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 2, 2005
 
ACE LIMITED
(Exact name of registrant as specified in its charter)

Cayman Islands	 	1-11778	 	98-0091805	
(State or other jurisdiction)	 	(Commission File Number)	 	(I.R.S. Employer of Incorporation
Identification No.)	
 
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton HM 08 Bermuda
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (441) 295-5200
 
Not applicable
(Former name or former address, if changed since last report)

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-2(b))	
 
 	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
(Former name or former address, if changed since last report)

 
Item 2.02.	Results of Operations and Financial Condition	
 
On February 2, 2005, ACE Limited issued a press release reporting its fourth quarter 2004 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 2, 2005, reporting fourth quarter results	
		
99.2	 	Fourth Quarter 2004 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 2, 2005

 
EXHIBIT INDEX

Number
	  	Description
	  	Method of Filing

99.1	  	Press release, dated February 2, 2005, reporting fourth quarter results	  	Furnished herewith	
			
99.2	  	Fourth Quarter 2004 Financial Supplement	  	Furnished herewith	

Exhibit 99.1

News
Release

FOR IMMEDIATE RELEASE

Investor Contact:	 	Helen M. Wilson
(441) 299-9283	
Media Contact:	 	Robert T. Grieves
(212) 621-8684	
 
ACE LIMITED REPORTS FOURTH QUARTER, YEAR-END RESULTS
 
HAMILTON, Bermuda, February 2, 2005 — ACE Limited (NYSE: ACE) today reported net income for the fourth quarter ended December 31, 2004 of $282 million or $0.94 per common share after payment of preferred dividends, compared with net income of $444 million or $1.53 per share for the same quarter last year. Income excluding net realized gains (losses) for the fourth quarter was $166 million, or $0.54 per share, compared with $328 million or $1.12 per share for the same quarter of last year. (1) The asbestos, environmental and other run-off (A&E) losses resulted in an after-tax charge of $302 million for the quarter or $1.06 per share. The combined ratio for the quarter was 104.0%. Excluding A&E losses, the combined ratio would be 87.7%, a 4.2 point improvement over the comparable quarter in 2003. (1)
 
Fourth Quarter Summary
(in millions, except share and per share amounts)

 	  	2004
	 	 	2003
	 	 	Change
	 	 	(Per Share - Diluted)
	 	
 	  			 			 			 	2004
	  	2003
	  	Change
	 	
Net income	  	$	282	 	 	$	444	 	 	(37	%)	 	$	0.94	  	$	1.53	  	(39	%)	
Net realized gains (losses), net of tax	  	 	116	 	 	 	116	 	 	—  	 	 	 	0.40	  	 	0.41	  	—  	 	
Income excluding net realized gains, net of tax (1)	  	 	166	 	 	 	328	 	 	(49	)	 	 	0.54	  	 	1.12	  	(52	)	
A&E charge, net of tax	  	 	302	 	 	 	—  	 	 	—  	 	 	 	1.06	  	 	—  	  	—  	 	
Income excluding net realized gains (losses) and A&E charge, net of tax (1)	  	$	468	 	 	$	328	 	 	43	%	 	$	1.60	  	$	1.12	  	43	%	
Combined ratio, excluding A&E charge	  	 	87.7	%	 	 	91.9	%	 	 	 	 	 	 	  	 	 	  	 	 	
 
Net income for the year decreased 20 percent to $1.1 billion or $3.83 per share, compared with $1.4 billion or $5.01 per share in 2003. For 2004, income excluding net realized gains (losses) decreased 17 percent to $1.0 billion or $3.30 per share, compared with $1.2 billion or $4.21 per share in 2003. Record industry catastrophe losses resulted in an after-tax net loss of $437 million or $1.53 per share, compared with $105 million or $0.38 per share in 2003. The combined ratio for the year was 96.6%.

Years Ended
(in millions, except share and per share amounts)

 	  	2004
	  	2003
	  	Change
	 	 	(Per Share - Diluted)
	 	
 	  		  		  			 	2004
	  	2003
	  	Change
	 	
Net income	  	$	1,139	  	$	1,417	  	(20	%)	 	$	3.83	  	$	5.01	  	(24	%)	
Net realized gains, net of tax	  	 	151	  	 	220	  	—  	 	 	 	0.53	  	 	0.80	  	—  	 	
Income excluding net realized gains (losses), net of tax (1)	  	 	988	  	 	1,197	  	(17	)	 	 	3.30	  	 	4.21	  	(22	)	
A&E charge, net of tax	  	 	302	  	 	—  	  	—  	 	 	 	1.06	  	 	—  	  	—  	 	
Catastrophe losses, net of tax	  	 	437	  	 	105	  	—  	 	 	 	1.53	  	 	0.38	  	—  	 	
Income excluding net realized gains (losses), A&E charge and catastrophe losses, net of tax (1)	  	$	1,727	  	$	1,302	  	32	%	 	$	5.89	  	$	4.59	  	28	%	
 
Evan Greenberg, President and Chief Executive Officer of ACE Limited, commented: “The strength of our organization was demonstrated in 2004. Despite record natural catastrophes around the world, and a fourth quarter reserve charge to our run-off operations, we produced a combined ratio of 96.6%. Our P&C premium growth exceeded 20%, and our investment income and book value grew to record levels while we substantially added to our loss reserve position. We are entering 2005 with a strong balance sheet, and we are well positioned throughout the world to continue our growth in earnings and book value.”
 
Other 2004 operating highlights were as follows:
 
 	·	P&C net premiums written increased 22.3% for the year	
 
 	·	The combined ratio was 96.6% for the year compared with 91.5% a year ago	
 
 	·	Operating cash flow amounted to a record $4.8 billion for the year	
 
 	·	Cash and invested assets increased by $5 billion in 2004	
 
 	·	Net investment income increased 16% for the year to $1 billion	
 
 	·	Shareholders’ equity increased 11.3% for the year to $9.8 billion	
 
 	·	Tangible equity rose to $7.2 billion, a gain of 18% from year-end 2003	
 
 	·	Debt to total capital ratio improved to 16.3% from 16.9% at year-end 2003	
 
 	·	Return on equity for 2004 was 10.7% (2) ; excluding FAS 115, it was 11.6%	
 
 	·	Book value per share as of December 31, 2004 increased 10% in 2004 to $32.48 (3)	
 
Financial results by business segment follow. Further details are available in the financial supplement. Key items include:
 
 	·	Insurance-North American: Net premiums written increased 27% for the year and the combined ratio was 90.4% excluding the A&E and catastrophe losses. (1)	
 
 	·	Insurance-Overseas General: Net premiums written increased 17% for the year. The segment’s combined ratio improved to 87.5%.	
 
 	·	Global Reinsurance: Net premiums written were up 24% for the year. This segment had a combined ratio of 93.7%. Adjusted for catastrophes the combined ratio was 72.4% compared to 68.2% for 2003.	
 
 	·	Financial Services: Income excluding net realized gains (losses) decreased 9% for the year.	

Please refer to the ACE Financial Supplement December 31, 2004, which is posted on the Company’s website, for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, catastrophe loss charges by segment, investment portfolio and capital structure. ACE’s website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports/fin_supp_december_31_2004.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 Limited (NYSE: ACE) will host its fourth quarter year-end earnings conference call and webcast on Thursday, February 3, 2005 beginning at 8:30 a.m. EST. The call is available via live and archived webcast at www.acelimited.com . Please refer to our website in “Investor Information, Calendar of Events” for details.
 
If you are unable to listen to the live webcast, a replay of the call will be available from approximately 11:30 a.m. EST on Thursday, February 3, 2005 until Thursday, March 3, 2005. To listen to the replay, dial: 1-877-519-4471 (in the United States) or 1-973-341-3080 (international); passcode 5527078.
 
The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. A component of the Standard & Poor’s 500 stock index, The ACE Group conducts its business on a worldwide basis with operating subsidiaries in approximately 50 countries. Additional information can be found at: www.acelimited.com .

1 Non-GAAP Financial Measures:
Income (loss) excluding net realized gains (losses) and the tax effect of net realized gains (losses) is a common performance measurement. 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) because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities.
Underwriting income is calculated by subtracting losses and loss expenses, life and annuity 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.
Income (loss) excluding net realized gains (losses), A&E and catastrophe losses is presented because those losses are deemed to be significant to the quarter and the year end. The separate presentation is useful to understand the impact of these factors on our financial results and how management evaluates the Company’s financial performance.
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).
 
