  	 	6,227	
Future policy benefits	  	 	2,904	 	 	 	2,919	 	 	 	2,948	 	 	 	632	  	 	545	
Insurance and reinsurance balances payable	  	 	2,841	 	 	 	2,754	 	 	 	2,991	 	 	 	2,756	  	 	2,843	
Securities lending payable	  	 	1,296	 	 	 	2,095	 	 	 	2,118	 	 	 	2,361	  	 	2,109	
Payable for securities purchased	  	 	740	 	 	 	1,008	 	 	 	1,802	 	 	 	1,391	  	 	1,798	
Accounts payable, accrued expenses, and other liabilities	  	 	3,118	 	 	 	2,547	 	 	 	2,473	 	 	 	2,445	  	 	2,287	
Short-term debt	  	 	471	 	 	 	333	 	 	 	1,050	 	 	 	1,341	  	 	372	
Long-term debt	  	 	2,806	 	 	 	3,002	 	 	 	3,008	 	 	 	2,114	  	 	1,811	
Trust preferred securities	  	 	309	 	 	 	309	 	 	 	309	 	 	 	309	  	 	309	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	
Total liabilities	  	 	57,611	 	 	 	59,799	 	 	 	61,449	 	 	 	57,184	  	 	55,413	
						
Shareholders’ equity	  				 				 				 			  			
Total shareholders’ equity, excl. AOCI	  	 	16,362	 	 	 	16,379	 	 	 	16,381	 	 	 	16,261	  	 	15,908	
Accumulated other comprehensive income (AOCI)	  	 	(1,916	)	 	 	(1,023	)	 	 	(54	)	 	 	474	  	 	769	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	
Total shareholders’ equity	  	 	14,446	 	 	 	15,356	 	 	 	16,327	 	 	 	16,735	  	 	16,677	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	
Total liabilities and shareholders’ equity	  	$	72,057	 	 	$	75,155	 	 	$	77,776	 	 	$	73,919	  	$	72,090	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	
Book value per common share (1) 	  	$	43.30	 	 	$	46.06	 	 	$	48.99	 	 	$	48.65	  	$	48.89	
Tangible book value per common share (1) 	  	$	32.07	 	 	$	34.61	 	 	$	38.15	 	 	$	40.00	  	$	40.28	
 
(1)	See page 29 Non-GAAP Financial Measures.	

Consol Bal Sheet	  	Page 3	

					
	  	ACE Limited
Consolidated Premiums and Income Excluding
Net Realized Gains (Losses) by Line of Business
(in millions of U.S. dollars)
(Unaudited)	  		
 
ACE Limited Consolidated

 	  	4Q-08	 	 	% of Total
Consolidated	 	 	4Q-07	  	% of Total
Consolidated	 	 	% Change
4Q-08 vs.
4Q-07	 	 	Year
2008	  	% of Total
Consolidated	 	 	Year
2007	  	% of Total
Consolidated	 	 	% Change
2008 vs.
2007	 	
Net premiums written	  				 			 			  			 			 			  			 			  			 			
Property and all other	  	$	731	 	 	24	%	 	$	769	  	27	%	 	-5	%	 	$	3,963	  	30	%	 	$	3,721	  	31	%	 	7	%	
Casualty	  	 	1,413	 	 	46	%	 	 	1,522	  	54	%	 	-7	%	 	 	5,666	  	43	%	 	 	6,219	  	52	%	 	-9	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Subtotal	  	 	2,144	 	 	70	%	 	 	2,291	  	81	%	 	-6	%	 	 	9,629	  	73	%	 	 	9,940	  	83	%	 	-3	%	
											
Personal accident (A&H) (1)	  	 	771	 	 	25	%	 	 	425	  	15	%	 	81	%	 	 	2,964	  	23	%	 	 	1,658	  	14	%	 	79	%	
Life (2)	  	 	137	 	 	5	%	 	 	111	  	4	%	 	23	%	 	 	487	  	4	%	 	 	381	  	3	%	 	28	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Total Consolidated	  	$	3,052	 	 	100	%	 	$	2,827	  	100	%	 	8	%	 	$	13,080	  	100	%	 	$	11,979	  	100	%	 	9	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Net premiums earned	  				 			 			  			 			 			  			 			  			 			
Property and all other	  	$	924	 	 	29	%	 	$	963	  	32	%	 	-4	%	 	$	3,954	  	30	%	 	$	3,811	  	31	%	 	4	%	
Casualty	  	 	1,403	 	 	43	%	 	 	1,556	  	51	%	 	-10	%	 	 	5,838	  	44	%	 	 	6,464	  	53	%	 	-10	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Subtotal	  	 	2,327	 	 	72	%	 	 	2,519	  	83	%	 	-8	%	 	 	9,792	  	74	%	 	 	10,275	  	84	%	 	-5	%	
Personal accident (A&H) (1)	  	 	768	 	 	24	%	 	 	440	  	14	%	 	75	%	 	 	2,949	  	22	%	 	 	1,654	  	13	%	 	78	%	
Life (2)	  	 	131	 	 	4	%	 	 	98	  	3	%	 	34	%	 	 	462	  	4	%	 	 	368	  	3	%	 	26	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Total Consolidated	  	$	3,226	 	 	100	%	 	$	3,057	  	100	%	 	6	%	 	$	13,203	  	100	%	 	$	12,297	  	100	%	 	7	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Income excluding net realized gains (losses)	  				 			 			  			 			 			  			 			  			 			
Property, casualty, and all other	  	$	547	 	 	88	%	 	$	582	  	84	%	 	-6	%	 	$	2,080	  	80	%	 	$	2,268	  	84	%	 	-8	%	
											
Personal accident (A&H) (1)	  	 	104	 	 	16	%	 	 	78	  	11	%	 	33	%	 	 	433	  	17	%	 	 	278	  	10	%	 	56	%	
Life (2)	  	 	(27	)	 	-4	%	 	 	33	  	5	%	 	-182	%	 	 	78	  	3	%	 	 	166	  	6	%	 	-53	%	
	  	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Total Consolidated	  	$	624	 	 	100	%	 	$	693	  	100	%	 	-10	%	 	$	2,591	  	100	%	 	$	2,712	  	100	%	 	-4	%	

(1)	Consolidated A&H includes Combined Insurance which is reported in the Insurance - Overseas General and Life Insurance and Reinsurance segments.	
 
(2)	Excludes the North America A&H business from Combined Insurance which is included in the Life Insurance and Reinsurance segment.	

Line of Business	  	Page 4	

					
	  	ACE Limited
Consolidating Statement of Operations
Three months ended December 31, 2008 and 2007
(in millions of U.S. dollars)
(Unaudited)	  		

 	 	Insurance -
North
American	 	 	Insurance -
Overseas
General	 	 	Global
Reinsurance	 	 	Corporate
& Other	 	 	Consolidated
Excluding
Life Segment	 	 	Life Insurance
& Reinsurance	 	 	ACE
Consolidated	 	
December 31, 2008	 				 				 				 				 				 				 				
Gross premiums written	 	$	2,167	 	 	$	1,609	 	 	$	130	 	 	$	—  	 	 	$	3,906	 	 	$	414	 	 	$	4,320	 	
Net premiums written	 	 	1,304	 	 	 	1,251	 	 	 	126	 	 	 	—  	 	 	 	2,681	 	 	 	371	 	 	 	3,052	 	
Net premiums earned	 	 	1,377	 	 	 	1,250	 	 	 	240	 	 	 	—  	 	 	 	2,867	 	 	 	359	 	 	 	3,226	 	
Losses and loss expenses	 	 	893	 	 	 	640	 	 	 	121	 	 	 	—  	 	 	 	1,654	 	 	 	106	 	 	 	1,760	 	
Future policy benefits	 	 	—  	 	 	 	2	 	 	 	—  	 	 	 	—  	 	 	 	2	 	 	 	154	 	 	 	156	 	
Policy acquisition costs	 	 	112	 	 	 	296	 	 	 	40	 	 	 	—  	 	 	 	448	 	 	 	69	 	 	 	517	 	
Administrative expenses	 	 	138	 	 	 	195	 	 	 	13	 	 	 	42	 	 	 	388	 	 	 	56	 	 	 	444	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income (loss)	 	 	234	 	 	 	117	 	 	 	66	 	 	 	(42	)	 	 	375	 	 	 	(26	)	 	 	349	 	
Net investment income	 	 	266	 	 	 	134	 	 	 	74	 	 	 	—  	 	 	 	474	 	 	 	47	 	 	 	521	 	
Net realized gains (losses)	 	 	(259	)	 	 	(117	)	 	 	(96	)	 	 	58	 	 	 	(414	)	 	 	(230	)	 	 	(644	)	
Interest expense	 	 	1	 	 	 	—  	 	 	 	—  	 	 	 	53	 	 	 	54	 	 	 	—  	 	 	 	54	 	
Other income (expense)	 	 	(1	)	 	 	(3	)	 	 	—  	 	 	 	(55	)	 	 	(59	)	 	 	(6	)	 	 	(65	)	
Income tax expense (benefit)	 	 	93	 	 	 	5	 	 	 	6	 	 	 	(22	)	 	 	82	 	 	 	5	 	 	 	87	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	146	 	 	 	126	 	 	 	38	 	 	 	(70	)	 	 	240	 	 	 	(220	)	 	 	20	 	
Net realized gains (losses)	 	 	(259	)	 	 	(117	)	 	 	(96	)	 	 	58	 	 	 	(414	)	 	 	(230	)	 	 	(644	)	
Net realized gains (losses) in other income (expense)	 	 	—  	 	 	 	1	 	 	 	—  	 	 	 	(49	)	 	 	(48	)	 	 	—  	 	 	 	(48	)	
Tax expense (benefit) on net realized gains (losses)	 	 	(72	)	 	 	(17	)	 	 	(1	)	 	 	8	 	 	 	(82	)	 	 	(6	)	 	 	(88	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) excluding net realized gains (losses) (1)	 	$	333	 	 	$	225	 	 	$	133	 	 	$	(71	)	 	$	620	 	 	$	4	 	 	$	624	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2007	 				 				 				 				 				 				 				
Gross premiums written	 	$	2,274	 	 	$	1,584	 	 	$	177	 	 	$	—  	 	 	$	4,035	 	 	$	109	 	 	$	4,144	 	
Net premiums written	 	 	1,373	 	 	 	1,169	 	 	 	174	 	 	 	—  	 	 	 	2,716	 	 	 	111	 	 	 	2,827	 	
Net premiums earned	 	 	1,418	 	 	 	1,229	 	 	 	312	 	 	 	—  	 	 	 	2,959	 	 	 	98	 	 	 	3,057	 	
Losses and loss expenses	 	 	1,004	 	 	 	631	 	 	 	155	 	 	 	(2	)	 	 	1,788	 	 	 	—  	 	 	 	1,788	 	
Future policy benefits	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	60	 	 	 	60	 	
Policy acquisition costs	 	 	121	 	 	 	269	 	 	 	58	 	 	 	—  	 	 	 	448	 	 	 	9	 	 	 	457	 	
Administrative expenses	 	 	138	 	 	 	175	 	 	 	17	 	 	 	42	 	 	 	372	 	 	 	13	 	 	 	385	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income (loss)	 	 	155	 	 	 	154	 	 	 	82	 	 	 	(40	)	 	 	351	 	 	 	16	 	 	 	367	 	
Net investment income	 	 	276	 	 	 	119	 	 	 	73	 	 	 	21	 	 	 	489	 	 	 	15	 	 	 	504	 	
Net realized gains (losses)	 	 	44	 	 	 	(11	)	 	 	(3	)	 	 	12	 	 	 	42	 	 	 	(108	)	 	 	(66	)	
Interest expense	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	43	 	 	 	43	 	 	 	—  	 	 	 	43	 	
Other income (expense)	 	 	—  	 	 	 	12	 	 	 	(1	)	 	 	(59	)	 	 	(48	)	 	 	(1	)	 	 	(49	)	
Income tax expense (benefit)	 	 	100	 	 	 	59	 	 	 	7	 	 	 	(21	)	 	 	145	 	 	 	(4	)	 	 	141	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	375	 	 	 	215	 	 	 	144	 	 	 	(88	)	 	 	646	 	 	 	(74	)	 	 	572	 	
Net realized gains (losses)	 	 	44	 	 	 	(11	)	 	 	(3	)	 	 	12	 	 	 	42	 	 	 	(108	)	 	 	(66	)	
Net realized gains (losses) in other income (expense)	 	 	—  	 	 	 	15	 	 	 	—  	 	 	 	(73	)	 	 	(58	)	 	 	1	 	 	 	(57	)	
Tax expense (benefit) on net realized gains (losses)	 	 	(2	)	 	 	(1	)	 	 	(1	)	 	 	2	 	 	 	(2	)	 	 	—  	 	 	 	(2	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) excluding net realized gains (losses) (1)	 	$	329	 	 	$	210	 	 	$	146	 	 	$	(25	)	 	$	660	 	 	$	33	 	 	$	693	 	