3 Diluted book value per ordinary share is ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued.
 
Cautionary Statement Regarding Forward-Looking Statements:
 
Any forward-looking statements made in this press release 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, new theories of liability, judicial, legislative and other governmental developments, litigation tactics, the amount and timing of reinsurance recoverable, 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)

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

 	  	December 31
2004
	  	December 31
2003
	
 	  	(Unaudited)	  	 	
Assets	  	 	 	  	 	 	
Total investments	  	$	28,506	  	$	23,446	
Cash	  	 	534	  	 	562	
Insurance and reinsurance balances receivable	  	 	3,272	  	 	2,837	
Reinsurance recoverable	  	 	15,254	  	 	14,081	
Other assets	  	 	8,776	  	 	8,628	
 	  			  			
Total assets	  	$	56,342	  	$	49,553	

Liabilities	  	 	 	  	 	 	
Unpaid losses and loss expenses	  	$	31,513	  	$	27,155	
Unearned premiums	  	 	5,923	  	 	6,051	
Other liabilities	  	 	9,070	  	 	7,512	
 	  			  			
Total liabilities	  	$	46,506	  	$	40,718	

Shareholders’ equity	  	 	 	  	 	 	
Total shareholders’ equity	  	$	9,836	  	$	8,835	
 	  			  			
Total liabilities and shareholders’ equity	  	$	56,342	  	$	49,553	

Diluted book value per ordinary share (3)	  	$	32.48	  	$	29.46	

																	
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
	 	 	Years Ended
December 31
	 	
 	  	2004
	 	 	2003
	 	 	2004
	 	 	2003
	 	
Gross premiums written	  	$	3,659	 	 	$	3,668	 	 	$	16,097	 	 	$	14,637	 	
Net premiums written	  	 	2,655	 	 	 	2,573	 	 	 	11,528	 	 	 	10,215	 	
Net premiums earned	  	 	2,895	 	 	 	2,827	 	 	 	11,136	 	 	 	9,602	 	
					
Losses and loss expenses	  	 	2,213	 	 	 	1,857	 	 	 	7,714	 	 	 	6,118	 	
Life and annuity benefits	  	 	38	 	 	 	44	 	 	 	172	 	 	 	181	 	
Policy acquisition costs	  	 	411	 	 	 	384	 	 	 	1,558	 	 	 	1,357	 	
Administrative expenses	  	 	338	 	 	 	320	 	 	 	1,288	 	 	 	1,160	 	
 	  				 				 				 				
Underwriting income (loss) (1)	  	 	(105	)	 	 	222	 	 	 	404	 	 	 	786	 	
					
Net investment income	  	 	275	 	 	 	228	 	 	 	1,001	 	 	 	861	 	
Net realized gains (losses)	  	 	128	 	 	 	128	 	 	 	195	 	 	 	252	 	
Interest expense	  	 	44	 	 	 	44	 	 	 	183	 	 	 	177	 	
Other expense	  	 	—  	 	 	 	19	 	 	 	2	 	 	 	27	 	
Income tax expense (benefit)	  	 	(28	)	 	 	71	 	 	 	276	 	 	 	278	 	
 	  				 				 				 				
Net income	  	 	282	 	 	 	444	 	 	 	1,139	 	 	 	1,417	 	
Preference shares dividend	  	 	(12	)	 	 	(11	)	 	 	(45	)	 	 	(26	)	
FELINE PRIDE dividend	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(10	)	
 	  				 				 				 				
Net income available to holders of ordinary shares	  	$	270	 	 	$	433	 	 	$	1,094	 	 	$	1,381	 	

Diluted earnings per share:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	 	0.54	 	 	 	1.12	 	 	 	3.30	 	 	 	4.21	 	
Net income	  	 	0.94	 	 	 	1.53	 	 	 	3.83	 	 	 	5.01	 	
					
Weighted average diluted shares outstanding	  	 	286,048,064	 	 	 	282,647,642	 	 	 	285,487,854	 	 	 	275,655,969	 	
					
Loss and loss expense ratio	  	 	77.9%	 	 	 	66.8%	 	 	 	70.7%	 	 	 	65.0%	 	
Policy acquisition cost ratio	  	 	14.3%	 	 	 	13.6%	 	 	 	14.1%	 	 	 	14.2%	 	
Administrative expense ratio	  	 	11.8%	 	 	 	11.5%	 	 	 	11.8%	 	 	 	12.3%	 	
Combined ratio	  	 	104.0%	 	 	 	91.9%	 	 	 	96.6%	 	 	 	91.5%	 	

 
Ratios exclude life reinsurance business

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

 	  	Three Months Ended
December 31
	 	 	Years Ended
December 31
	 	
 	  	2004
	 	 	2003
	 	 	2004
	 	 	2003

Gross Premiums Written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
					
Insurance—North American	  	$	1,898	 	 	$	1,764	 	 	$	8,124	 	 	$	6,895	 	
Insurance—Overseas General	  	 	1,392	 	 	 	1,341	 	 	 	5,858	 	 	 	5,191	 	
Global Reinsurance*	  	 	340	 	 	 	274	 	 	 	1,795	 	 	 	1,505	 	
Financial Services	  	 	29	 	 	 	289	 	 	 	320	 	 	 	1,046	 	
 	  				 				 				 				
Total	  	$	3,659	 	 	$	3,668	 	 	$	16,097	 	 	$	14,637	 	

Net Premiums Written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
					
Insurance—North American	  	$	1,208	 	 	$	1,048	 	 	$	5,098	 	 	$	4,015	 	
Insurance—Overseas General	  	 	1,087	 	 	 	982	 	 	 	4,370	 	 	 	3,751	 	
Global Reinsurance*	  	 	334	 	 	 	267	 	 	 	1,744	 	 	 	1,410	 	
Financial Services	  	 	26	 	 	 	276	 	 	 	316	 	 	 	1,039	 	
 	  				 				 				 				
Total	  	$	2,655	 	 	$	2,573	 	 	$	11,528	 	 	$	10,215	 	

Net Premiums Earned	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
					
Insurance—North American	  	$	1,259	 	 	$	991	 	 	$	4,678	 	 	$	3,654	 	
Insurance—Overseas General	  	 	1,126	 	 	 	1,007	 	 	 	4,322	 	 	 	3,563	 	
Global Reinsurance*	  	 	414	 	 	 	357	 	 	 	1,616	 	 	 	1,284	 	
Financial Services	  	 	96	 	 	 	472	 	 	 	520	 	 	 	1,101	 	
 	  				 				 				 				
Total	  	$	2,895	 	 	$	2,827	 	 	$	11,136	 	 	$	9,602	 	

Income (Loss) Excluding Net Realized Gains (Losses) (1) 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
					
Insurance—North American	  	$	(126	)	 	$	153	 	 	$	242	 	 	$	532	 	
Insurance—Overseas General	  	 	192	 	 	 	94	 	 	 	523	 	 	 	315	 	
Global Reinsurance*	  	 	120	 	 	 	95	 	 	 	254	 	 	 	361	 	
Financial Services	  	 	39	 	 	 	57	 	 	 	211	 	 	 	231	 	
Corporate	  	 	(59	)	 	 	(71	)	 	 	(242	)	 	 	(242	)	
 	  				 				 				 				
Total	  	$	166	 	 	$	328	 	 	$	988	 	 	$	1,197	 	

 
* Includes both property and casualty reinsurance and life reinsurance
 
# # #

 

Investor Contact
 
Helen M. Wilson
Phone: (441) 299-9283
Fax: (441) 292-8675
email: investorrelations@ace.bm
 
This report is for informational purposes only. It should be read in conjuction with documents filed by ACE Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
 
Cautionary Statement Regarding Forward-Looking Statements:
 
Any forward-looking statements made in this financial supplement reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from those set forth in these statements. For example, the Company’s forward-looking statements concerning exposures, reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience which differs from the Company’s assumptions, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative and other governmental developments, litigation tactics, and credit developments among reinsurers and the Company’s forward-looking statements concerning taxes could be affected by changes in tax laws and regulations. Other factors that could affect forward-looking statements are identified in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, the Company’s quarterly reports on Form 10-Q and in the Company’s earnings press release, which are available on the Company’s website.
 
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

					
	 	ACE Limited
 
Financial Supplement Table of Contents	 	 	

 	  	 	  	Page
	
I.	  	Financial Highlights	  	 	
 	  	- Consolidated Financial Highlights	  	1	
 	  	- Consolidated Financial Highlights Excluding A&E and Catastrophe Loss Charges	  	2	
			
II.	  	Consolidated Results	  	 	
 	  	- Consolidated Results - Consecutive Quarters	  	3-4	
 	  	- Computation of Basic and Diluted Earnings Per Share	  	5	
 	  	- Summary Consolidated Balance Sheets	  	6	
 	  	- Consolidated Premiums by Line of Business	  	7	
 	  	- Consolidating Statement of Operations	  	8-9	
			
III.	  	Segment Results	  	 	
 	  	- Insurance-North American	  	10	
 	  	- Insurance-Overseas General	  	11	
 	  	- Global Reinsurance	  	12-13	
 	  	- Financial Services	  	14-15	
			
IV.	  	Balance Sheet Details	  	 	
 	  	- Loss Reserve Rollforward	  	16	
 	  	- Asbestos and Environmental Reserves	  	17	
 	  	- Reinsurance Recoverable Analysis	  	18-21	
 	  	- Investment Portfolio	  	22-23	
 	  	- Realized and Unrealized Gains (Losses)	  	24	
 	  	- Capital Structure	  	25	
			
V.	  	Other Disclosures	  	 	
 	  	- Non-GAAP Financial Measures	  	26	
 	  	- Diluted Book Value per Ordinary Share	  	27	
 	  	- Comprehensive Income	  	28	
 	  	- Glossary	  	29	

					
	 	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-04 vs.
4Q-03
	 	 	Year ended December 31
	 	 	% Change
YTD -04 vs.
YTD-03
	 	
 	  	2004
	 	 	2003
	 	 			 	2004
	 	 	2003
	 	 			
Gross premiums written	  	$	3,659	 	 	$	3,668	 	 	0	%	 	$	16,097	 	 	$	14,637	 	 	10	%	
Net premiums written	  	$	2,655	 	 	$	2,573	 	 	3	%	 	$	11,528	 	 	$	10,215	 	 	13	%	
Net premiums earned	  	$	2,895	 	 	$	2,827	 	 	2	%	 	$	11,136	 	 	$	9,602	 	 	16	%	
Net investment income	  	$	275	 	 	$	228	 	 	21	%	 	$	1,001	 	 	$	861	 	 	16	%	
Net income	  	$	282	 	 	$	444	 	 	-36	%	 	$	1,139	 	 	$	1,417	 	 	-20	%	
Income excluding net realized gains (losses)(1)	  	$	166	 	 	$	328	 	 	-49	%	 	$	988	 	 	$	1,197	 	 	-17	%	
Comprehensive income	  	$	410	 	 	$	496	 	 	-17	%	 	$	1,155	 	 	$	1,697	 	 	-32	%	
Operating cash flow	  	$	875	 	 	$	1,586	 	 	-45	%	 	$	4,953	 	 	$	4,224	 	 	17	%	
							
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	77.9	%	 	 	66.8	%	 	 	 	 	 	70.7	%	 	 	65.0	%	 	 	 	
Underwriting and administrative expense ratio	  	 	26.1	%	 	 	25.1	%	 	 	 	 	 	25.9	%	 	 	26.5	%	 	 	 	
 	  				 				 	 	 	 				 				 	 	 	
Combined ratio	  	 	104.0	%	 	 	91.9	%	 	 	 	 	 	96.6	%	 	 	91.5	%	 	 	 	
Annualized ROE*	  	 	6.8	%	 	 	15.8	%	 	 	 	 	 	10.7	%	 	 	15.8	%	 	 	 	
Annualized ROE, excluding FAS 115*	  	 	7.3	%	 	 	17.3	%	 	 	 	 	 	11.6	%	 	 	17.2	%	 	 	 	
							
Diluted earnings per share	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)(1)	  	$	0.54	 	 	$	1.12	 	 	-52	%	 	$	3.30	 	 	$	4.21	 	 	-22	%	
Net income	  	$	0.94	 	 	$	1.53	 	 	-39	%	 	$	3.83	 	 	$	5.01	 	 	-24	%	
Diluted book value per ordinary share	  	$	32.48	 	 	$	29.46	 	 	10	%	 	$	32.48	 	 	$	29.46	 	 	10	%	
Diluted tangible book value per ordinary share	  	$	23.63	 	 	$	20.25	 	 	17	%	 	$	23.63	 	 	$	20.25	 	 	17	%	
Weighted average diluted ordinary shares outstanding	  	 	286.0	 	 	 	282.6	 	 	 	 	 	 	285.5	 	 	 	275.7	 	 	 	 	
Debt/ total capitalization	  	 	16.3	%	 	 	16.9	%	 	 	 	 	 	16.3	%	 	 	16.9	%	 	 	 	
 
(1)	See page 26 Non-GAAP Financial Measures.	
 
*	Calculated using income excluding net realized gains (losses).	

Financial Highlights	  	Page 1	

					
	 	ACE Limited
 
Consolidated Financial Highlights Excluding A&E(1) and Catastrophe Loss Charges
 
(in millions of U.S. dollars, except per share data and ratios)
 
(Unaudited)	 	 	

 	  	Three months ended December 31, 2004
	 	 	Three months ended December 31, 2003
	 	
 	  	As
reported
	 	 	A&E(1)
loss charge
	 	 	Catastrophe
loss charge
	 	 	Adjusted(3)
	 	 	As reported
	 	 	Catastrophe
loss charge
	 	 	Adjusted(3)
	 	
Net premiums earned(2)	  	$	2,840	 	 	$	—  	 	 	$	—  	 	 	$	2,840	 	 	$	2,779	 	 	$	—  	 	 	$	2,779	 	
Losses and loss expenses(2)	  	$	2,213	 	 	$	(465	)	 	$	(31	)	 	$	1,717	 	 	$	1,857	 	 	$	(35	)	 	$	1,822	 	
Income tax expense (benefit) (2)	  	$	(28	)	 	$	163	 	 	$	—  	 	 	$	135	 	 	$	71	 	 	$	—  	 	 	$	71	 	
Net income	  	$	282	 	 	$	302	 	 	$	31	 	 	$	615	 	 	$	444	 	 	$	35	 	 	$	479	 	
Income excluding net realized gains (losses)(3)	  	$	166	 	 	$	302	 	 	$	31	 	 	$	499	 	 	$	328	 	 	$	35	 	 	$	363	 	
								
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	77.9	%	 	 	-16.3	%	 	 	-1.1	%	 	 	60.5	%	 	 	66.8	%	 	 	-1.2	%	 	 	65.6	%	
Underwriting and administrative expense ratio	  	 	26.1	%	 	 	0.0	%	 	 	0.0	%	 	 	26.1	%	 	 	25.1	%	 	 	0.0	%	 	 	25.1	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	104.0	%	 	 	-16.3	%	 	 	-1.1	%	 	 	86.6	%	 	 	91.9	%	 	 	-1.2	%	 	 	90.7	%	
								
Diluted earnings per share	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)(3)	  	$	0.54	 	 	$	1.06	 	 	$	0.11	 	 	$	1.71	 	 	$	1.12	 	 	$	0.12	 	 	$	1.24	 	
Net income	  	$	0.94	 	 	$	1.06	 	 	$	0.11	 	 	$	2.11	 	 	$	1.53	 	 	$	0.12	 	 	$	1.65	 	
			
 	  	Year ended December 31, 2004
	 	 	Year ended December 31, 2003
	 	
 	  	As
reported
	 	 	A&E (1)
 loss charge
	 	 	Catastrophe
loss charges
	 	 	Adjusted (3)
	 	 	As reported
	 	 	Catastrophe
loss charge
	 	 	Adjusted (3)
	 	
Net premiums earned(2)	  	$	10,916	 	 	$	—  	 	 	$	11	 	 	$	10,927	 	 	$	9,418	 	 	$	—  	 	 	$	9,418	 	
Losses and loss expenses(2)	  	$	7,714	 	 	$	(465	)	 	$	(499	)	 	$	6,750	 	 	$	6,118	 	 	$	(112	)	 	$	6,006	 	
Income tax expense (benefit) (2)	  	$	276	 	 	$	163	 	 	$	73	 	 	$	512	 	 	$	278	 	 	$	7	 	 	$	285	 	
Net income	  	$	1,139	 	 	$	302	 	 	$	437	 	 	$	1,878	 	 	$	1,417	 	 	$	105	 	 	$	1,522	 	
Income excluding net realized gains (losses)(3)	  	$	988	 	 	$	302	 	 	$	437	 	 	$	1,727	 	 	$	1,197	 	 	$	105	 	 	$	1,302	 	
								
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	70.7	%	 	 	-4.2	%	 	 	-4.7	%	 	 	61.8	%	 	 	65.0	%	 	 	-1.2	%	 	 	63.8	%	
Underwriting and administrative expense ratio	  	 	25.9	%	 	 	0.0	%	 	 	-0.1	%	 	 	25.8	%	 	 	26.5	%	 	 	0.0	%	 	 	26.5	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	96.6	%	 	 	-4.2	%	 	 	-4.8	%	 	 	87.6	%	 	 	91.5	%	 	 	-1.2	%	 	 	90.3	%	
								
Diluted earnings per share	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)(3)	  	$	3.30	 	 	$	1.06	 	 	$	1.53	 	 	$	5.89	 	 	$	4.21	 	 	$	0.38	 	 	$	4.59	 	
Net income	  	$	3.83	 	 	$	1.06	 	 	$	1.53	 	 	$	6.42	 	 	$	5.01	 	 	$	0.38	 	 	$	5.39	 	
 
(1)	Asbestos, environmental and other run-off loss charges (A&E).	
 
(2)	ACE Limited consolidated excluding Life	
 
(3)	See page 26 Non-GAAP Financial Measures.	