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

Segment 2008 Qtr	  	Page 5	

					
	  	ACE Limited
Consolidating Statement of Operations
Year ended December 31, 2008 and 2007
(in millions of U.S. dollars)
(Unaudited)	  		

 	 	Insurance -
North
American	 	 	Insurance -
Overseas
General	 	 	Global
Reinsurance	 	 	Corporate
& Other	 	 	Consolidated
Excluding
Life Segment	 	 	Life Insurance
& Reinsurance	 	 	ACE
Consolidated	 	
December 31, 2008	 				 				 				 				 				 				 				
Gross premiums written	 	$	10,053	 	 	$	6,941	 	 	$	921	 	 	$	—  	 	 	$	17,915	 	 	$	1,327	 	 	$	19,242	 	
Net premiums written	 	 	5,636	 	 	 	5,332	 	 	 	914	 	 	 	—  	 	 	 	11,882	 	 	 	1,198	 	 	 	13,080	 	
Net premiums earned	 	 	5,679	 	 	 	5,337	 	 	 	1,017	 	 	 	—  	 	 	 	12,033	 	 	 	1,170	 	 	 	13,203	 	
Losses and loss expenses	 	 	4,080	 	 	 	2,679	 	 	 	524	 	 	 	—  	 	 	 	7,283	 	 	 	320	 	 	 	7,603	 	
Future policy benefits	 	 	—  	 	 	 	12	 	 	 	—  	 	 	 	—  	 	 	 	12	 	 	 	387	 	 	 	399	 	
Policy acquisition costs	 	 	562	 	 	 	1,193	 	 	 	192	 	 	 	—  	 	 	 	1,947	 	 	 	188	 	 	 	2,135	 	
Administrative expenses	 	 	536	 	 	 	793	 	 	 	56	 	 	 	153	 	 	 	1,538	 	 	 	199	 	 	 	1,737	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income (loss)	 	 	501	 	 	 	660	 	 	 	245	 	 	 	(153	)	 	 	1,253	 	 	 	76	 	 	 	1,329	 	
Net investment income	 	 	1,095	 	 	 	521	 	 	 	309	 	 	 	(5	)	 	 	1,920	 	 	 	142	 	 	 	2,062	 	
Net realized gains (losses)	 	 	(709	)	 	 	(316	)	 	 	(163	)	 	 	87	 	 	 	(1,101	)	 	 	(532	)	 	 	(1,633	)	
Interest expense	 	 	1	 	 	 	—  	 	 	 	—  	 	 	 	229	 	 	 	230	 	 	 	—  	 	 	 	230	 	
Other income (expense)	 	 	(7	)	 	 	11	 	 	 	(2	)	 	 	49	 	 	 	51	 	 	 	(12	)	 	 	39	 	
Income tax expense (benefit)	 	 	315	 	 	 	100	 	 	 	30	 	 	 	(105	)	 	 	340	 	 	 	30	 	 	 	370	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	564	 	 	 	776	 	 	 	359	 	 	 	(146	)	 	 	1,553	 	 	 	(356	)	 	 	1,197	 	
Net realized gains (losses)	 	 	(709	)	 	 	(316	)	 	 	(163	)	 	 	87	 	 	 	(1,101	)	 	 	(532	)	 	 	(1,633	)	
Net realized gains (losses) in other income (expense)	 	 	—  	 	 	 	18	 	 	 	—  	 	 	 	1	 	 	 	19	 	 	 	2	 	 	 	21	 	
Tax expense (benefit) on net realized gains (losses)	 	 	(151	)	 	 	(62	)	 	 	(4	)	 	 	5	 	 	 	(212	)	 	 	(6	)	 	 	(218	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) excluding net realized gains (losses) (1)	 	$	1,122	 	 	$	1,012	 	 	$	518	 	 	$	(229	)	 	$	2,423	 	 	$	168	 	 	$	2,591	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2007	 				 				 				 				 				 				 				
Gross premiums written	 	$	9,840	 	 	$	6,291	 	 	$	1,218	 	 	$	—  	 	 	$	17,349	 	 	$	391	 	 	$	17,740	 	
Net premiums written	 	 	5,833	 	 	 	4,568	 	 	 	1,197	 	 	 	—  	 	 	 	11,598	 	 	 	381	 	 	 	11,979	 	
Net premiums earned	 	 	6,007	 	 	 	4,623	 	 	 	1,299	 	 	 	—  	 	 	 	11,929	 	 	 	368	 	 	 	12,297	 	
Losses and loss expenses	 	 	4,269	 	 	 	2,420	 	 	 	664	 	 	 	(2	)	 	 	7,351	 	 	 	—  	 	 	 	7,351	 	
Future policy benefits	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	168	 	 	 	168	 	
Policy acquisition costs	 	 	515	 	 	 	963	 	 	 	248	 	 	 	—  	 	 	 	1,726	 	 	 	45	 	 	 	1,771	 	
Administrative expenses	 	 	530	 	 	 	669	 	 	 	64	 	 	 	142	 	 	 	1,405	 	 	 	50	 	 	 	1,455	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income (loss)	 	 	693	 	 	 	571	 	 	 	323	 	 	 	(140	)	 	 	1,447	 	 	 	105	 	 	 	1,552	 	
Net investment income	 	 	1,034	 	 	 	450	 	 	 	274	 	 	 	105	 	 	 	1,863	 	 	 	55	 	 	 	1,918	 	
Net realized gains (losses)	 	 	125	 	 	 	(69	)	 	 	21	 	 	 	26	 	 	 	103	 	 	 	(164	)	 	 	(61	)	
Interest expense	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	175	 	 	 	175	 	 	 	—  	 	 	 	175	 	
Other income (expense)	 	 	(11	)	 	 	20	 	 	 	(4	)	 	 	(85	)	 	 	(80	)	 	 	(1	)	 	 	(81	)	
Income tax expense (benefit)	 	 	468	 	 	 	183	 	 	 	32	 	 	 	(100	)	 	 	583	 	 	 	(8	)	 	 	575	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	1,373	 	 	 	789	 	 	 	582	 	 	 	(169	)	 	 	2,575	 	 	 	3	 	 	 	2,578	 	
Net realized gains (losses)	 	 	125	 	 	 	(69	)	 	 	21	 	 	 	26	 	 	 	103	 	 	 	(164	)	 	 	(61	)	
Net realized gains (losses) in other income (expense)	 	 	—  	 	 	 	26	 	 	 	—  	 	 	 	(122	)	 	 	(96	)	 	 	1	 	 	 	(95	)	
Tax expense (benefit) on net realized gains (losses)	 	 	21	 	 	 	(14	)	 	 	(2	)	 	 	(27	)	 	 	(22	)	 	 	—  	 	 	 	(22	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) excluding net realized gains (losses) (1)	 	$	1,269	 	 	$	818	 	 	$	559	 	 	$	(100	)	 	$	2,546	 	 	$	166	 	 	$	2,712	 	

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

Segment 2008 YTD	  	Page 6	

					
	  	ACE Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)	  		
 
Insurance - North American
																													
 	  	4Q-08	 	 	3Q-08	 	 	2Q-08	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Gross premiums written	  	$	2,167	 	 	$	2,987	 	 	$	2,718	 	 	$	2,181	 	 	$	2,274	 	 	$	10,053	 	 	$	9,840	 	
Net premiums written	  	 	1,304	 	 	 	1,461	 	 	 	1,511	 	 	 	1,360	 	 	 	1,373	 	 	 	5,636	 	 	 	5,833	 	
Net premiums earned	  	 	1,377	 	 	 	1,583	 	 	 	1,365	 	 	 	1,354	 	 	 	1,418	 	 	 	5,679	 	 	 	6,007	 	
Losses and loss expenses	  	 	893	 	 	 	1,356	 	 	 	962	 	 	 	869	 	 	 	1,004	 	 	 	4,080	 	 	 	4,269	 	
Policy acquisition costs	  	 	112	 	 	 	160	 	 	 	129	 	 	 	161	 	 	 	121	 	 	 	562	 	 	 	515	 	
Administrative expenses	  	 	138	 	 	 	132	 	 	 	131	 	 	 	135	 	 	 	138	 	 	 	536	 	 	 	530	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income	  	 	234	 	 	 	(65	)	 	 	143	 	 	 	189	 	 	 	155	 	 	 	501	 	 	 	693	 	
								
Net investment income	  	 	266	 	 	 	278	 	 	 	282	 	 	 	269	 	 	 	276	 	 	 	1,095	 	 	 	1,034	 	
Net realized gains (losses)	  	 	(259	)	 	 	(284	)	 	 	(105	)	 	 	(61	)	 	 	44	 	 	 	(709	)	 	 	125	 	
Interest expense	  	 	1	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1	 	 	 	—  	 	
Other income (expense)	  	 	(1	)	 	 	(3	)	 	 	(3	)	 	 	—  	 	 	 	—  	 	 	 	(7	)	 	 	(11	)	
Income tax expense (benefit)	  	 	93	 	 	 	(7	)	 	 	106	 	 	 	123	 	 	 	100	 	 	 	315	 	 	 	468	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	 	146	 	 	 	(67	)	 	 	211	 	 	 	274	 	 	 	375	 	 	 	564	 	 	 	1,373	 	
								
Net realized gains (losses)	  	 	(259	)	 	 	(284	)	 	 	(105	)	 	 	(61	)	 	 	44	 	 	 	(709	)	 	 	125	 	
Tax expense (benefit) on net realized gains (losses)	  	 	(72	)	 	 	(64	)	 	 	(7	)	 	 	(8	)	 	 	(2	)	 	 	(151	)	 	 	21	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	333	 	 	$	153	 	 	$	309	 	 	$	327	 	 	$	329	 	 	$	1,122	 	 	$	1,269	 	

Combined ratio	  				 				 				 				 				 				 				
Loss and loss expense ratio	  	 	64.9	%	 	 	85.6	%	 	 	70.5	%	 	 	64.1	%	 	 	70.8	%	 	 	71.8	%	 	 	71.1	%	
Policy acquisition cost ratio	  	 	8.1	%	 	 	10.1	%	 	 	9.5	%	 	 	11.9	%	 	 	8.6	%	 	 	9.9	%	 	 	8.6	%	
Administrative expense ratio	  	 	10.0	%	 	 	8.4	%	 	 	9.5	%	 	 	10.0	%	 	 	9.7	%	 	 	9.4	%	 	 	8.8	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined ratio	  	 	83.0	%	 	 	104.1	%	 	 	89.5	%	 	 	86.0	%	 	 	89.1	%	 	 	91.1	%	 	 	88.5	%	

Large losses and other items (before tax)	  				 				 				 				 				 				 				
Catastrophe losses (before tax)	  	$	3	 	 	$	258	 	 	$	22	 	 	$	15	 	 	$	—  	 	 	$	298	 	 	$	16	 	
Prior period development - unfavorable (favorable) (2)	  	$	(102	)	 	$	(103	)	 	$	(23	)	 	$	(79	)	 	$	1	 	 	$	(307	)	 	$	9	 	
								
Loss and loss expense ratio excluding catastrophe losses and prior period development	  	 	72.0	%	 	 	75.1	%	 	 	70.6	%	 	 	72.1	%	 	 	70.8	%	 	 	72.6	%	 	 	70.6	%	
								
% Change versus prior year period	  				 				 				 				 				 				 				
Net premiums written	  	 	-5	%	 	 	1	%	 	 	1	%	 	 	-10	%	 	 	-7	%	 	 	-3	%	 	 	-2	%	
Net premiums earned	  	 	-3	%	 	 	-1	%	 	 	-6	%	 	 	-12	%	 	 	-4	%	 	 	-5	%	 	 	5	%	
								
Other ratios	  				 				 				 				 				 				 				
Net premiums written/gross premiums written	  	 	60	%	 	 	49	%	 	 	56	%	 	 	62	%	 	 	60	%	 	 	56	%	 	 	59	%	
 
(1)	See page 29 Non-GAAP Financial Measures.	
 
(2)	For Q1 2008 prior period favorable development of $123 million less $44 million of profit share commission on Crop business settlement.	