Financial Highlights (2)	  	Page 2	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Property and Casualty(1)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	3,575	 	 	$	3,854	 	 	$	3,969	 	 	$	4,155	 	 	$	3,330	 	 	 	15,553	 	 	$	13,398	 	
Net premiums written	  	 	2,574	 	 	 	2,641	 	 	 	2,798	 	 	 	2,979	 	 	 	2,250	 	 	 	10,992	 	 	 	8,991	 	
Net premiums earned	  	 	2,744	 	 	 	2,682	 	 	 	2,600	 	 	 	2,370	 	 	 	2,307	 	 	 	10,396	 	 	 	8,317	 	
Losses and loss expenses	  	 	2,116	 	 	 	2,118	 	 	 	1,636	 	 	 	1,456	 	 	 	1,429	 	 	 	7,326	 	 	 	5,224	 	
Policy acquisition costs	  	 	406	 	 	 	378	 	 	 	381	 	 	 	349	 	 	 	363	 	 	 	1,514	 	 	 	1,280	 	
Administrative expenses	  	 	335	 	 	 	321	 	 	 	298	 	 	 	290	 	 	 	295	 	 	 	1,244	 	 	 	1,073	 	
 	  				 				 				 				 				 				 				
P& C underwriting income (loss)	  	$	(113	)	 	$	(135	)	 	$	285	 	 	$	275	 	 	$	220	 	 	$	312	 	 	$	740	 	
Financial Services underwriting income (loss)	  	 	(3	)	 	 	(11	)	 	 	26	 	 	 	58	 	 	 	4	 	 	 	70	 	 	 	62	 	
Life underwriting income (loss) excluding investment income	  	 	11	 	 	 	5	 	 	 	3	 	 	 	3	 	 	 	(2	)	 	 	22	 	 	 	(16	)	
Net investment income	  	 	275	 	 	 	252	 	 	 	236	 	 	 	238	 	 	 	228	 	 	 	1,001	 	 	 	861	 	
Other (income) expense	  	 	—  	 	 	 	(21	)	 	 	6	 	 	 	17	 	 	 	19	 	 	 	2	 	 	 	27	 	
Net realized gains (losses)	  	 	128	 	 	 	(33	)	 	 	43	 	 	 	57	 	 	 	128	 	 	 	195	 	 	 	252	 	
Interest expense	  	 	44	 	 	 	48	 	 	 	47	 	 	 	44	 	 	 	44	 	 	 	183	 	 	 	177	 	
Income tax expense	  	 	(28	)	 	 	54	 	 	 	127	 	 	 	123	 	 	 	71	 	 	 	276	 	 	 	278	 	
 	  				 				 				 				 				 				 				
Net income (loss)	  	$	282	 	 	$	(3	)	 	$	413	 	 	$	447	 	 	$	444	 	 	$	1,139	 	 	$	1,417	 	
 	  				 				 				 				 				 				 				
Net realized gains (losses)	  	 	128	 	 	 	(33	)	 	 	43	 	 	 	57	 	 	 	128	 	 	 	195	 	 	 	252	 	
Tax expense on net realized gains (losses)	  	 	12	 	 	 	1	 	 	 	10	 	 	 	21	 	 	 	12	 	 	 	44	 	 	 	32	 	
 	  				 				 				 				 				 				 				
Income excluding net realized gains (losses)(2)	  	$	166	 	 	$	31	 	 	$	380	 	 	$	411	 	 	$	328	 	 	$	988	 	 	$	1,197	 	

% Change versus prior year period(1)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	7	%	 	 	17	%	 	 	22	%	 	 	18	%	 	 	13	%	 	 	16	%	 	 	21	%	
Net premiums written	  	 	14	%	 	 	23	%	 	 	25	%	 	 	26	%	 	 	32	%	 	 	22	%	 	 	40	%	
Net premiums earned	  	 	19	%	 	 	25	%	 	 	27	%	 	 	31	%	 	 	41	%	 	 	25	%	 	 	50	%	
								
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	72	%	 	 	69	%	 	 	70	%	 	 	72	%	 	 	68	%	 	 	71	%	 	 	67	%	
Effective tax rate on income excluding net realized gains (losses)	  	 	-32	%	 	 	63	%	 	 	24	%	 	 	20	%	 	 	15	%	 	 	19	%	 	 	17	%	
								
ROE	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Annualized ROE*	  	 	6.8	%	 	 	0.9	%	 	 	16.9	%	 	 	18.7	%	 	 	15.8	%	 	 	10.7	%	 	 	15.8	%	
Annualized ROE, excluding FAS 115*	  	 	7.3	%	 	 	0.9	%	 	 	17.7	%	 	 	20.4	%	 	 	17.3	%	 	 	11.6	%	 	 	17.2	%	
 
(1)	Property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.	
 
(2)	See page 26 Non-GAAP Financial Measures.	
 
*	Calculated using income excluding net realized gains (losses).	

Consolidated Results	  	Page 3	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	77.9	%	 	 	80.0	%	 	 	63.1	%	 	 	60.5	%	 	 	66.8	%	 	 	70.7	%	 	 	65.0	%	
Policy acquisition cost ratio	  	 	14.3	%	 	 	13.6	%	 	 	14.3	%	 	 	14.1	%	 	 	13.6	%	 	 	14.1	%	 	 	14.2	%	
Administrative expense ratio	  	 	11.8	%	 	 	11.6	%	 	 	11.3	%	 	 	12.3	%	 	 	11.5	%	 	 	11.8	%	 	 	12.3	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	104.0	%	 	 	105.2	%	 	 	88.7	%	 	 	86.9	%	 	 	91.9	%	 	 	96.6	%	 	 	91.5	%	

Property and Casualty (1)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
								
 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	77.1	%	 	 	78.9	%	 	 	62.9	%	 	 	61.5	%	 	 	61.9	%	 	 	70.5	%	 	 	62.8	%	
Policy acquisition cost ratio	  	 	14.8	%	 	 	14.1	%	 	 	14.6	%	 	 	14.7	%	 	 	15.8	%	 	 	14.6	%	 	 	15.4	%	
Administrative expense ratio	  	 	12.2	%	 	 	12.0	%	 	 	11.5	%	 	 	12.2	%	 	 	12.8	%	 	 	12.0	%	 	 	12.9	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	104.1	%	 	 	105.0	%	 	 	89.0	%	 	 	88.4	%	 	 	90.5	%	 	 	97.1	%	 	 	91.1	%	

Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asbestos, environmental and other run-off losses	  	$	465	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	465	 	 	$	—	 	
Catastrophe and other large losses	  	$	31	 	 	$	457	 	 	$	—	 	 	$	—	 	 	$	35	 	 	$	488	 	 	$	112	 	
Prior period development(2)	  	$	109	 	 	$	12	 	 	$	25	 	 	$	(6	)	 	$	14	 	 	$	140	 	 	$	121	 	
 
(1)	Property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.	
 
(2)	See Financial Services schedule for prior period development related to that segment.	

Consolidated Results 2	  	Page 4	

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

 	  	Three months ended December 31
	 	 	Year ended December 31
	 	
 	  	2004
	 	 	2003
	 	 	2004
	 	 	2003
	 	
Numerator	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)(1)	  	$	166	 	 	$	328	 	 	$	988	 	 	$	1,197	 	
Perpetual preferred dividend	  	 	(12	)	 	 	(11	)	 	 	(45	)	 	 	(26	)	
Mezzanine equity dividend	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(10	)	
 	  				 				 				 				
Income to ordinary shares, excl. net realized gains (losses)	  	 	154	 	 	 	317	 	 	 	943	 	 	 	1,161	 	
Net realized gains (losses), net of income tax	  	 	116	 	 	 	116	 	 	 	151	 	 	 	220	 	
 	  				 				 				 				
Net income available to the holders of ordinary shares	  	$	270	 	 	$	433	 	 	$	1,094	 	 	$	1,381	 	

Rollforward of ordinary shares	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ordinary shares - beginning of period	  	 	284,112,866	 	 	 	278,480,910	 	 	 	279,897,193	 	 	 	262,679,356	 	
Issued under employee stock purchase plan	  	 	45	 	 	 	326	 	 	 	239,776	 	 	 	288,726	 	
Stock (cancelled) granted	  	 	(52,375	)	 	 	(167,902	)	 	 	790,984	 	 	 	898,869	 	
Issued for option exercises	  	 	417,989	 	 	 	1,583,859	 	 	 	3,550,572	 	 	 	4,215,968	 	
Mezzanine equity conversion	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	11,814,274	 	
 	  				 				 				 				
Ordinary shares - end of period	  	 	284,478,525	 	 	 	279,897,193	 	 	 	284,478,525	 	 	 	279,897,193	 	

Denominator	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding	  	 	281,308,706	 	 	 	276,705,797	 	 	 	280,271,225	 	 	 	270,620,114	 	
Effect of other dilutive securities	  	 	4,739,358	 	 	 	5,941,845	 	 	 	5,216,629	 	 	 	5,035,855	 	
 	  				 				 				 				
Adj. wtd. avg. shares outstanding and assumed conversions	  	 	286,048,064	 	 	 	282,647,642	 	 	 	285,487,854	 	 	 	275,655,969	 	

Basic earnings per share	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)(1)	  	$	0.55	 	 	$	1.14	 	 	$	3.36	 	 	$	4.29	 	
Net realized gains (losses)	  	 	0.41	 	 	 	0.42	 	 	 	0.54	 	 	 	0.81	 	
 	  				 				 				 				
Net income	  	$	0.96	 	 	$	1.56	 	 	$	3.90	 	 	$	5.10	 	

Diluted earnings per share	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses)(1)	  	$	0.54	 	 	$	1.12	 	 	$	3.30	 	 	$	4.21	 	
Net realized gains (losses)	  	 	0.40	 	 	 	0.41	 	 	 	0.53	 	 	 	0.80	 	
 	  				 				 				 				
Net income	  	$	0.94	 	 	$	1.53	 	 	$	3.83	 	 	$	5.01	 	

(1)	See page 26 Non-GAAP Financial Measures.	

Earning per share	  	Page 5	

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

 	  	December
31 2004
	  	September
30 2004
	  	June 30
2004
	  	March 31
2004
	  	December
31 2003
	
 	  	(Unaudited)	  	(Unaudited)	  	(Unaudited)	  	(Unaudited)	  	(Audited)	
Assets	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Fixed maturities available for sale, at fair value	  	$	21,739	  	$	20,791	  	$	18,348	  	$	19,920	  	$	18,645	
Equity securities, at fair value	  	 	1,229	  	 	960	  	 	953	  	 	539	  	 	544	
Securities on loan, at fair value	  	 	1,038	  	 	1,044	  	 	1,515	  	 	1,183	  	 	684	
Short-term investments	  	 	3,199	  	 	3,360	  	 	4,040	  	 	3,290	  	 	2,928	
Other investments	  	 	1,301	  	 	1,228	  	 	1,216	  	 	643	  	 	645	
 	  			  			  			  			  			
Total investments	  	 	28,506	  	 	27,383	  	 	26,072	  	 	25,575	  	 	23,446	
Cash	  	 	534	  	 	626	  	 	663	  	 	614	  	 	562	
Insurance and reinsurance balances receivable	  	 	3,272	  	 	3,379	  	 	3,567	  	 	3,493	  	 	2,837	
Reinsurance recoverable	  	 	15,254	  	 	14,268	  	 	14,374	  	 	14,062	  	 	14,081	
Deferred policy acquisition costs	  	 	944	  	 	975	  	 	969	  	 	1,108	  	 	1,005	
Prepaid reinsurance premiums	  	 	1,320	  	 	1,653	  	 	1,652	  	 	1,578	  	 	1,372	
Goodwill	  	 	2,612	  	 	2,612	  	 	2,614	  	 	2,699	  	 	2,711	
Deferred tax assets	  	 	1,161	  	 	1,015	  	 	1,115	  	 	997	  	 	1,090	
Other assets	  	 	2,739	  	 	2,544	  	 	2,625	  	 	2,352	  	 	2,449	
 	  			  			  			  			  			
Total assets	  	$	56,342	  	$	54,455	  	$	53,651	  	$	52,478	  	$	49,553	

Liabilities	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Unpaid losses and loss expenses	  	$	31,513	  	$	29,603	  	$	28,224	  	$	27,697	  	$	27,155	
Unearned premiums	  	 	5,923	  	 	6,466	  	 	6,555	  	 	6,930	  	 	6,051	
Future policy benefits for life and annuity contracts	  	 	509	  	 	521	  	 	505	  	 	496	  	 	492	
Insurance and reinsurance balances payable	  	 	2,308	  	 	2,273	  	 	2,280	  	 	2,145	  	 	1,903	
Deposit liabilities	  	 	343	  	 	220	  	 	221	  	 	217	  	 	212	
Securities lending collateral	  	 	1,059	  	 	1,068	  	 	1,542	  	 	1,208	  	 	698	
Payable for investments purchased	  	 	717	  	 	879	  	 	726	  	 	570	  	 	369	
Accounts payable, accrued expenses and other liabilities	  	 	1,727	  	 	1,539	  	 	1,496	  	 	1,436	  	 	1,468	
Short-term debt	  	 	146	  	 	146	  	 	546	  	 	546	  	 	546	
Long-term debt	  	 	1,849	  	 	1,849	  	 	1,849	  	 	1,349	  	 	1,349	
Trust preferred securities	  	 	412	  	 	412	  	 	487	  	 	487	  	 	475	
 	  			  			  			  			  			
Total liabilities	  	 	46,506	  	 	44,976	  	 	44,431	  	 	43,081	  	 	40,718	
						
Shareholders’ equity	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total shareholders’ equity, excl. AOCI	  	 	9,100	  	 	8,871	  	 	8,915	  	 	8,543	  	 	8,115	
Accumulated other comprehensive income (AOCI)	  	 	736	  	 	608	  	 	305	  	 	854	  	 	720	
 	  			  			  			  			  			
Total shareholders’ equity	  	 	9,836	  	 	9,479	  	 	9,220	  	 	9,397	  	 	8,835	
 	  			  			  			  			  			
Total liabilities and shareholders’ equity	  	$	56,342	  	$	54,455	  	$	53,651	  	$	52,478	  	$	49,553	

Diluted book value per ordinary share	  	$	32.48	  	$	31.29	  	$	30.46	  	$	31.36	  	$	29.46	
						
Diluted tangible book value per ordinary share	  	$	23.63	  	$	22.44	  	$	21.61	  	$	22.41	  	$	20.25	

Consol Bal Sheet	  	Page 6	

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

 	  	4Q-04
	  	% of
Total
Consolidated
	 	 	4Q-03
	  	% of
Total
Consolidated
	 	 	% Change
4Q-04 vs.
4Q-03
	 	 	Full Year
2004
	  	% of
Total
Consolidated
	 	 	Full Year
2003
	  	% of
Total
Consolidated
	 	 	% Change
2004 vs.
2003
	 	
Net premiums written	  	 	 	  	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Property and all other	  	$	725	  	27	%	 	$	734	  	29	%	 	-1	%	 	$	3,439	  	30	%	 	$	3,048	  	30	%	 	13	%	
Casualty	  	 	1,560	  	59	%	 	 	1,285	  	50	%	 	21	%	 	 	6,420	  	55	%	 	 	4,994	  	49	%	 	29	%	
Personal accident	  	 	289	  	11	%	 	 	231	  	9	%	 	25	%	 	 	1,133	  	10	%	 	 	949	  	9	%	 	19	%	
 	  			  			 			  			 			 			  			 			  			 			
Total P&C	  	 	2,574	  	97	%	 	 	2,250	  	87	%	 	14	%	 	 	10,992	  	95	%	 	 	8,991	  	88	%	 	22	%	
 	  			  			 			  			 			 			  			 			  			 			
Global Re - life	  	 	55	  	2	%	 	 	47	  	2	%	 	17	%	 	 	220	  	2	%	 	 	185	  	2	%	 	19	%	
Financial Services	  	 	26	  	1	%	 	 	276	  	11	%	 	-91	%	 	 	316	  	3	%	 	 	1,039	  	10	%	 	-70	%	
 	  			  			 			  			 			 			  			 			  			 			
Total Consolidated	  	$	2,655	  	100	%	 	$	2,573	  	100	%	 	3	%	 	$	11,528	  	100	%	 	$	10,215	  	100	%	 	13	%	
 	  			  			 			  			 			 			  			 			  			 			
Net premiums earned	  	 	 	  	 	 	 	 	 	  	 	 	 	 	 	 	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Property and all other	  	$	900	  	31	%	 	$	829	  	29	%	 	9	%	 	$	3,350	  	30	%	 	$	2,899	  	30	%	 	16	%	
Casualty	  	 	1,547	  	53	%	 	 	1,230	  	44	%	 	26	%	 	 	5,913	  	53	%	 	 	4,498	  	47	%	 	31	%	
Personal accident	  	 	297	  	10	%	 	 	248	  	9	%	 	20	%	 	 	1,133	  	10	%	 	 	920	  	10	%	 	23	%	
 	  			  			 			  			 			 			  			 			  			 			
Total P&C	  	 	2,744	  	94	%	 	 	2,307	  	82	%	 	19	%	 	 	10,396	  	93	%	 	 	8,317	  	87	%	 	25	%	
 	  			  			 			  			 			 			  			 			  			 			
Global Re - life	  	 	55	  	2	%	 	 	48	  	2	%	 	15	%	 	 	220	  	2	%	 	 	184	  	2	%	 	20	%	
Financial Services	  	 	96	  	4	%	 	 	472	  	16	%	 	-80	%	 	 	520	  	5	%	 	 	1,101	  	11	%	 	-53	%	
 	  			  			 			  			 			 			  			 			  			 			