			
Insurance - North American	  	Page 7	

					
	  	ACE Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)	  		
 
Insurance - Overseas General
																													
 	  	4Q-08  (2)	 	 	3Q-08  (2)	 	 	2Q-08  (2)	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Gross premiums written	  	$	1,609	 	 	$	1,678	 	 	$	1,876	 	 	$	1,778	 	 	$	1,584	 	 	$	6,941	 	 	$	6,291	 	
Net premiums written	  	 	1,251	 	 	 	1,293	 	 	 	1,443	 	 	 	1,345	 	 	 	1,169	 	 	 	5,332	 	 	 	4,568	 	
Net premiums earned	  	 	1,250	 	 	 	1,425	 	 	 	1,439	 	 	 	1,223	 	 	 	1,229	 	 	 	5,337	 	 	 	4,623	 	
Losses and loss expenses	  	 	640	 	 	 	731	 	 	 	715	 	 	 	593	 	 	 	631	 	 	 	2,679	 	 	 	2,420	 	
Future policy benefits	  	 	2	 	 	 	5	 	 	 	5	 	 	 	—  	 	 	 	—  	 	 	 	12	 	 	 	—  	 	
Policy acquisition costs	  	 	296	 	 	 	329	 	 	 	323	 	 	 	245	 	 	 	269	 	 	 	1,193	 	 	 	963	 	
Administrative expenses	  	 	195	 	 	 	217	 	 	 	208	 	 	 	173	 	 	 	175	 	 	 	793	 	 	 	669	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income	  	 	117	 	 	 	143	 	 	 	188	 	 	 	212	 	 	 	154	 	 	 	660	 	 	 	571	 	
								
Net investment income	  	 	134	 	 	 	136	 	 	 	134	 	 	 	117	 	 	 	119	 	 	 	521	 	 	 	450	 	
Net realized gains (losses)	  	 	(117	)	 	 	(58	)	 	 	(58	)	 	 	(83	)	 	 	(11	)	 	 	(316	)	 	 	(69	)	
Other income (expense)	  	 	(3	)	 	 	(6	)	 	 	17	 	 	 	3	 	 	 	12	 	 	 	11	 	 	 	20	 	
Income tax expense (benefit)	  	 	5	 	 	 	10	 	 	 	38	 	 	 	47	 	 	 	59	 	 	 	100	 	 	 	183	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	126	 	 	 	205	 	 	 	243	 	 	 	202	 	 	 	215	 	 	 	776	 	 	 	789	 	
								
Net realized gains (losses)	  	 	(117	)	 	 	(58	)	 	 	(58	)	 	 	(83	)	 	 	(11	)	 	 	(316	)	 	 	(69	)	
Net realized gains (losses) in other income (expense)	  	 	1	 	 	 	(5	)	 	 	15	 	 	 	7	 	 	 	15	 	 	 	18	 	 	 	26	 	
Tax expense (benefit) on net realized gains (losses)	  	 	(17	)	 	 	(16	)	 	 	(7	)	 	 	(22	)	 	 	(1	)	 	 	(62	)	 	 	(14	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	225	 	 	$	252	 	 	$	279	 	 	$	256	 	 	$	210	 	 	$	1,012	 	 	$	818	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined ratio	  				 				 				 				 				 				 				
Loss and loss expense ratio	  	 	51.5	%	 	 	51.6	%	 	 	50.0	%	 	 	48.5	%	 	 	51.4	%	 	 	50.4	%	 	 	52.4	%	
Policy acquisition cost ratio	  	 	23.7	%	 	 	23.1	%	 	 	22.4	%	 	 	20.0	%	 	 	21.8	%	 	 	22.4	%	 	 	20.8	%	
Administrative expense ratio	  	 	15.5	%	 	 	15.2	%	 	 	14.5	%	 	 	14.2	%	 	 	14.3	%	 	 	14.8	%	 	 	14.5	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined ratio	  	 	90.7	%	 	 	89.9	%	 	 	86.9	%	 	 	82.7	%	 	 	87.5	%	 	 	87.6	%	 	 	87.7	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Large losses and other items	  				 				 				 				 				 				 				
Catastrophe losses (before tax)	  	$	(6	)	 	$	49	 	 	$	25	 	 	$	15	 	 	$	13	 	 	$	83	 	 	$	94	 	
Prior period development - unfavorable (favorable)	  	$	(85	)	 	$	(121	)	 	$	(54	)	 	$	(44	)	 	$	(76	)	 	$	(304	)	 	$	(192	)	
Loss and loss expense ratio excluding catastrophe losses and prior period development	  	 	58.6	%	 	 	56.7	%	 	 	52.0	%	 	 	50.9	%	 	 	56.5	%	 	 	54.5	%	 	 	54.4	%	
								
% Change versus prior year period	  				 				 				 				 				 				 				
Net premiums written	  	 	7	%	 	 	24	%	 	 	24	%	 	 	13	%	 	 	10	%	 	 	17	%	 	 	7	%	
Net premiums earned	  	 	2	%	 	 	25	%	 	 	26	%	 	 	10	%	 	 	12	%	 	 	15	%	 	 	7	%	
								
Other ratios	  				 				 				 				 				 				 				
Net premiums written/gross premiums written	  	 	78	%	 	 	77	%	 	 	77	%	 	 	76	%	 	 	74	%	 	 	77	%	 	 	73	%	
 
(1)	See page 29 Non-GAAP Financial Measures.	
 
(2)	Includes the International operations of Combined Insurance.	

Insurance - Overseas General	  	Page 8	

					
	  	ACE Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)	  		
 
Global Reinsurance
																													
 	  	4Q-08	 	 	3Q-08	 	 	2Q-08	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Gross premiums written	  	$	130	 	 	$	174	 	 	$	272	 	 	$	345	 	 	$	177	 	 	$	921	 	 	$	1,218	 	
Net premiums written	  	 	126	 	 	 	174	 	 	 	270	 	 	 	344	 	 	 	174	 	 	 	914	 	 	 	1,197	 	
Net premiums earned	  	 	240	 	 	 	257	 	 	 	257	 	 	 	263	 	 	 	312	 	 	 	1,017	 	 	 	1,299	 	
Losses and loss expenses	  	 	121	 	 	 	178	 	 	 	108	 	 	 	117	 	 	 	155	 	 	 	524	 	 	 	664	 	
Policy acquisition costs	  	 	40	 	 	 	44	 	 	 	54	 	 	 	54	 	 	 	58	 	 	 	192	 	 	 	248	 	
Administrative expenses	  	 	13	 	 	 	14	 	 	 	14	 	 	 	15	 	 	 	17	 	 	 	56	 	 	 	64	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underwriting income	  	 	66	 	 	 	21	 	 	 	81	 	 	 	77	 	 	 	82	 	 	 	245	 	 	 	323	 	
								
Net investment income	  	 	74	 	 	 	83	 	 	 	79	 	 	 	73	 	 	 	73	 	 	 	309	 	 	 	274	 	
Net realized gains (losses)	  	 	(96	)	 	 	(2	)	 	 	(20	)	 	 	(45	)	 	 	(3	)	 	 	(163	)	 	 	21	 	
Other income (expense)	  	 	—  	 	 	 	(1	)	 	 	(1	)	 	 	—  	 	 	 	(1	)	 	 	(2	)	 	 	(4	)	
Income tax expense (benefit)	  	 	6	 	 	 	9	 	 	 	11	 	 	 	4	 	 	 	7	 	 	 	30	 	 	 	32	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	38	 	 	 	92	 	 	 	128	 	 	 	101	 	 	 	144	 	 	 	359	 	 	 	582	 	
								
Net realized gains (losses)	  	 	(96	)	 	 	(2	)	 	 	(20	)	 	 	(45	)	 	 	(3	)	 	 	(163	)	 	 	21	 	
Tax expense (benefit) on net realized gains (losses)	  	 	(1	)	 	 	(1	)	 	 	—  	 	 	 	(2	)	 	 	(1	)	 	 	(4	)	 	 	(2	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	133	 	 	$	93	 	 	$	148	 	 	$	144	 	 	$	146	 	 	$	518	 	 	$	559	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined ratio	  				 				 				 				 				 				 				
Loss and loss expense ratio	  	 	50.3	%	 	 	69.2	%	 	 	42.1	%	 	 	44.5	%	 	 	49.8	%	 	 	51.5	%	 	 	51.1	%	
Policy acquisition cost ratio	  	 	16.6	%	 	 	16.9	%	 	 	21.0	%	 	 	20.6	%	 	 	18.3	%	 	 	18.8	%	 	 	19.1	%	
Administrative expense ratio	  	 	5.4	%	 	 	5.4	%	 	 	5.5	%	 	 	5.7	%	 	 	5.5	%	 	 	5.5	%	 	 	4.9	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined ratio	  	 	72.3	%	 	 	91.5	%	 	 	68.6	%	 	 	70.8	%	 	 	73.6	%	 	 	75.8	%	 	 	75.1	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Large losses and other items	  				 				 				 				 				 				 				
Catastrophe losses (before tax)	  	$	70	 	 	$	104	 	 	$	11	 	 	$	1	 	 	$	10	 	 	 	186	 	 	$	49	 	
Prior period development - unfavorable (favorable)	  	$	(65	)	 	$	(53	)	 	$	(27	)	 	$	(14	)	 	$	(14	)	 	 	(159	)	 	$	(34	)	
Loss and loss expense ratio excluding catastrophe losses and prior period development	  	 	50.4	%	 	 	51.7	%	 	 	48.2	%	 	 	49.5	%	 	 	51.2	%	 	 	49.9	%	 	 	50.0	%	
								
% Change versus prior year period	  				 				 				 				 				 				 				
Net premiums written	  	 	-28	%	 	 	-19	%	 	 	-19	%	 	 	-28	%	 	 	-31	%	 	 	-24	%	 	 	-23	%	
Net premiums earned	  	 	-23	%	 	 	-19	%	 	 	-21	%	 	 	-23	%	 	 	-18	%	 	 	-22	%	 	 	-14	%	
								
Other ratios	  				 				 				 				 				 				 				
Net premiums written/gross premiums written	  	 	97	%	 	 	100	%	 	 	99	%	 	 	100	%	 	 	98	%	 	 	99	%	 	 	98	%	
 
(1)	See page 29 Non-GAAP Financial Measures.	

Global Reinsurance	  	Page 9	

					
	  	ACE Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)	  		
 
Life Insurance and Reinsurance
																													
 	  	4Q-08  (4)	 	 	3Q-08  (4)	 	 	2Q-08  (4)	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Gross premiums written (1)	  	$	414	 	 	$	381	 	 	$	427	 	 	$	105	 	 	$	109	 	 	$	1,327	 	 	$	391	 	
Net premiums written	  	 	371	 	 	 	348	 	 	 	374	 	 	 	105	 	 	 	111	 	 	 	1,198	 	 	 	381	 	
Net premiums earned	  	 	359	 	 	 	344	 	 	 	367	 	 	 	100	 	 	 	98	 	 	 	1,170	 	 	 	368	 	
Losses and loss expenses	  	 	106	 	 	 	104	 	 	 	110	 	 	 	—  	 	 	 	—  	 	 	 	320	 	 	 	—  	 	
Future policy benefits	  	 	154	 	 	 	86	 	 	 	84	 	 	 	63	 	 	 	60	 	 	 	387	 	 	 	168	 	
Policy acquisition costs	  	 	69	 	 	 	48	 	 	 	63	 	 	 	8	 	 	 	9	 	 	 	188	 	 	 	45	 	
Administrative expenses	  	 	56	 	 	 	61	 	 	 	69	 	 	 	13	 	 	 	13	 	 	 	199	 	 	 	50	 	
Net investment income	  	 	47	 	 	 	40	 	 	 	40	 	 	 	15	 	 	 	15	 	 	 	142	 	 	 	55	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Life underwriting income (2)	  	 	21	 	 	 	85	 	 	 	81	 	 	 	31	 	 	 	31	 	 	 	218	 	 	 	160	 	
								
Net realized gains (losses)	  	 	(230	)	 	 	(180	)	 	 	64	 	 	 	(186	)	 	 	(108	)	 	 	(532	)	 	 	(164	)	
Other income (expense)	  	 	(6	)	 	 	(2	)	 	 	(4	)	 	 	—  	 	 	 	(1	)	 	 	(12	)	 	 	(1	)	
Income tax expense (benefit)	  	 	5	 	 	 	15	 	 	 	12	 	 	 	(2	)	 	 	(4	)	 	 	30	 	 	 	(8	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	 	(220	)	 	 	(112	)	 	 	129	 	 	 	(153	)	 	 	(74	)	 	 	(356	)	 	 	3	 	
								
Net realized gains (losses)	  	 	(230	)	 	 	(180	)	 	 	64	 	 	 	(186	)	 	 	(108	)	 	 	(532	)	 	 	(164	)	
Net realized gains (losses) in other income (expense)	  	 	—  	 	 	 	2	 	 	 	—  	 	 	 	—  	 	 	 	1	 	 	 	2	 	 	 	1	 	
Tax expense (benefit) on net realized gains (losses)	  	 	(6	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(6	)	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (3)	  	$	4	 	 	$	66	 	 	$	65	 	 	$	33	 	 	$	33	 	 	$	168	 	 	$	166	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
% Change versus prior year period	  				 				 				 				 				 				 				
Net premiums written	  	 	234	%	 	 	266	%	 	 	330	%	 	 	19	%	 	 	42	%	 	 	214	%	 	 	39	%	
Net premiums earned	  	 	266	%	 	 	262	%	 	 	322	%	 	 	14	%	 	 	26	%	 	 	218	%	 	 	34	%	
 
(1)	Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues. For the quarters ended December 31, 2008; September 30, 2008; June 30, 2008; March 31, 2008; and December 31, 2007, premiums or deposits collected on investment and universal life contracts that are excluded from premium revenue above are $29.2 million, $18.8 million, $30.9 million, $41.2 million, and $27.2 million, respectively. Fees on universal life and investment contracts are revenue for GAAP and have been classified as premium. For the quarters ended December 31, 2008; September 30, 2008; June 30, 2008; March 31, 2008; and December 31, 2007, fees reflected as gross written premiums are $5.6 million, $4.5 million, $4.9 million, $4.4 million, and $4.1 million, respectively.	
 
(2)	We assess the performance of our Life Insurance and Reinsurance business based on life underwriting income which includes net investment income.	
 
(3)	See page 29 Non-GAAP Financial Measures.	
 
(4)	Includes the North America operations of Combined Insurance.	

Life	  	Page 10	

					
	  	ACE Limited
Segment Results - Life Reinsurance
(in millions of U.S. dollars)
(Unaudited)	  		
 
Variable Annuity (VA) Lines
Historical Cash Flow Summary by Quarter

Death Benefits (GMDB)	  				 			  			  			  			  			  			  			
 	  	4Q-08	 	 	3Q-08	  	2Q-08	  	1Q-08	  	4Q-07	  	3Q-07	  	2Q-07	  	1Q-07	
Premium	  	$	29	 	 	$	31	  	$	31	  	$	32	  	$	33	  	$	32	  	$	31	  	$	29	
less Paid Claims	  	 	38	 	 	 	14	  	 	8	  	 	7	  	 	3	  	 	3	  	 	2	  	 	1	
	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Net Cash	  	$	(9	)	 	$	17	  	$	23	  	$	25	  	$	30	  	$	29	  	$	29	  	$	28	

Living Benefits (Includes GMIB and GMAB)	  				 			  			  			  			  			  			  			
 	  	4Q-08	 	 	3Q-08	  	2Q-08	  	1Q-08	  	4Q-07	  	3Q-07	  	2Q-07	  	1Q-07	
Premium	  	$	37	 	 	$	37	  	$	37	  	$	34	  	$	29	  	$	27	  	$	26	  	$	25	
less Paid Claims (1)	  	 	—  	 	 	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	—  	
	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Net Cash	  	$	37	 	 	$	37	  	$	37	  	$	34	  	$	29	  	$	27	  	$	26	  	$	25	

Total VA Guaranteed Benefits	  				 			  			  			  			  			  			  			
 	  	4Q-08	 	 	3Q-08	  	2Q-08	  	1Q-08	  	4Q-07	  	3Q-07	  	2Q-07	  	1Q-07	
Premium	  	$	66	 	 	$	68	  	$	68	  	$	66	  	$	62	  	$	59	  	$	57	  	$	54	
less Paid Claims	  	 	38	 	 	 	14	  	 	8	  	 	7	  	 	3	  	 	3	  	 	2	  	 	1	
	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Net Cash	  	$	28	 	 	$	54	  	$	60	  	$	59	  	$	59	  	$	56	  	$	55	  	$	53	

Amounts represent past premium received and claims paid by quarter, split by benefit type.
 
Death Benefits (GMDB)
 
Premiums and claims from VA contracts reinsuring Guaranteed Minimum Death Benefits (GMDB)
 
Using our current mortality assumptions we expect approximately $164 million of claims and $108 million of premium on death benefits over the next 12 months.
 
Living Benefits (Includes GMIB and GMAB)
 
Premiums and claims from VA contracts reinsuring Guaranteed Minimum Income Benefits (GMIB) and Guaranteed Minimum Accumulation Benefits (GMAB), collectively known as Living Benefits.
 
Using our current mortality assumptions we expect approximately $2 million of claims and $138 million of premium on living benefits over the next 12 months.
 
(1)	Substantially all of our living benefit reinsurance clients’ policyholders are currently ineligible to trigger a claim payment. These policyholders begin to become eligible in 2013.	

Variable Annuity	  	Page 11	

					
	  	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, 2006	  	$	35,517	 	 	$	13,509	 	 	$	22,008	 	 	$	28,989	 	 	$	8,977	 	 	$	20,012	 	 	$	6,528	 	 	$	4,532	 	 	$	1,996	 	
										
Losses and loss expenses incurred	  	 	2,703	 	 	 	843	 	 	 	1,860	 	 	 	2,690	 	 	 	832	 	 	 	1,858	 	 	 	13	 	 	 	11	 	 	 	2	 	
Losses and loss expenses paid	  	 	(2,363	)	 	 	(943	)	 	 	(1,420	)	 	 	(2,206	)	 	 	(797	)	 	 	(1,409	)	 	 	(157	)	 	 	(146	)	 	 	(11	)	
Other (incl. foreign exch. revaluation)	  	 	(44	)	 	 	4	 	 	 	(48	)	 	 	(44	)	 	 	4	 	 	 	(48	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at March 31, 2007	  	 	35,813	 	 	 	13,413	 	 	 	22,400	 	 	 	29,429	 	 	 	9,016	 	 	 	20,413	 	 	 	6,384	 	 	 	4,397	 	 	 	1,987	 	
										
Losses and loss expenses incurred	  	 	2,280	 	 	 	487	 	 	 	1,793	 	 	 	2,249	 	 	 	473	 	 	 	1,776	 	 	 	31	 	 	 	14	 	 	 	17	 	
Losses and loss expenses paid	  	 	(2,111	)	 	 	(758	)	 	 	(1,353	)	 	 	(1,977	)	 	 	(637	)	 	 	(1,340	)	 	 	(134	)	 	 	(121	)	 	 	(13	)	
Other (incl. foreign exch. revaluation)	  	 	141	 	 	 	34	 	 	 	107	 	 	 	140	 	 	 	34	 	 	 	106	 	 	 	1	 	 	 	—  	 	 	 	1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at June 30, 2007	  	 	36,123	 	 	 	13,176	 	 	 	22,947	 	 	 	29,841	 	 	 	8,886	 	 	 	20,955	 	 	 	6,282	 	 	 	4,290	 	 	 	1,992	 	
										
Losses and loss expenses incurred	  	 	3,010	 	 	 	1,100	 	 	 	1,910	 	 	 	2,999	 	 	 	1,093	 	 	 	1,906	 	 	 	11	 	 	 	7	 	 	 	4	 	
Losses and loss expenses paid	  	 	(2,429	)	 	 	(948	)	 	 	(1,481	)	 	 	(2,269	)	 	 	(833	)	 	 	(1,436	)	 	 	(160	)	 	 	(115	)	 	 	(45	)	
Other (incl. foreign exch. revaluation)	  	 	164	 	 	 	58	 	 	 	106	 	 	 	164	 	 	 	58	 	 	 	106	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at September 30, 2007	  	 	36,868	 	 	 	13,386	 	 	 	23,482	 	 	 	30,735	 	 	 	9,204	 	 	 	21,531	 	 	 	6,133	 	 	 	4,182	 	 	 	1,951	 	
										
Losses and loss expenses incurred	  	 	2,838	 	 	 	1,050	 	 	 	1,788	 	 	 	2,815	 	 	 	1,057	 	 	 	1,758	 	 	 	23	 	 	 	(7	)	 	 	30	 	
Losses and loss expenses paid	  	 	(2,613	)	 	 	(933	)	 	 	(1,680	)	 	 	(2,400	)	 	 	(806	)	 	 	(1,594	)	 	 	(213	)	 	 	(127	)	 	 	(86	)	
Other (incl. foreign exch. revaluation)	  	 	19	 	 	 	17	 	 	 	2	 	 	 	19	 	 	 	17	 	 	 	2	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2007	  	 	37,112	 	 	 	13,520	 	 	 	23,592	 	 	 	31,169	 	 	 	9,472	 	 	 	21,697	 	 	 	5,943	 	 	 	4,048	 	 	 	1,895	 	
										
Losses and loss expenses incurred	  	 	1,659	 	 	 	80	 	 	 	1,579	 	 	 	1,670	 	 	 	87	 	 	 	1,583	 	 	 	(11	)	 	 	(7	)	 	 	(4	)	
Losses and loss expenses paid	  	 	(1,748	)	 	 	(601	)	 	 	(1,147	)	 	 	(1,554	)	 	 	(406	)	 	 	(1,148	)	 	 	(194	)	 	 	(195	)	 	 	1	 	
Other (incl. foreign exch. revaluation)	  	 	159	 	 	 	71	 	 	 	88	 	 	 	159	 	 	 	71	 	 	 	88	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at March 31, 2008	  	$	37,182	 	 	$	13,070	 	 	$	24,112	 	 	$	31,444	 	 	$	9,224	 	 	$	22,220	 	 	$	5,738	 	 	$	3,846	 	 	$	1,892	 	
										
Losses and loss expenses incurred	  	 	2,736	 	 	 	841	 	 	 	1,895	 	 	 	2,727	 	 	 	837	 	 	 	1,890	 	 	 	9	 	 	 	4	 	 	 	5	 	
Losses and loss expenses paid	  	 	(2,620	)	 	 	(1,024	)	 	 	(1,596	)	 	 	(2,391	)	 	 	(801	)	 	 	(1,590	)	 	 	(229	)	 	 	(223	)	 	 	(6	)	
Other (incl. foreign exch. revaluation)	  	 	12	 	 	 	12	 	 	 	—  	 	 	 	11	 	 	 	12	 	 	 	(1	)	 	 	1	 	 	 	—  	 	 	 	1	 	
Losses and loss expenses acquired  (2)	  	 	386	 	 	 	33	 	 	 	353	 	 	 	386	 	 	 	33	 	 	 	353	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at June 30, 2008	  	$	37,696	 	 	$	12,932	 	 	$	24,764	 	 	$	32,177	 	 	$	9,305	 	 	$	22,872	 	 	$	5,519	 	 	$	3,627	 	 	$	1,892	 	
										
Losses and loss expenses incurred	  	 	3,995	 	 	 	1,626	 	 	 	2,369	 	 	 	3,976	 	 	 	1,615	 	 	 	2,361	 	 	 	19	 	 	 	11	 	 	 	8	 	
Losses and loss expenses paid	  	 	(2,767	)	 	 	(1,025	)	 	 	(1,742	)	 	 	(2,544	)	 	 	(818	)	 	 	(1,726	)	 	 	(223	)	 	 	(207	)	 	 	(16	)	
Other (incl. foreign exch. revaluation)	  	 	(551	)	 	 	(200	)	 	 	(351	)	 	 	(551	)	 	 	(200	)	 	 	(351	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at September 30, 2008	  	$	38,373	 	 	$	13,333	 	 	$	25,040	 	 	$	33,058	 	 	$	9,902	 	 	$	23,156	 	 	$	5,315	 	 	$	3,431	 	 	$	1,884	 	
										
Losses and loss expenses incurred	  	 	2,554	 	 	 	794	 	 	 	1,760	 	 	 	2,625	 	 	 	907	 	 	 	1,718	 	 	 	(71	)	 	 	(113	)	 	 	42	 	
Losses and loss expenses paid	  	 	(2,764	)	 	 	(922	)	 	 	(1,842	)	 	 	(2,651	)	 	 	(773	)	 	 	(1,878	)	 	 	(113	)	 	 	(149	)	 	 	36	 	
Other (incl. foreign exch. revaluation)	  	 	(987	)	 	 	(270	)	 	 	(717	)	 	 	(987	)	 	 	(270	)	 	 	(717	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2008	  	$	37,176	 	 	$	12,935	 	 	$	24,241	 	 	$	32,045	 	 	$	9,766	 	 	$	22,279	 	 	$	5,131	 	 	$	3,169	 	 	$	1,962	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Add net recoverable on paid losses	  				 	 	982	 	 				 				 				 				 				 				 				
	  				 	 	 	 	 				 				 				 				 				 				 				
Reinsurance Recoverable	  				 	$	13,917	 	 				 				 				 				 				 				 				

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

Loss Reserve Rollforward	  	Page 12	

					
	  	ACE Limited
Reinsurance Recoverable Analysis
(in millions of U.S. dollars)
(Unaudited)	  		
 