Total Consolidated	  	$	2,895	  	100	%	 	$	2,827	  	100	%	 	2	%	 	$	11,136	  	100	%	 	$	9,602	  	100	%	 	16	%	

			
Line of Business	  	Page 7	

					
	 	ACE Limited
 
Consolidating Statement of Operations
 
Three months ended December 31, 2004 and 2003
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	

 	  	Insurance -
North
American
	 	 	Insurance -
Overseas
General
	  	Global
Reinsurance
	 	 	Corporate
& Other
	 	 	Consolidated
P&C
	 	 	Financial
Services
	 	 	ACE
Consolidated
	 	
December 31, 2004	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	1,898	 	 	$	1,392	  	$	285	 	 	$	—  	 	 	$	3,575	 	 	$	29	 	 	$	3,604	 	
Net premiums written	  	 	1,208	 	 	 	1,087	  	 	279	 	 	 	—  	 	 	 	2,574	 	 	 	26	 	 	 	2,600	 	
Net premiums earned	  	 	1,259	 	 	 	1,126	  	 	359	 	 	 	—  	 	 	 	2,744	 	 	 	96	 	 	 	2,840	 	
Losses and loss expenses	  	 	1,359	 	 	 	547	  	 	204	 	 	 	6	 	 	 	2,116	 	 	 	97	 	 	 	2,213	 	
Policy acquisition costs	  	 	114	 	 	 	224	  	 	68	 	 	 	—  	 	 	 	406	 	 	 	—  	 	 	 	406	 	
Administrative expenses	  	 	135	 	 	 	138	  	 	15	 	 	 	47	 	 	 	335	 	 	 	2	 	 	 	337	 	
 	  				 			  				 				 				 				 				
Underwriting income (loss)	  	 	(349	)	 	 	217	  	 	72	 	 	 	(53	)	 	 	(113	)	 	 	(3	)	 	 	(116	)	
Life underwriting income (includes investment income)	  	 	—  	 	 	 	—  	  	 	20	 	 	 	—  	 	 	 	20	 	 	 	—  	 	 	 	20	 	
Net investment income - property and casualty	  	 	129	 	 	 	69	  	 	39	 	 	 	—  	 	 	 	237	 	 	 	29	 	 	 	266	 	
Other (income) expense	  	 	1	 	 	 	15	  	 	(1	)	 	 	—  	 	 	 	15	 	 	 	(15	)	 	 	—  	 	
Net realized gains (losses)	  	 	32	 	 	 	18	  	 	67	 	 	 	(2	)	 	 	115	 	 	 	13	 	 	 	128	 	
Interest expense	  	 	6	 	 	 	—  	  	 	—  	 	 	 	38	 	 	 	44	 	 	 	—  	 	 	 	44	 	
Income tax expense (benefit)	  	 	(96	)	 	 	84	  	 	12	 	 	 	(32	)	 	 	(32	)	 	 	4	 	 	 	(28	)	
 	  				 			  				 				 				 				 				
Net income (loss)	  	 	(99	)	 	 	205	  	 	187	 	 	 	(61	)	 	 	232	 	 	 	50	 	 	 	282	 	
Net realized gains (losses)	  	 	32	 	 	 	18	  	 	67	 	 	 	(2	)	 	 	115	 	 	 	13	 	 	 	128	 	
Tax expense (benefit) on net realized gains (losses)	  	 	5	 	 	 	5	  	 	—  	 	 	 	—  	 	 	 	10	 	 	 	2	 	 	 	12	 	
 	  				 			  				 				 				 				 				
Income (loss) excluding net realized gains (losses) (1)	  	$	(126	)	 	$	192	  	$	120	 	 	$	(59	)	 	$	127	 	 	$	39	 	 	$	166	 	

December 31, 2003	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	1,764	 	 	$	1,341	  	$	225	 	 	$	—  	 	 	$	3,330	 	 	$	289	 	 	$	3,619	 	
Net premiums written	  	 	1,048	 	 	 	982	  	 	220	 	 	 	—  	 	 	 	2,250	 	 	 	276	 	 	 	2,526	 	
Net premiums earned	  	 	991	 	 	 	1,007	  	 	309	 	 	 	—  	 	 	 	2,307	 	 	 	472	 	 	 	2,779	 	
Losses and loss expenses	  	 	660	 	 	 	603	  	 	166	 	 	 	—  	 	 	 	1,429	 	 	 	428	 	 	 	1,857	 	
Policy acquisition costs	  	 	108	 	 	 	197	  	 	58	 	 	 	—  	 	 	 	363	 	 	 	16	 	 	 	379	 	
Administrative expenses	  	 	109	 	 	 	130	  	 	17	 	 	 	39	 	 	 	295	 	 	 	24	 	 	 	319	 	
 	  				 			  				 				 				 				 				
Underwriting income (loss)	  	 	114	 	 	 	77	  	 	68	 	 	 	(39	)	 	 	220	 	 	 	4	 	 	 	224	 	
Life underwriting income (includes investment income)	  	 	—  	 	 	 	—  	  	 	6	 	 	 	—  	 	 	 	6	 	 	 	—  	 	 	 	6	 	
Net investment income - property and casualty	  	 	103	 	 	 	44	  	 	24	 	 	 	(4	)	 	 	167	 	 	 	53	 	 	 	220	 	
Other (income) expense	  	 	8	 	 	 	3	  	 	(1	)	 	 	9	 	 	 	19	 	 	 	—  	 	 	 	19	 	
Net realized gains (losses)	  	 	24	 	 	 	1	  	 	8	 	 	 	3	 	 	 	36	 	 	 	92	 	 	 	128	 	
Interest expense	  	 	6	 	 	 	—  	  	 	—  	 	 	 	37	 	 	 	43	 	 	 	1	 	 	 	44	 	
Income tax expense (benefit)	  	 	50	 	 	 	24	  	 	5	 	 	 	(18	)	 	 	61	 	 	 	10	 	 	 	71	 	
 	  				 			  				 				 				 				 				
Net income (loss)	  	 	177	 	 	 	95	  	 	102	 	 	 	(68	)	 	 	306	 	 	 	138	 	 	 	444	 	
Net realized gains (losses)	  	 	24	 	 	 	1	  	 	8	 	 	 	3	 	 	 	36	 	 	 	92	 	 	 	128	 	
Tax expense (benefit) on net realized gains (losses)	  	 	—  	 	 	 	—  	  	 	1	 	 	 	—  	 	 	 	1	 	 	 	11	 	 	 	12	 	
 	  				 			  				 				 				 				 				
Income (loss) excluding net realized gains (losses) (1)	  	$	153	 	 	$	94	  	$	95	 	 	$	(71	)	 	$	271	 	 	$	57	 	 	$	328	 	

(1)	See page 26 Non-GAAP Financial Measures.	

Segment 2004 Qtr	  	Page 8	

					
	 	ACE Limited
 
Consolidating Statement of Operations
 
Years ended December 31, 2004 and 2003
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	

 	  	Insurance -
North
American
	 	 	Insurance -
Overseas
General
	 	 	Global
Reinsurance
	 	 	Corporate
& Other
	 	 	Consolidated
P&C
	 	 	Financial
Services
	 	 	ACE
Consolidated
	
December 31, 2004	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	8,124	 	 	$	5,858	 	 	$	1,571	 	 	$	—  	 	 	$	15,553	 	 	$	320	 	 	$	15,873	
Net premiums written	  	 	5,098	 	 	 	4,370	 	 	 	1,524	 	 	 	—  	 	 	 	10,992	 	 	 	316	 	 	 	11,308	
Net premiums earned	  	 	4,678	 	 	 	4,322	 	 	 	1,396	 	 	 	—  	 	 	 	10,396	 	 	 	520	 	 	 	10,916	
Losses and loss expenses	  	 	3,902	 	 	 	2,426	 	 	 	973	 	 	 	25	 	 	 	7,326	 	 	 	388	 	 	 	7,714	
Policy acquisition costs	  	 	440	 	 	 	803	 	 	 	271	 	 	 	—  	 	 	 	1,514	 	 	 	22	 	 	 	1,536	
Administrative expenses	  	 	482	 	 	 	554	 	 	 	65	 	 	 	143	 	 	 	1,244	 	 	 	40	 	 	 	1,284	
 	  				 				 				 				 				 				 			