Net Reinsurance Recoverable by Division
																					
 	  	December 31	 	 	September 30	 	 	June 30	 	 	March 31	 	 	December 31	 	
 	  	2008	 	 	2008	 	 	2008	 	 	2008	 	 	2007	 	
Reinsurance recoverable on paid losses and loss expenses	  				 				 				 				 				
Active operations	  	$	745	 	 	$	643	 	 	$	706	 	 	$	686	 	 	$	697	 	
Brandywine	  	 	331	 	 	 	354	 	 	 	327	 	 	 	342	 	 	 	305	 	
Westchester Run-off	  	 	34	 	 	 	46	 	 	 	37	 	 	 	34	 	 	 	36	 	
Other Run-off	  	 	12	 	 	 	13	 	 	 	15	 	 	 	9	 	 	 	12	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	1,122	 	 	$	1,056	 	 	$	1,085	 	 	$	1,071	 	 	$	1,050	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Reinsurance recoverable on unpaid losses and loss expenses and benefits	  				 				 				 				 				
Active operations	  	$	10,289	 	 	$	10,389	 	 	$	9,810	 	 	$	9,746	 	 	$	10,016	 	
Brandywine	  	 	2,443	 	 	 	2,675	 	 	 	2,844	 	 	 	3,004	 	 	 	3,161	 	
Westchester Run-off	  	 	550	 	 	 	593	 	 	 	615	 	 	 	627	 	 	 	653	 	
Other Run-off	  	 	104	 	 	 	163	 	 	 	149	 	 	 	169	 	 	 	160	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	13,386	 	 	$	13,820	 	 	$	13,418	 	 	$	13,546	 	 	$	13,990	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross reinsurance recoverable	  				 				 				 				 				
Active operations	  	$	11,034	 	 	$	11,032	 	 	$	10,516	 	 	$	10,432	 	 	$	10,713	 	
Brandywine	  	 	2,774	 	 	 	3,029	 	 	 	3,171	 	 	 	3,346	 	 	 	3,466	 	
Westchester Run-off	  	 	584	 	 	 	639	 	 	 	652	 	 	 	661	 	 	 	689	 	
Other Run-off	  	 	116	 	 	 	176	 	 	 	164	 	 	 	178	 	 	 	172	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	14,508	 	 	$	14,876	 	 	$	14,503	 	 	$	14,617	 	 	$	15,040	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for uncollectible reinsurance	  				 				 				 				 				
Active operations	  	$	(398	)	 	$	(431	)	 	$	(432	)	 	$	(444	)	 	$	(435	)	
Brandywine	  	 	(155	)	 	 	(174	)	 	 	(185	)	 	 	(189	)	 	 	(197	)	
Westchester Run-off	  	 	(27	)	 	 	(31	)	 	 	(31	)	 	 	(31	)	 	 	(31	)	
Other Run-off	  	 	(11	)	 	 	(15	)	 	 	(16	)	 	 	(16	)	 	 	(23	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	(591	)	 	$	(651	)	 	$	(664	)	 	$	(680	)	 	$	(686	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net reinsurance recoverable	  				 				 				 				 				
Active operations	  	$	10,636	 	 	$	10,601	 	 	$	10,084	 	 	$	9,988	 	 	$	10,278	 	
Brandywine	  	 	2,619	 	 	 	2,855	 	 	 	2,986	 	 	 	3,157	 	 	 	3,269	 	
Westchester Run-off	  	 	557	 	 	 	608	 	 	 	621	 	 	 	630	 	 	 	658	 	
Other Run-off	  	 	105	 	 	 	161	 	 	 	148	 	 	 	162	 	 	 	149	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	13,917	 	 	$	14,225	 	 	$	13,839	 	 	$	13,937	 	 	$	14,354	 	

			
Reinsurance Recoverable	  	Page 13	

					
	  	ACE Limited
Reinsurance Recoverable Analysis - 2
(in millions of U.S. dollars)
(Unaudited)	  		
 
Consolidated Reinsurance Recoverable
										
 	  	September 30, 2008	 	
 	  	Recoverable	  	Provision  (5)	  	% Of Gross	 	
Categories	  			  			  			
Largest Reinsurers (1)	  	$	9,581	  	$	142	  	1.5	%	
Other reinsurers balances rated A- or better	  	 	1,844	  	 	28	  	1.5	%	
Other reinsurers balances with rating lower than A- or not rated	  	 	763	  	 	155	  	20.3	%	
Other Pools and Government Agencies	  	 	184	  	 	11	  	6.0	%	
Structured Settlements	  	 	551	  	 	19	  	3.4	%	
Other Captives	  	 	1,536	  	 	12	  	0.8	%	
Others (2)	  	 	417	  	 	284	  	68.1	%	
	  	 	 	  	 	 	  	 	 	
Total	  	$	14,876	  	$	651	  	4.4	%	

At September 30, 2008, $10.9 billion of ACE Limited recoverables were from rated reinsurers, of which 92.9% were rated the equivalent of A- or better by internationally recognized rating agencies.

Largest Reinsurers  (3)	  	S&P Rating  (4)	  	AM Best Rating  (4)	
AGRI General Insurance Co	  	BBBpi	  	A	
American International Group (AIG) (6)	  	A+	  	A	
Berkshire Hathaway Insurance Group	  	AAA	  	A++	
Chubb Insurance Group	  	AA	  	A++	
Equitas	  	NL	  	NL	
Everest Re Group	  	AA-	  	A+	
Fairfax Financial Holdings Ltd.	  	A-	  	A-	
Federal Crop Insurance Corp	  	U.S. Federal Gov.	  	U.S. Federal Gov.	
HDI (Hannover Re)	  	AA-	  	A	
Lloyd’s of London	  	A+	  	A	
Munich Re Group	  	AA-	  	A+	
National Workers Compensation Reinsurance Pool	  	Mandatory Pool	  	Mandatory Pool	
Partner Re	  	AA-	  	A+	
Swiss Re Group	  	AA-	  	A+	
WR Berkley Corp	  	A+	  	A+	
XL Capital Group (7)	  	A	  	A	
 
(1)	The Largest Reinsurers includes all reinsurers where gross recoverable exceeds 1% of ACE shareholders’ equity. Total ACE shareholders’ equity at September 30, 2008 was $15.356 billion.	
 
(2)	Others principally includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation, or liquidation. Our estimate of provision for uncollectible reinsurance associated with Others 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 multi-beneficiary trusts and parental guarantees.	
 
(3)	The Largest Reinsurers includes all reinsurers where gross recoverable (net of collateral) exceeds 1% of ACE shareholders’ equity. The Largest Reinsurers account for 59.3% of total recoverables at September 30, 2008.	
 
(4)	S&P and AM Best ratings based on each group’s predominant reinsurer.	
 
(5)	See MD&A reported in the 2007 Form 10-K for a discussion on how ACE determines the provision for uncollectible reinsurance.	
 
(6)	Gross recoverables with American International Group (AIG) were $549.5 million at September 30, 2008, of which $433.4 million (78.9%) were with Transatlantic Reinsurance Co.	
 
(7)	Gross recoverables with XL Capital Group were $351.2 million at September 30, 2008. The balance was $358.3 million at December 31, 2008, however, we were able to obtain $59 million of additional usable collateral in the 4th quarter to support this balance.	

Reinsurance Recoverable - 2	  	Page 14	

					
	  	ACE Limited
Reinsurance Recoverable Analysis - 3
(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, 2007	  	$	774	 	 	$	276	 	 	$	1,050	 	
Provision at 12/31/07	  	 	43	 	 	 	173	 	 	 	216	 	
% of gross	  	 	5.6	%	 	 	62.7	%	 	 	20.6	%	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net balance at December 31, 2007	  	$	731	 	 	$	103	 	 	$	834	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross balance at March 31, 2008	  	$	672	 	 	$	399	 	 	$	1,071	 	
Provision at 3/31/08	  	 	40	 	 	 	164	 	 	 	204	 	
% of gross	  	 	6.0	%	 	 	41.1	%	 	 	19.0	%	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net balance at March 31, 2008	  	$	632	 	 	$	235	 	 	$	867	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross balance at June 30, 2008	  	$	732	 	 	$	353	 	 	$	1,085	 	
Provision at 6/30/08	  	 	37	 	 	 	141	 	 	 	178	 	
% of gross	  	 	5.1	%	 	 	39.9	%	 	 	16.4	%	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net balance at June 30, 2008	  	$	695	 	 	$	212	 	 	$	907	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross balance at September 30, 2008	  	$	736	 	 	$	320	 	 	$	1,056	 	
Provision at 9/30/08	  	 	35	 	 	 	129	 	 	 	164	 	
% of gross	  	 	4.8	%	 	 	40.3	%	 	 	15.5	%	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net balance at September 30, 2008	  	$	701	 	 	$	191	 	 	$	892	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross balance at December 31, 2008	  	$	782	 	 	$	340	 	 	$	1,122	 	
Provision at 12/31/08	  	 	30	 	 	 	110	 	 	 	140	 	
% of gross	  	 	3.8	%	 	 	32.4	%	 	 	12.5	%	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net balance at December 31, 2008  (3) 	  	$	752	 	 	$	230	 	 	$	982	 	

(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 for Brandywine Group and active operations. 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 multi-beneficiary trusts and parental guarantees.	
 
(3)	The current quarter split between General Collections and Other is estimated based on prior quarter balances. Balances are adjusted to actual in the next quarter.	

Reinsurance Recoverable - 3	  	Page 15	

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

 	 	December 31
2008	 	 	September 30
2008	 	 	June 30
2008	 	 	March 31
2008	 	 	December 31
2007	 	
Market Value	 				 			 				 			 				 			 				 			 				 			
Fixed maturities available for sale	 	$	31,155	 	 			 	$	33,158	 	 			 	$	34,870	 	 			 	$	32,619	 	 			 	$	33,184	 	 			
Fixed maturities held to maturity	 	 	2,865	 	 			 	 	2,852	 	 			 	 	2,932	 	 			 	 	2,960	 	 			 	 	3,015	 	 			
Short-term investments	 	 	3,350	 	 			 	 	3,014	 	 			 	 	3,137	 	 			 	 	4,795	 	 			 	 	2,631	 	 			
	 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			
Total	 	$	37,370	 	 			 	$	39,024	 	 			 	$	40,939	 	 			 	$	40,374	 	 			 	$	38,830	 	 			
	 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			
Asset Allocation by Market Value	 				 			 				 			 				 			 				 			 				 			
Treasury	 	$	1,018	 	 	3	%	 	$	1,122	 	 	3	%	 	$	1,043	 	 	2	%	 	$	974	 	 	2	%	 	$	1,145	 	 	3	%	
Agency	 	 	2,027	 	 	5	%	 	 	1,816	 	 	5	%	 	 	1,677	 	 	4	%	 	 	1,939	 	 	5	%	 	 	1,820	 	 	5	%	
Corporate	 	 	8,744	 	 	23	%	 	 	8,779	 	 	22	%	 	 	9,689	 	 	25	%	 	 	8,906	 	 	22	%	 	 	9,015	 	 	23	%	
Mortgage-backed securities	 	 	10,986	 	 	29	%	 	 	12,451	 	 	32	%	 	 	12,674	 	 	31	%	 	 	13,087	 	 	32	%	 	 	13,733	 	 	35	%	
Asset-backed securities	 	 	709	 	 	2	%	 	 	837	 	 	2	%	 	 	1,041	 	 	2	%	 	 	1,060	 	 	3	%	 	 	1,150	 	 	3	%	
Municipal	 	 	2,124	 	 	6	%	 	 	1,833	 	 	5	%	 	 	1,950	 	 	5	%	 	 	2,025	 	 	5	%	 	 	1,844	 	 	5	%	
Non-U.S.	 	 	8,412	 	 	23	%	 	 	9,172	 	 	23	%	 	 	9,728	 	 	23	%	 	 	7,588	 	 	19	%	 	 	7,492	 	 	19	%	
Short-term investments	 	 	3,350	 	 	9	%	 	 	3,014	 	 	8	%	 	 	3,137	 	 	8	%	 	 	4,795	 	 	12	%	 	 	2,631	 	 	7	%	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	37,370	 	 	100	%	 	$	39,024	 	 	100	%	 	$	40,939	 	 	100	%	 	$	40,374	 	 	100	%	 	$	38,830	 	 	100	%	

Note: Insured municipal bonds represent $1,043 million, or 49% of our municipal bond holdings.	 	
											
Credit Quality by Market Value	 				 			 				 			 				 			 				 			 				 			
AAA	 	$	22,960	 	 	61	%	 	$	23,995	 	 	62	%	 	$	24,740	 	 	60	%	 	$	26,162	 	 	65	%	 	$	24,553	 	 	63	%	
AA	 	 	3,374	 	 	9	%	 	 	3,943	 	 	10	%	 	 	4,285	 	 	10	%	 	 	3,746	 	 	9	%	 	 	3,747	 	 	10	%	
A	 	 	5,497	 	 	15	%	 	 	4,969	 	 	13	%	 	 	5,572	 	 	14	%	 	 	4,620	 	 	12	%	 	 	4,590	 	 	12	%	
BBB	 	 	3,388	 	 	9	%	 	 	3,407	 	 	9	%	 	 	3,463	 	 	9	%	 	 	3,188	 	 	8	%	 	 	3,297	 	 	8	%	
BB	 	 	1,119	 	 	3	%	 	 	1,296	 	 	3	%	 	 	1,390	 	 	3	%	 	 	1,249	 	 	3	%	 	 	1,073	 	 	3	%	
B	 	 	934	 	 	3	%	 	 	1,315	 	 	3	%	 	 	1,416	 	 	4	%	 	 	1,341	 	 	3	%	 	 	1,481	 	 	4	%	
Other	 	 	98	 	 	0	%	 	 	99	 	 	0	%	 	 	73	 	 	0	%	 	 	68	 	 	0	%	 	 	89	 	 	0	%	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	37,370	 	 	100	%	 	$	39,024	 	 	100	%	 	$	40,939	 	 	100	%	 	$	40,374	 	 	100	%	 	$	38,830	 	 	100	%	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost/Amortized Cost	 				 			 				 			 				 			 				 			 				 			
Fixed maturities available for sale	 	$	33,109	 	 			 	$	34,609	 	 			 	$	35,355	 	 			 	$	32,615	 	 			 	$	32,994	 	 			
Fixed maturities held to maturity	 	 	2,860	 	 			 	 	2,881	 	 			 	 	2,932	 	 			 	 	2,913	 	 			 	 	2,987	 	 			
Short-term investments	 	 	3,350	 	 			 	 	3,014	 	 			 	 	3,137	 	 			 	 	4,795	 	 			 	 	2,631	 	 			
	 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			
Subtotal	 	 	39,319	 	 			 	 	40,504	 	 			 	 	41,424	 	 			 	 	40,323	 	 			 	 	38,612	 	 			
Equity securities	 	 	1,132	 	 			 	 	1,336	 	 			 	 	1,502	 	 			 	 	1,597	 	 			 	 	1,618	 	 			
Other investments	 	 	1,368	 	 			 	 	1,327	 	 			 	 	1,182	 	 			 	 	992	 	 			 	 	880	 	 			
	 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			
Total	 	$	41,819	 	 			 	$	43,167	 	 			 	$	44,108	 	 			 	$	42,912	 	 			 	$	41,110	 	 			
	 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 			
Avg. duration of fixed maturities	 	 	3.6 years	 	 			 	 	3.8 years	 	 			 	 	3.7 years	 	 			 	 	3.5 years	 	 			 	 	3.5 years	 	 			
Avg. market yield of fixed maturities	 	 	6.4	%	 			 	 	6.1	%	 			 	 	5.6	%	 			 	 	5.1	%	 			 	 	5.3	%	 			
Avg. credit quality	 	 	AA	 	 			 	 	AA	 	 			 	 	AA	 	 			 	 	AA	 	 			 	 	AA	 	 			

Investments	  	Page 16	

					
	  	ACE Limited
Investment Portfolio - 2
(in millions of U.S. dollars)
(Unaudited)	  		
 
Mortgage-backed and Asset-backed Fixed Income Portfolio
Market Value at December 31, 2008
																			
 	  	S&P Credit Rating	
 	  	AAA	  	AA	  	A	  	BBB	  	BB and below	  	Total	
Mortgage-backed securities	  			  			  			  			  			  			
Residential mortgage-backed (RMBS)	  			  			  			  			  			  			
GNMA	  	$	406	  	$	—  	  	$	—  	  	$	—  	  	$	—  	  	$	406	
FNMA	  	 	4,483	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	4,483	
Freddie Mac	  	 	2,071	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	2,071	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total agency RMBS	  	 	6,960	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	6,960	
Non-agency RMBS	  	 	1,764	  	 	56	  	 	34	  	 	24	  	 	7	  	 	1,885	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total residential mortgage-backed	  	 	8,724	  	 	56	  	 	34	  	 	24	  	 	7	  	 	8,845	
							
Commercial mortgage-backed	  	 	2,126	  	 	4	  	 	9	  	 	2	  	 	—  	  	 	2,141	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total mortgage-backed securities	  	$	10,850	  	$	60	  	$	43	  	$	26	  	$	7	  	$	10,986	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Asset-backed securities	  			  			  			  			  			  			
Sub-prime	  	$	60	  	$	5	  	$	6	  	$	1	  	$	4	  	$	76	
Credit cards	  	 	53	  	 	—  	  	 	15	  	 	6	  	 	—  	  	 	74	
Autos	  	 	312	  	 	44	  	 	5	  	 	8	  	 	—  	  	 	369	
Other	  	 	183	  	 	3	  	 	3	  	 	1	  	 	—  	  	 	190	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total asset-backed securities	  	$	608	  	$	52	  	$	29	  	$	16	  	$	4	  	$	709	

Insured asset-backed securities represent $118 million, or 17% of our asset-backed security holdings.

Investments 2	  	Page 17	

					
	  	ACE Limited
Investment Portfolio - 3
(in millions of U.S. dollars)
(Unaudited)	  		
 
Mortgage-backed and Asset-backed Fixed Income Portfolio
Market Value at December 31, 2008
 
Mortgage-backed securities total $11 billion, are rated predominantly AAA and comprise 29% of the fixed income portfolio. This compares to a 45% mortgage-backed weighting in representative indices of the U.S. fixed income market. The minimum rating for initial purchases of mortgage and asset backed securities is AAA.
 
ACE suspended new investments in sub-prime backed securities in 3Q 2007 and ALT-A, credit card, and auto backed securities in 1Q 2008.
 
Securities issued by Federal agencies with implied or explicit government guarantees total $7 billion and represent 79% of the residential mortgage-backed portfolio.
 
Non-agency residential mortgage-backed securities are rated predominantly AAA, backed by prime collateral, and broadly diversified in over 300,000 loans. The portfolio’s loan-to-value ratio is approximately 67% with an average FICO score of 736. With this conservative loan-to-value ratio and subordinated collateral of 12%, the cumulative 5-year foreclosure rate would have to rise to 27% and real estate values would have to fall 61% before principal is impaired. The comparable historical cumulative foreclosure rate is 2.9% for prime mortgages.
 
Within the portfolio of prime AAA non-agency RMBS are $152 million of holdings classified as ALT-A. These ALT-A holdings are broadly diversified with over 60% issued prior to 2006. The average FICO score is 714 with a relatively conservative loan-to-value ratio of 70%. With subordinated collateral of 19%, the cumulative 4-year foreclosure rate would have to rise to 40% and real estate values would have to fall more than 59% before principal is impaired. The comparable historical cumulative foreclosure rate is approximately 8.25%.
 
Commercial mortgage-backed securities of $2.1 billion are rated predominantly AAA, broadly diversified with over 26,000 loans and seasoned with 71% of the portfolio issued before 2006. The average loan-to-value ratio is approximately 63% with a debt service coverage ratio in excess of 1.7 and weighted average subordinated collateral of 27%. The cumulative foreclosure rate would have to rise to 63% and commercial real estate values would have to fall more than 64% before principal is impaired. The historical annual delinquency rate is 1%.
 
Sub-prime asset-backed securities (current holdings of $76 million) are rated predominantly AAA, broadly diversified in over 115,000 loans with an average loan-to-value ratio of approximately 80% and an average FICO score of 605. With subordinated collateral of 35%, the cumulative 5-year foreclosure rate would have to rise to 79% and real estate values would have to fall more than 54% before principal is impaired. The comparable historical cumulative 5-year foreclosure rate is 30%. The ratings have been reaffirmed on substantially all of these securities.
 
Auto loan asset-backed securities are rated predominantly AAA with a short duration of approximately 0.8 years and average subordinated collateral of 13%. Annual default rates would have to rise to 16 times their level of about 1.9% before principal is impaired.

Investments 3	  	Page 18	

					
	  	ACE Limited
Investment Portfolio - 4
(in millions of U.S. dollars)
(Unaudited)	  		
 
Mortgage-backed and Asset-backed Fixed Income Portfolio
Amortized Cost at December 31, 2008
																			
 	  	S&P Credit Rating	
 	  	AAA	  	AA	  	A	  	BBB	  	BB and below	  	Total	
Mortgage-backed securities	  			  			  			  			  			  			
Residential mortgage-backed (RMBS)	  			  			  			  			  			  			
GNMA	  	$	395	  	$	—  	  	$	—  	  	$	—  	  	$	—  	  	$	395	
FNMA	  	 	4,340	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	4,340	
Freddie Mac	  	 	1,999	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	1,999	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total agency RMBS	  	 	6,734	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	6,734	
Non-agency RMBS	  	 	2,454	  	 	84	  	 	63	  	 	43	  	 	7	  	 	2,651	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total residential mortgage-backed	  	 	9,188	  	 	84	  	 	63	  	 	43	  	 	7	  	 	9,385	
							
Commercial mortgage-backed	  	 	2,434	  	 	4	  	 	9	  	 	3	  	 	—  	  	 	2,450	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total mortgage-backed securities	  	$	11,622	  	$	88	  	$	72	  	$	46	  	$	7	  	$	11,835	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Asset-backed securities	  			  			  			  			  			  			
Sub-prime	  	$	77	  	$	6	  	$	8	  	$	1	  	$	4	  	$	96	
Credit cards	  	 	55	  	 	—  	  	 	16	  	 	8	  	 	—  	  	 	79	
Autos	  	 	324	  	 	49	  	 	5	  	 	9	  	 	—  	  	 	387	
Other	  	 	187	  	 	5	  	 	3	  	 	—  	  	 	—  	  	 	195	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total asset-backed securities	  	$	643	  	$	60	  	$	32	  	$	18	  	$	4	  	$	757	

Insured asset-backed securities represent $126 million, or 17% of our asset-backed security holdings.

Investments 4	  	Page 19	

					
	  	ACE Limited
Investment Portfolio - 5
(in millions of U.S. dollars)
(Unaudited)	  		
 
Market Value at December 31, 2008

 	  	S&P Credit Rating	
 	  	AAA	  	AA	  	A	  	BBB	  	Total	
U.S. Investment Grade Corporate Fixed Income Portfolio	  			  			  			  			  			
Banks	  	$	112	  	$	539	  	$	1,720	  	$	105	  	$	2,476	
Basic Materials	  	 	—  	  	 	—  	  	 	20	  	 	72	  	 	92	
Communications	  	 	—  	  	 	—  	  	 	346	  	 	427	  	 	773	
Consumer, Cyclical	  	 	6	  	 	57	  	 	127	  	 	96	  	 	286	
Consumer, Non-Cyclical	  	 	12	  	 	51	  	 	325	  	 	163	  	 	551	
Diversified Financial Services	  	 	29	  	 	61	  	 	136	  	 	111	  	 	337	
Energy	  	 	—  	  	 	8	  	 	142	  	 	393	  	 	543	
Industrial	  	 	383	  	 	23	  	 	173	  	 	136	  	 	715	
Utilities	  	 	—  	  	 	8	  	 	214	  	 	365	  	 	587	
All Others	  	 	64	  	 	119	  	 	230	  	 	120	  	 	533	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	606	  	$	866	  	$	3,433	  	$	1,988	  	$	6,893	

U.S. Investment Grade Corporate Fixed Income Portfolio
 
The average credit quality of ACE's US investment grade bond portfolio is very high at AA+. As noted on the Investment Portfolio summary 65% of investment grade securities holdings are rated AAA or guaranteed by governments or quasi-government agencies.
 
ACE prohibits investments in complex structured securities (e.g. CDOs, CLOs) and over-the-counter derivatives and does not permit the use of portfolio leverage.
 
Corporate bond holdings are diversified across industries and geographies. Issuer limits are based on credit rating (AA 2%, A 1%, BBB 0.5% of total portfolio) and are monitored on a daily basis by ACE via an internal compliance system.

Investments 5	  	Page 20	

					
	  	ACE Limited
Investment Portfolio - 6
(in millions of U.S. dollars)
(Unaudited)	  		
 
Market Value at December 31, 2008

 	  	S&P Credit Rating	
 	  	BB	  	B	  	CCC	  	Other	  	Total	
Below Investment Grade Corporate Fixed Income Portfolio	  			  			  			  			  			
Basic Materials	  	$	73	  	$	34	  	$	3	  	$	2	  	$	112	
Communications	  	 	209	  	 	130	  	 	4	  	 	—  	  	 	343	
Consumer, Cyclical	  	 	101	  	 	110	  	 	18	  	 	3	  	 	232	
Consumer, Non-Cyclical	  	 	130	  	 	223	  	 	14	  	 	3	  	 	370	
Diversified Financial Services	  	 	1	  	 	12	  	 	1	  	 	17	  	 	31	
Energy	  	 	189	  	 	111	  	 	1	  	 	1	  	 	302	
Industrial	  	 	126	  	 	97	  	 	2	  	 	—  	  	 	225	
Utilities	  	 	85	  	 	89	  	 	—  	  	 	—  	  	 	174	
All Others	  	 	22	  	 	35	  	 	4	  	 	1	  	 	62	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	936	  	$	841	  	$	47	  	$	27	  	$	1,851	

Below Investment Grade Corporate Fixed income Portfolio
 
ACE manages high yield bonds as a distinct and separate asset class from investment grade bonds. ACE’s allocation to high yield bonds is explicitly set by internal management and is targeted to securities in the upper tier of credit quality (BB/B). Our minimum rating for initial purchase is BB/B.
 
Four external investment managers are responsible for high yield security selection and portfolio construction.
 
ACE’s high yield managers have a conservative approach to credit selection and very low historical default experience.
 