Underwriting income (loss)	  	 	(146	)	 	 	539	 	 	 	87	 	 	 	(168	)	 	 	312	 	 	 	70	 	 	 	382	
Life underwriting income (includes investment income)	  	 	—  	 	 	 	—  	 	 	 	55	 	 	 	—  	 	 	 	55	 	 	 	—  	 	 	 	55	
Net investment income - property and casualty	  	 	460	 	 	 	233	 	 	 	126	 	 	 	2	 	 	 	821	 	 	 	147	 	 	 	968	
Other (income) expense	  	 	5	 	 	 	25	 	 	 	(1	)	 	 	(1	)	 	 	28	 	 	 	(26	)	 	 	2	
Net realized gains (losses)	  	 	124	 	 	 	47	 	 	 	34	 	 	 	7	 	 	 	212	 	 	 	(17	)	 	 	195	
Interest expense	  	 	21	 	 	 	—  	 	 	 	—  	 	 	 	157	 	 	 	178	 	 	 	5	 	 	 	183	
Income tax expense (benefit)	  	 	68	 	 	 	238	 	 	 	15	 	 	 	(80	)	 	 	241	 	 	 	35	 	 	 	276	
 	  				 				 				 				 				 				 			
Net income (loss)	  	 	344	 	 	 	556	 	 	 	288	 	 	 	(235	)	 	 	953	 	 	 	186	 	 	 	1,139	
Net realized gains (losses)	  	 	124	 	 	 	47	 	 	 	34	 	 	 	7	 	 	 	212	 	 	 	(17	)	 	 	195	
Tax expense (benefit) on net realized gains (losses)	  	 	22	 	 	 	14	 	 	 	—  	 	 	 	—  	 	 	 	36	 	 	 	8	 	 	 	44	
 	  				 				 				 				 				 				 			
Income (loss) excluding net realized gains (losses) (1)	  	$	242	 	 	$	523	 	 	$	254	 	 	$	(242	)	 	$	777	 	 	$	211	 	 	$	988	

December 31, 2003	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	6,895	 	 	$	5,191	 	 	$	1,312	 	 	$	—  	 	 	$	13,398	 	 	$	1,046	 	 	$	14,444	
Net premiums written	  	 	4,015	 	 	 	3,751	 	 	 	1,225	 	 	 	—  	 	 	 	8,991	 	 	 	1,039	 	 	 	10,030	
Net premiums earned	  	 	3,654	 	 	 	3,563	 	 	 	1,100	 	 	 	—  	 	 	 	8,317	 	 	 	1,101	 	 	 	9,418	
Losses and loss expenses	  	 	2,521	 	 	 	2,144	 	 	 	559	 	 	 	—  	 	 	 	5,224	 	 	 	894	 	 	 	6,118	
Policy acquisition costs	  	 	387	 	 	 	682	 	 	 	211	 	 	 	—  	 	 	 	1,280	 	 	 	61	 	 	 	1,341	
Administrative expenses	  	 	402	 	 	 	486	 	 	 	62	 	 	 	123	 	 	 	1,073	 	 	 	84	 	 	 	1,157	
 	  				 				 				 				 				 				 			
Underwriting income (loss)	  	$	344	 	 	$	251	 	 	$	268	 	 	$	(123	)	 	$	740	 	 	$	62	 	 	$	802	
Life underwriting income	  	 	—  	 	 	 	—  	 	 	 	17	 	 	 	—  	 	 	 	17	 	 	 	—  	 	 	 	17	
Net investment income - property and casualty	  	 	403	 	 	 	155	 	 	 	87	 	 	 	(19	)	 	 	626	 	 	 	202	 	 	 	828	
Other (income) expense	  	 	14	 	 	 	7	 	 	 	(3	)	 	 	9	 	 	 	27	 	 	 	—  	 	 	 	27	
Net realized gains (losses)	  	 	39	 	 	 	(6	)	 	 	34	 	 	 	(5	)	 	 	62	 	 	 	190	 	 	 	252	
Interest expense	  	 	22	 	 	 	—  	 	 	 	—  	 	 	 	149	 	 	 	171	 	 	 	6	 	 	 	177	
Income tax expense (benefit)	  	 	179	 	 	 	79	 	 	 	14	 	 	 	(58	)	 	 	214	 	 	 	64	 	 	 	278	
 	  				 				 				 				 				 				 			
Net income (loss)	  	 	571	 	 	 	314	 	 	 	395	 	 	 	(247	)	 	 	1,033	 	 	 	384	 	 	 	1,417	
Net realized gains (losses)	  	 	39	 	 	 	(6	)	 	 	34	 	 	 	(5	)	 	 	62	 	 	 	190	 	 	 	252	
Tax expense (benefit) on net realized gains (losses)	  	 	—  	 	 	 	(5	)	 	 	—  	 	 	 	—  	 	 	 	(5	)	 	 	37	 	 	 	32	
 	  				 				 				 				 				 				 			
Income (loss) excluding net realized gains (losses) (1)	  	$	532	 	 	$	315	 	 	$	361	 	 	$	(242	)	 	$	966	 	 	$	231	 	 	$	1,197	

(1)	See page 26 Non-GAAP Financial Measures.	

Segment 2004 YTD	  	Page 9	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Gross premiums written	  	$	1,898	 	 	$	2,219	 	 	$	2,102	 	 	$	1,905	 	 	$	1,764	 	 	$	8,124	 	 	$	6,895	 	
Net premiums written	  	 	1,208	 	 	 	1,349	 	 	 	1,329	 	 	 	1,212	 	 	 	1,048	 	 	 	5,098	 	 	 	4,015	 	
Net premiums earned	  	 	1,259	 	 	 	1,234	 	 	 	1,178	 	 	 	1,007	 	 	 	991	 	 	 	4,678	 	 	 	3,654	 	
Losses and loss expenses	  	 	1,359	 	 	 	1,010	 	 	 	837	 	 	 	696	 	 	 	660	 	 	 	3,902	 	 	 	2,521	 	
Policy acquisition costs	  	 	114	 	 	 	114	 	 	 	111	 	 	 	101	 	 	 	108	 	 	 	440	 	 	 	387	 	
Administrative expenses	  	 	135	 	 	 	129	 	 	 	115	 	 	 	103	 	 	 	109	 	 	 	482	 	 	 	402	 	
 	  				 				 				 				 				 				 				
Underwriting income (loss)	  	 	(349	)	 	 	(19	)	 	 	115	 	 	 	107	 	 	 	114	 	 	 	(146	)	 	 	344	 	
Net investment income	  	 	129	 	 	 	120	 	 	 	107	 	 	 	104	 	 	 	103	 	 	 	460	 	 	 	403	 	
Other (income) expense	  	 	1	 	 	 	(2	)	 	 	3	 	 	 	3	 	 	 	8	 	 	 	5	 	 	 	14	 	
Net realized gains (losses)	  	 	32	 	 	 	9	 	 	 	31	 	 	 	52	 	 	 	24	 	 	 	124	 	 	 	39	 	
Interest expense	  	 	6	 	 	 	5	 	 	 	5	 	 	 	5	 	 	 	6	 	 	 	21	 	 	 	22	 	
Income tax expense	  	 	(96	)	 	 	33	 	 	 	69	 	 	 	62	 	 	 	50	 	 	 	68	 	 	 	179	 	
 	  				 				 				 				 				 				 				
Net income (loss)	  	 	(99	)	 	 	74	 	 	 	176	 	 	 	193	 	 	 	177	 	 	 	344	 	 	 	571	 	
Net realized gains (losses)	  	 	32	 	 	 	9	 	 	 	31	 	 	 	52	 	 	 	24	 	 	 	124	 	 	 	39	 	
Tax expense on net realized gains (losses)	  	 	5	 	 	 	2	 	 	 	8	 	 	 	7	 	 	 	—  	 	 	 	22	 	 	 	—  	 	
 	  				 				 				 				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	(126	)	 	$	67	 	 	$	153	 	 	$	148	 	 	$	153	 	 	$	242	 	 	$	532	 	

Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	108.0	%	 	 	81.8	%	 	 	71.1	%	 	 	69.1	%	 	 	66.6	%	 	 	83.4	%	 	 	69.0	%	
Policy acquisition cost ratio	  	 	9.0	%	 	 	9.3	%	 	 	9.5	%	 	 	10.0	%	 	 	10.9	%	 	 	9.4	%	 	 	10.6	%	
Administrative expense ratio	  	 	10.7	%	 	 	10.5	%	 	 	9.7	%	 	 	10.3	%	 	 	11.1	%	 	 	10.3	%	 	 	11.0	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	127.7	%	 	 	101.6	%	 	 	90.3	%	 	 	89.4	%	 	 	88.6	%	 	 	103.1	%	 	 	90.6	%	

Large losses and other items (before tax)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asbestos, environmental and other run-off losses	  	$	459	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	459	 	 	$	—  	 	
Catastrophe losses (before tax)	  	$	—  	 	 	$	126	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	126	 	 	$	20	 	
Prior period development	  	$	96	 	 	$	42	 	 	$	42	 	 	$	15	 	 	$	14	 	 	$	195	 	 	$	91	 	
								
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	8	%	 	 	22	%	 	 	28	%	 	 	14	%	 	 	8	%	 	 	18	%	 	 	13	%	
Net premiums written	  	 	15	%	 	 	27	%	 	 	37	%	 	 	30	%	 	 	28	%	 	 	27	%	 	 	38	%	
Net premiums earned	  	 	27	%	 	 	25	%	 	 	28	%	 	 	34	%	 	 	34	%	 	 	28	%	 	 	48	%	
								
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	64	%	 	 	61	%	 	 	63	%	 	 	64	%	 	 	59	%	 	 	63	%	 	 	58	%	
 
(1)	See page 26 Non-GAAP Financial Measures.	