Securities holdings are highly diversified across industries and are subject to a 1.5% issuer limit as a percentage of high yield allocation (or 0.1% of total portfolio). The portfolio is comprised of over 500 issuers with our largest current issuer exposure at $31 million. ACE monitors position limits on a daily basis through an internal compliance system.
 
Derivative and structured securities (e.g. credit default swaps, CLOs) are not permitted in high yield portfolios.

Investments 6	  	Page 21	

					
	  	ACE Limited
Investment Portfolio - 7
(in millions of U.S. dollars)
(Unaudited)	  		
 
Market Value at December 31, 2008

 	  	S&P Credit Rating	
 	  	AAA	  	AA	  	A	  	BBB	  	BB and below	  	Total	
Non-U.S. Fixed Income Portfolio	  			  			  			  			  			  			
United Kingdom	  	$	1,050	  	$	—  	  	$	—  	  	$	—  	  	$	—  	  	$	1,050	
Germany	  	 	267	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	267	
France	  	 	315	  	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	315	
Canada	  	 	699	  	 	2	  	 	7	  	 	—  	  	 	—  	  	 	708	
Japan	  	 	—  	  	 	206	  	 	—  	  	 	—  	  	 	—  	  	 	206	
Other Foreign Government	  	 	851	  	 	265	  	 	323	  	 	187	  	 	20	  	 	1,646	
Non-U.S. Corporate	  	 	653	  	 	714	  	 	1,508	  	 	1,091	  	 	254	  	 	4,220	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
	  	$	3,835	  	$	1,187	  	$	1,838	  	$	1,278	  	$	274	  	$	8,412	

Non-U.S. Fixed Income Portfolio
 
ACE’s non-U.S. investment grade fixed income portfolios are currency-matched with the insurance liabilities of ACE’s non-U.S. operations. 93% of ACE’s non-U.S. fixed income is denominated in G7 currencies.
 
Average credit quality of non-U.S. fixed income securities is very high at AA and 58% of holdings are rated AAA or guaranteed by governments or quasi-government agencies.
 
Corporate bond holdings are highly diversified across industries and geographies. Issuer limits are based on credit rating (AA 2%, A 1%, BBB 0.5% of total portfolio) and are monitored on a daily basis by ACE via an internal compliance system.

Investments 7	  	Page 22	

					
	  	ACE Limited
Investment Portfolio - 8
(in millions of U.S. dollars)
(Unaudited)	  		
 
Investment portfolio
Top 25 Exposures - Fixed Maturity Investments

December 31, 2008	  	Rating	
General Electric Co	  	$	459	  	AAA	
JP Morgan Chase & Co	  	 	365	  	A+	
Bank of America Corp	  	 	322	  	A+	
Citigroup Inc	  	 	293	  	A	
AT&T INC	  	 	189	  	A	
Wells Fargo & Co	  	 	187	  	AA	
Goldman Sachs Group Inc	  	 	179	  	A	
HSBC Holdings Plc	  	 	178	  	AA-	
Wachovia Corp	  	 	166	  	A+	
Comcast Corp	  	 	158	  	BBB+	
Morgan Stanley	  	 	155	  	A	
Time Warner Inc	  	 	155	  	BBB+	
Merrill Lynch & Co Inc	  	 	148	  	A+	
Royal Bank of Scotland Group Plc	  	 	139	  	A	
Verizon Communications Inc	  	 	138	  	A	
ConocoPhillips	  	 	115	  	A	
Credit Suisse Group	  	 	106	  	A	
XTO Energy Inc	  	 	96	  	BBB	
Banco Santander SA	  	 	95	  	AA	
HBOS PLC	  	 	87	  	A+	
Deutsche Telekom AG	  	 	87	  	BBB+	
Telecom Italia SpA	  	 	86	  	BBB	
American International Group	  	 	83	  	A-	
Dominion Resources Inc/VA	  	 	76	  	A-	
American Express	  	 	74	  	A	

Investments 8	  	Page 23	

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

 	  	Three months ended December 31, 2008	 	 	Year ended December 31, 2008	 	
 	  	Net Realized
Gains
(Losses)  (1)	 	 	Net Unrealized
Gains
(Losses)	 	 	Net
Impact	 	 	Net Realized
Gains
(Losses)  (1)	 	 	Net Unrealized
Gains
(Losses)	 	 	Net
Impact	 	
Fixed maturities	  	$	(271	)	 	$	(486	)	 	$	(757	)	 	$	(846	)	 	$	(2,091	)	 	$	(2,937	)	
Equity securities	  	 	(182	)	 	 	(37	)	 	 	(219	)	 	 	(349	)	 	 	(363	)	 	 	(712	)	
Equity and fixed income derivatives	  	 	7	 	 	 	—  	 	 	 	7	 	 	 	(3	)	 	 	—  	 	 	 	(3	)	
Foreign exchange gains (losses)	  	 	(10	)	 	 	—  	 	 	 	(10	)	 	 	23	 	 	 	—  	 	 	 	23	 	
Other	  	 	(36	)	 	 	(225	)	 	 	(261	)	 	 	(55	)	 	 	(313	)	 	 	(368	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sub-total	  	 	(492	)	 	 	(748	)	 	 	(1,240	)	 	 	(1,230	)	 	 	(2,767	)	 	 	(3,997	)	
Mark-to-market gains (losses) from derivative transactions (2)	  	 	(152	)	 	 	—  	 	 	 	(152	)	 	 	(403	)	 	 	—  	 	 	 	(403	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total gains (losses)	  	 	(644	)	 	 	(748	)	 	 	(1,392	)	 	 	(1,633	)	 	 	(2,767	)	 	 	(4,400	)	
Partially-owned insurance companies (3)	  	 	(48	)	 	 	14	 	 	 	(34	)	 	 	21	 	 	 	8	 	 	 	29	 	
Income tax expense (benefit)	  	 	(88	)	 	 	(140	)	 	 	(228	)	 	 	(218	)	 	 	(457	)	 	 	(675	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net gains (losses)	  	$	(604	)	 	$	(594	)	 	$	(1,198	)	 	$	(1,394	)	 	$	(2,302	)	 	$	(3,696	)	

(1)	Impairments for the quarter of $441M include $265M for fixed maturities, $145M for equities, and $31 for other investments. Impairments for the year of $1,064M include $760M for fixed maturities, $248M for equities, and $56M for other investments.	
 
(2)	Includes $207M and $486M of unrealized losses primarily on the guaranteed minimum income benefit derivatives from our life reinsurance operations for the quarter and year to date, respectively.	
 
(3)	Net realized and unrealized gains (losses) on partially-owned insurance companies that meet the requirements for equity accounting. The net income or loss is included in other income (expense).	

 	  	Three months ended December 31, 2007	 	 	Year ended December 31, 2007	 	
 	  	Net Realized
Gains
(Losses)  (4)	 	 	Net Unrealized
Gains
(Losses)	 	 	Net
Impact	 	 	Net Realized
Gains
(Losses)  (4)	 	 	Net Unrealized
Gains
(Losses)	 	 	Net
Impact	 	
Fixed maturities	  	$	(8	)	 	$	185	 	 	$	177	 	 	$	(98	)	 	$	48	 	 	$	(50	)	
Equity securities	  	 	20	 	 	 	(107	)	 	 	(87	)	 	 	162	 	 	 	(122	)	 	 	40	 	
Equity and fixed income derivatives	  	 	(5	)	 	 	—  	 	 	 	(5	)	 	 	(19	)	 	 	—  	 	 	 	(19	)	
Foreign exchange gains (losses)	  	 	1	 	 	 	—  	 	 	 	1	 	 	 	4	 	 	 	—  	 	 	 	4	 	
Other	  	 	19	 	 	 	28	 	 	 	47	 	 	 	37	 	 	 	73	 	 	 	110	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total inv. portfolio gains (losses)	  	 	27	 	 	 	106	 	 	 	133	 	 	 	86	 	 	 	(1	)	 	 	85	 	
Mark-to-market gains (losses) from derivative transactions (5)	  	 	(93	)	 	 	—  	 	 	 	(93	)	 	 	(147	)	 	 	—  	 	 	 	(147	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total gains (losses)	  	 	(66	)	 	 	106	 	 	 	40	 	 	 	(61	)	 	 	(1	)	 	 	(62	)	
Partially-owned insurance companies (6)	  	 	(57	)	 	 	33	 	 	 	(24	)	 	 	(95	)	 	 	25	 	 	 	(70	)	
Income tax expense (benefit)	  	 	(2	)	 	 	33	 	 	 	31	 	 	 	(22	)	 	 	23	 	 	 	1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net gains (losses)	  	$	(121	)	 	$	106	 	 	$	(15	)	 	$	(134	)	 	$	1	 	 	$	(133	)	

(4)	Impairments for the quarter of $69M include $60M for fixed maturities and $9M for equities. Impairments for the year of $141M include $123M for fixed maturities, $16M for equities and $2M for other investments.	
 
(5)	Includes $105M and $163M of unrealized losses primarily on the guaranteed minimum income benefit derivatives from our life reinsurance operations for the quarter and year to date, respectively.	
 
(6)	Net realized and unrealized gains (losses) on partially-owned insurance companies that meet the requirements for equity accounting. The net income or loss is included in other income (expense).	

Investment Gains (Losses)	  	Page 24	

					
	  	ACE Limited
Investment Portfolio Net Realized Gains (Losses) and Other-than-Temporary Impairments
(in millions of U.S. dollars)
(Unaudited)	  		

 	  	Three months ended December 31, 2008	 	
 	  	Net Realized
Gains
(Losses)	 	 	Price
Impairment	 	 	Credit
Impairment	 	 	All Other
Activity	 	
Investment Grade Corp	  	$	(34	)	 	$	(52	)	 	$	(20	)	 	$	38	 	
High Yield Corp	  	 	(205	)	 	 	(154	)	 	 	(9	)	 	 	(42	)	
MBS / ABS	  	 	3	 	 	 	(30	)	 	 	—  	 	 	 	33	 	
Convertible Bonds	  	 	(35	)	 	 	—  	 	 	 	—  	 	 	 	(35	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fixed maturities	  	 	(271	)	 	 	(236	)	 	 	(29	)	 	 	(6	)	
Equity securities	  	 	(182	)	 	 	(145	)	 	 	—  	 	 	 	(37	)	
Equity and fixed income derivatives	  	 	7	 	 	 	—  	 	 	 	—  	 	 	 	7	 	
Foreign exchange gains (losses)	  	 	(10	)	 	 	—  	 	 	 	—  	 	 	 	(10	)	
Other	  	 	(36	)	 	 	(31	)	 	 	—  	 	 	 	(5	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sub-total	  	$	(492	)	 	$	(412	)	 	$	(29	)	 	$	(51	)	

			
Investment Gains (Losses) OTTI	  	Page 25	

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

 	  	December 31
2008	 	 	September 30
2008	 	 	June 30
2008	 	 	March 31
2008	 	 	December 31
2007	 	 	December 31
2006	 	
Total short-term debt (1)	  	$	471	 	 	$	333	 	 	$	1,050	 	 	$	1,341	 	 	$	372	 	 	$	578	 	
Total long-term debt	  	 	2,806	 	 	 	3,002	 	 	 	3,008	 	 	 	2,114	 	 	 	1,811	 	 	 	1,560	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total debt	  	$	3,277	 	 	$	3,335	 	 	$	4,058	 	 	$	3,455	 	 	$	2,183	 	 	$	2,138	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total trust preferred securities	  	$	309	 	 	$	309	 	 	$	309	 	 	$	309	 	 	$	309	 	 	$	309	 	

Perpetual preferred shares	  	$	—	 	 	$	—	 	 	$	—	 	 	$	557	 	 	$	557	 	 	$	557	 	
Common shareholders’ equity	  	 	14,446	 	 	 	15,356	 	 	 	16,327	 	 	 	16,178	 	 	 	16,120	 	 	 	13,721	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total shareholders’ equity	  	$	14,446	 	 	$	15,356	 	 	$	16,327	 	 	$	16,735	 	 	$	16,677	 	 	$	14,278	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total capitalization	  	$	18,032	 	 	$	19,000	 	 	$	20,694	 	 	$	20,499	 	 	$	19,169	 	 	$	16,725	 	
							
Tangible shareholders’ equity (2)	  	$	10,699	 	 	$	11,539	 	 	$	12,715	 	 	$	13,856	 	 	$	13,839	 	 	$	11,439	 	
							
Leverage ratios	  				 				 				 				 				 				
Debt/ total capitalization	  	 	18.2	%	 	 	17.6	%	 	 	19.6	%	 	 	16.9	%	 	 	11.4	%	 	 	12.8	%	
Debt plus trust preferred securities/ total capitalization	  	 	19.9	%	 	 	19.2	%	 	 	21.1	%	 	 	18.4	%	 	 	13.0	%	 	 	14.6	%	
Debt/ tangible equity	  	 	30.6	%	 	 	28.9	%	 	 	31.9	%	 	 	24.9	%	 	 	15.8	%	 	 	18.7	%	
Debt plus trust preferred securities/ tangible equity	  	 	33.5	%	 	 	31.6	%	 	 	34.3	%	 	 	27.2	%	 	 	18.0	%	 	 	21.4	%	
Debt plus total preferred stock/ total capitalization	  	 	19.9	%	 	 	19.2	%	 	 	21.1	%	 	 	21.1	%	 	 	15.9	%	 	 	18.0	%	
 
(1)	Includes $1.0 billion and $705 million of repurchase agreements for the Combined Insurance acquisition for Q1 and Q2, respectively.	
 
(2)	Tangible equity is equal to shareholders' equity less goodwill and other intangible assets.	

Capital Structure	  	Page 26	

					
	  	ACE Limited
Debt, Trust Preferred and Credit Facilities
(in millions of U.S. dollars)
(Unaudited)	  		

 	  	Par amount
outstanding	  	Coupon	 	 	Maturity Date	
Debt and Trust Preferred	  			  				 		
Reverse Repurchase Agreements	  	$	250	  	 	2.26	%	 	February 4, 2009	
ACE INA Holdings Inc. Term Loan	  	$	16	  	 	3.02	%	 	September 18, 2009	
ACE INA Holdings Inc Subordinated Notes	  	$	200	  	 	8.41	%	 	December 6, 2009	
ACE European Holdings No2 Limited Term Loan	  	$	146	  	 	5.25	%	 	December 13, 2010	
ACE INA Holdings Inc. Term Loan	  	$	50	  	 	5.61	%	 	December 19, 2011	
ACE INA Holdings Inc. Term Loan	  	$	450	  	 	4.15	%	 	April 1, 2013	
ACE INA Holdings Inc. Senior Notes	  	$	500	  	 	5.88	%	 	June 15, 2014	
ACE INA Holdings Inc. Senior Notes	  	$	450	  	 	5.60	%	 	May 15, 2015	
ACE INA Holdings Inc. Senior Notes	  	$	500	  	 	5.70	%	 	February 15, 2017	
ACE INA Holdings Inc. Senior Notes	  	$	300	  	 	5.80	%	 	March 15, 2018	
ACE INA Holdings Inc. Debentures	  	$	100	  	 	8.88	%	 	August 15, 2029	
ACE Capital Trust II Capital Securities	  	$	300	  	 	9.70	%	 	April 1, 2030	
ACE INA Holdings Inc. Senior Notes	  	$	300	  	 	6.70	%	 	May 15, 2036	
				
 	  	Commitment	  	LOC Usage	 	 	Maturity Date	
Credit Facilities	  			  				 		
Syndicated Letter of Credit Facility	  	$	1,000	  	$	782	 	 	November 8, 2012	
Revolving Credit / LOC Facility	  	$	500	  	$	64	 	 	November 8, 2012	
Funds at Lloyds Capital Facility	  	$	438	  	$	256	 	 	December 31, 2013	

Capital Structure (2)	  	Page 27	

					
	  	ACE Limited
Computation of Basic and Diluted Earnings Per Share
(in millions of U.S. dollars, except share, per share data)
(Unaudited)	  		

 	  	Three months ended December 31	 	 	Year ended December 31	 	
 	  	2008	 	 	2007	 	 	2008	 	 	2007	 	
Numerator	  				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	624	 	 	$	693	 	 	$	2,591	 	 	$	2,712	 	
Perpetual preferred dividend	  	 	—  	 	 	 	(12	)	 	 	(24	)	 	 	(45	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income to common shares, excl. net realized gains (losses)	  	 	624	 	 	 	681	 	 	 	2,567	 	 	 	2,667	 	
Net realized gains (losses), net of income tax	  	 	(604	)	 	 	(121	)	 	 	(1,394	)	 	 	(134	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available to the holders of common shares	  	 	20	 	 	 	560	 	 	 	1,173	 	 	 	2,533	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rollforward of Common Shares Outstanding	  				 				 				 				
Shares - beginning of period	  	 	333,394,608	 	 	 	329,460,367	 	 	 	329,704,531	 	 	 	326,455,468	 	
Issued under employee stock purchase plan	  	 	(80	)	 	 	—  	 	 	 	203,375	 	 	 	205,396	 	
Shares (cancelled) granted	  	 	(7,101	)	 	 	(46,477	)	 	 	1,086,832	 	 	 	1,212,603	 	
Issued for option exercises	  	 	258,044	 	 	 	290,641	 	 	 	2,650,733	 	 	 	1,831,064	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares - end of period	  	 	333,645,471	 	 	 	329,704,531	 	 	 	333,645,471	 	 	 	329,704,531	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Denominator	  				 				 				 				
Weighted average shares outstanding	  	 	329,379,719	 	 	 	325,611,204	 	 	 	328,579,543	 	 	 	324,938,327	 	
Effect of other dilutive securities	  	 	3,468,141	 	 	 	5,645,111	 	 	 	3,902,084	 	 	 	5,509,394	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adj. wtd. avg. shares outstanding and assumed conversions	  	 	332,847,860	 	 	 	331,256,315	 	 	 	332,481,627	 	 	 	330,447,721	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per share	  				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	1.89	 	 	$	2.09	 	 	$	7.81	 	 	$	8.21	 	
Net realized gains (losses), net of income tax	  	 	(1.83	)	 	 	(0.37	)	 	 	(4.24	)	 	 	(0.42	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.06	 	 	$	1.72	 	 	$	3.57	 	 	$	7.79	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share	  				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	1.87	 	 	$	2.05	 	 	$	7.72	 	 	$	8.07	 	
Net realized gains (losses), net of income tax	  	 	(1.81	)	 	 	(0.36	)	 	 	(4.19	)	 	 	(0.41	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.06	 	 	$	1.69	 	 	$	3.53	 	 	$	7.66	 	

(1)	See page 31 Non-GAAP Financial Measures.	

Earnings Per Share	  	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 generally accepted accounting principles (GAAP). A reconciliation of book value per 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, future policy 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 excluding net realized gains (losses) and the related tax expense (benefit). 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) and net realized gains (losses) included in other income (expense) related to partially owned insurance companies because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with GAAP.

 	  	4Q-08	 	 	3Q-08	 	 	2Q-08	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Net income, as reported	  	$	20	 	 	$	54	 	 	$	746	 	 	$	377	 	 	$	572	 	 	$	1,197	 	 	$	2,578	 	
Net realized gains (losses)	  	 	(644	)	 	 	(510	)	 	 	(126	)	 	 	(353	)	 	 	(66	)	 	 	(1,633	)	 	 	(61	)	
Net realized gains (losses) in other income (expense) (1)	  	 	(48	)	 	 	(23	)	 	 	120	 	 	 	(28	)	 	 	(57	)	 	 	21	 	 	 	(95	)	
Income tax expense (benefit) on net realized gains (losses)	  	 	(88	)	 	 	(83	)	 	 	(14	)	 	 	(33	)	 	 	(2	)	 	 	(218	)	 	 	(22	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)	  	$	624	 	 	$	504	 	 	$	738	 	 	$	725	 	 	$	693	 	 	$	2,591	 	 	$	2,712	 	

(1)	Realized gains (losses) on partially-owned insurance companies that meet the requirements for equity accounting. The net income or loss is included in other income (expense).	

Reconciliation Non-GAAP	  	Page 29	

					
	  	ACE Limited
Book Value and Book Value per Common Share
(in millions of U.S. dollars, except share and per share data)
(Unaudited)	  		
 
Reconciliation of Book Value per Common Share

 	  	December 31
2008	 	 	September 30
2008	 	 	June 30
2008	 	 	March 31
2008	 	 	December 31
2007	 	
Shareholders’ equity	  	$	14,446	 	 	$	15,356	 	 	$	16,327	 	 	$	16,735	 	 	$	16,677	 	
Proceeds from issuance of perpetual preferred shares	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(557	)	 	 	(557	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Numerator for book value per share calculation	  	 	14,446	 	 	 	15,356	 	 	 	16,327	 	 	 	16,178	 	 	 	16,120	 	
Less: goodwill and other intangible assets	  	 	3,747	 	 	 	3,817	 	 	 	3,612	 	 	 	2,879	 	 	 	2,838	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Numerator for tangible book value per share	  	$	10,699	 	 	$	11,539	 	 	$	12,715	 	 	$	13,299	 	 	$	13,282	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Denominator	  	 	333,645,471	 	 	 	333,394,608	 	 	 	333,249,308	 	 	 	332,506,547	 	 	 	329,704,531	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Book value per common share	  	$	43.30	 	 	$	46.06	 	 	$	48.99	 	 	$	48.65	 	 	$	48.89	 	
Tangible book value per common share	  	$	32.07	 	 	$	34.61	 	 	$	38.15	 	 	$	40.00	 	 	$	40.28	 	
						
Reconciliation of Book Value	  				 				 				 				 				
						
Opening shareholders’ equity	  	$	15,356	 	 	$	16,327	 	 	$	16,735	 	 	$	16,677	 	 	$	16,035	 	
Income excluding net realized gains (losses)	  	 	624	 	 	 	504	 	 	 	738	 	 	 	725	 	 	 	693	 	
Net realized gains (losses), net of tax	  	 	(604	)	 	 	(450	)	 	 	8	 	 	 	(348	)	 	 	(121	)	
Net unrealized gains (losses), net of tax	  	 	(594	)	 	 	(874	)	 	 	(532	)	 	 	(302	)	 	 	106	 	
Cumulative translation, net of tax	  	 	(310	)	 	 	(98	)	 	 	3	 	 	 	13	 	 	 	8	 	
Dividend on common shares	  	 	(91	)	 	 	(87	)	 	 	(96	)	 	 	(90	)	 	 	(89	)	
Redemption of perpetual preferred shares	  	 	—  	 	 	 	—  	 	 	 	(575	)	 	 	—  	 	 	 	—  	 	
Other (1)	  	 	65	 	 	 	34	 	 	 	46	 	 	 	60	 	 	 	45	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	14,446	 	 	$	15,356	 	 	$	16,327	 	 	$	16,735	 	 	$	16,677	 	

(1)	Other includes proceeds from exercise of stock options, change in minimum pension liability, and stock compensation expenses.	

Reconciliation Book Value	  	Page 30	

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

 	  	4Q-08	 	 	3Q-08	 	 	2Q-08	 	 	1Q-08	 	 	4Q-07	 	 	Full Year
2008	 	 	Full Year
2007	 	
Net income	  	$	20	 	 	$	54	 	 	$	746	 	 	$	377	 	 	$	572	 	 	$	1,197	 	 	$	2,578	 	
Net unrealized appreciation (depreciation) on investments	  				 				 				 				 				 				 				
Unrealized appreciation (depreciation) on investments	  	 	(1,198	)	 	 	(1,522	)	 	 	(731	)	 	 	(497	)	 	 	133	 	 	 	(3,948	)	 	 	(3	)	
Reclassification adjustment for net realized gains (losses) included in net income	  	 	464	 	 	 	383	 	 	 	169	 	 	 	173	 	 	 	6	 	 	 	1,189	 	 	 	27	 	
Change in cumulative translation adjustments	  	 	(468	)	 	 	(155	)	 	 	6	 	 	 	27	 	 	 	12	 	 	 	(590	)	 	 	105	 	
Change in minimum pension liability	  	 	17	 	 	 	5	 	 	 	1	 	 	 	—  	 	 	 	(1	)	 	 	23	 	 	 	(4	)	
Income tax (expense) benefit related to other comprehensive income items	  	 	292	 	 	 	320	 	 	 	27	 	 	 	8	 	 	 	(37	)	 	 	647	 	 	 	(60	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	 	(893	)	 	 	(969	)	 	 	(528	)	 	 	(289	)	 	 	113	 	 	 	(2,679	)	 	 	65	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	  	$	(873	)	 	$	(915	)	 	$	218	 	 	$	88	 	 	$	685	 	 	$	(1,482	)	 	$	2,643	 	

			
Comprehensive Income	  	Page 31	

					
	  	ACE Limited
Glossary	  		
 
Annualized return on ordinary shareholders’ equity (ROE): Income excluding net realized gains (losses) less perpetual preferred securities divided by average common shareholders’ equity for the period. To annualize a quarterly rate multiply by four.
 
Book value per common share: Common shareholders’ equity divided by the shares outstanding.
 
Combined Insurance: Combined Insurance Company of America, acquired April 1, 2008.
 
Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business. Calculated on a GAAP basis.
 
Effective tax rate: Income tax expense divided by the sum of income tax expense and income 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.
 
Common shareholders’ equity: Shareholders’ equity less perpetual preferred shares.
 
Tangible book value per common share: Common shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.
 
Tangible equity: Shareholders’ equity less goodwill and other intangible assets.
 
Total capitalization: Short-term debt, long-term debt, trust preferreds, perpetual preferred shares, and shareholders’ equity.

Glossary	  	Page 32