Insurance-North America	  	Page 10	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Gross premiums written	  	$	1,392	 	 	$	1,292	 	 	$	1,500	 	 	$	1,674	 	 	$	1,341	 	 	$	5,858	 	 	$	5,191	 	
Net premiums written	  	 	1,087	 	 	 	980	 	 	 	1,105	 	 	 	1,198	 	 	 	982	 	 	 	4,370	 	 	 	3,751	 	
Net premiums earned	  	 	1,126	 	 	 	1,086	 	 	 	1,076	 	 	 	1,034	 	 	 	1,007	 	 	 	4,322	 	 	 	3,563	 	
Losses and loss expenses	  	 	547	 	 	 	653	 	 	 	625	 	 	 	601	 	 	 	603	 	 	 	2,426	 	 	 	2,144	 	
Policy acquisition costs	  	 	224	 	 	 	199	 	 	 	196	 	 	 	184	 	 	 	197	 	 	 	803	 	 	 	682	 	
Administrative expenses	  	 	138	 	 	 	139	 	 	 	139	 	 	 	138	 	 	 	130	 	 	 	554	 	 	 	486	 	
 	  				 				 				 				 				 				 				
Underwriting income	  	$	217	 	 	$	95	 	 	$	116	 	 	$	111	 	 	$	77	 	 	$	539	 	 	$	251	 	
Net investment income	  	 	69	 	 	 	61	 	 	 	55	 	 	 	48	 	 	 	44	 	 	 	233	 	 	 	155	 	
Other (income) expense	  	 	15	 	 	 	3	 	 	 	4	 	 	 	3	 	 	 	3	 	 	 	25	 	 	 	7	 	
Net realized gains (losses)	  	 	18	 	 	 	2	 	 	 	3	 	 	 	24	 	 	 	1	 	 	 	47	 	 	 	(6	)	
Interest expense	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
Income tax expense	  	 	84	 	 	 	42	 	 	 	61	 	 	 	51	 	 	 	24	 	 	 	238	 	 	 	79	 	
 	  				 				 				 				 				 				 				
Net income	  	$	205	 	 	$	113	 	 	$	109	 	 	$	129	 	 	$	95	 	 	$	556	 	 	$	314	 	
Net realized gains (losses)	  	 	18	 	 	 	2	 	 	 	3	 	 	 	24	 	 	 	1	 	 	 	47	 	 	 	(6	)	
Tax expense (benefit) on net realized gains (losses)	  	 	5	 	 	 	1	 	 	 	1	 	 	 	7	 	 	 	—  	 	 	 	14	 	 	 	(5	)	
 	  				 				 				 				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	192	 	 	$	112	 	 	$	107	 	 	$	112	 	 	$	94	 	 	$	523	 	 	$	315	 	

Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	48.6	%	 	 	60.1	%	 	 	58.1	%	 	 	58.1	%	 	 	59.8	%	 	 	56.1	%	 	 	60.2	%	
Policy acquisition cost ratio	  	 	19.9	%	 	 	18.3	%	 	 	18.2	%	 	 	17.9	%	 	 	19.6	%	 	 	18.6	%	 	 	19.2	%	
Administrative expense ratio	  	 	12.2	%	 	 	12.8	%	 	 	13.0	%	 	 	13.3	%	 	 	12.9	%	 	 	12.8	%	 	 	13.6	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	80.7	%	 	 	91.2	%	 	 	89.3	%	 	 	89.3	%	 	 	92.3	%	 	 	87.5	%	 	 	93.0	%	

Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asbestos, environmental and other run-off losses	  	$	6	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	6	 	 	$	—  	 	
Large losses (before tax)	  	$	—  	 	 	$	53	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	53	 	 	$	10	 	
Prior period development	  	$	26	 	 	$	(8	)	 	$	(4	)	 	$	(8	)	 	$	11	 	 	$	6	 	 	$	57	 	
								
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	4	%	 	 	8	%	 	 	21	%	 	 	19	%	 	 	11	%	 	 	13	%	 	 	26	%	
Net premiums written	  	 	11	%	 	 	12	%	 	 	21	%	 	 	22	%	 	 	23	%	 	 	17	%	 	 	38	%	
Net premiums earned	  	 	12	%	 	 	23	%	 	 	25	%	 	 	27	%	 	 	50	%	 	 	21	%	 	 	49	%	
								
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	78	%	 	 	76	%	 	 	74	%	 	 	72	%	 	 	73	%	 	 	75	%	 	 	72	%	
 
(1)	See page 26 Non-GAAP Financial Measures.	

Insurance-Overseas General	  	Page 11	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Property and casualty	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	285	 	 	$	343	 	 	$	367	 	 	$	576	 	 	$	225	 	 	$	1,571	 	 	$	1,312	 	
Net premiums written	  	 	279	 	 	 	312	 	 	 	364	 	 	 	569	 	 	 	220	 	 	 	1,524	 	 	 	1,225	 	
Net premiums earned	  	 	359	 	 	 	362	 	 	 	346	 	 	 	329	 	 	 	309	 	 	 	1,396	 	 	 	1,100	 	
Losses and loss expenses	  	 	204	 	 	 	436	 	 	 	174	 	 	 	159	 	 	 	166	 	 	 	973	 	 	 	559	 	
Policy acquisition costs	  	 	68	 	 	 	65	 	 	 	74	 	 	 	64	 	 	 	58	 	 	 	271	 	 	 	211	 	
Administrative expenses	  	 	15	 	 	 	16	 	 	 	15	 	 	 	19	 	 	 	17	 	 	 	65	 	 	 	62	 	
 	  				 				 				 				 				 				 				
P&C underwriting income (loss)	  	 	72	 	 	 	(155	)	 	 	83	 	 	 	87	 	 	 	68	 	 	 	87	 	 	 	268	 	
								
Life	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	55	 	 	 	60	 	 	 	56	 	 	 	53	 	 	 	49	 	 	 	224	 	 	 	193	 	
Net premiums written	  	 	55	 	 	 	59	 	 	 	55	 	 	 	51	 	 	 	47	 	 	 	220	 	 	 	185	 	
Net premiums earned	  	 	55	 	 	 	60	 	 	 	54	 	 	 	51	 	 	 	48	 	 	 	220	 	 	 	184	 	
Losses and loss expenses	  	 	38	 	 	 	48	 	 	 	44	 	 	 	42	 	 	 	44	 	 	 	172	 	 	 	181	 	
Policy acquisition costs	  	 	5	 	 	 	6	 	 	 	6	 	 	 	5	 	 	 	5	 	 	 	22	 	 	 	16	 	
Administrative expenses	  	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	4	 	 	 	3	 	
Net investment income	  	 	9	 	 	 	8	 	 	 	8	 	 	 	8	 	 	 	8	 	 	 	33	 	 	 	33	 	
 	  				 				 				 				 				 				 				
Life underwriting income	  	 	20	 	 	 	13	 	 	 	11	 	 	 	11	 	 	 	6	 	 	 	55	 	 	 	17	 	
Total underwriting income (loss)	  	 	92	 	 	 	(142	)	 	 	94	 	 	 	98	 	 	 	74	 	 	 	142	 	 	 	285	 	
Net investment income - property and casualty	  	 	39	 	 	 	31	 	 	 	29	 	 	 	27	 	 	 	24	 	 	 	126	 	 	 	87	 	
Other (income) expense	  	 	(1	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(1	)	 	 	(1	)	 	 	(3	)	
Net realized gains (losses)	  	 	67	 	 	 	(35	)	 	 	12	 	 	 	(10	)	 	 	8	 	 	 	34	 	 	 	34	 	
Interest expense	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
Income tax expense	  	 	12	 	 	 	(1	)	 	 	1	 	 	 	3	 	 	 	5	 	 	 	15	 	 	 	14	 	
 	  				 				 				 				 				 				 				
Net income (loss)	  	 	187	 	 	 	(145	)	 	 	134	 	 	 	112	 	 	 	102	 	 	 	288	 	 	 	395	 	
Net realized gains (losses)	  	 	67	 	 	 	(35	)	 	 	12	 	 	 	(10	)	 	 	8	 	 	 	34	 	 	 	34	 	
Tax expense (benefit) on net realized gains (losses)	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1	 	 	 	—  	 	 	 	—  	 	
 	  				 				 				 				 				 				 				
Income (loss) excluding net realized gains (losses) (1)	  	$	120	 	 	$	(110	)	 	$	122	 	 	$	122	 	 	$	95	 	 	$	254	 	 	$	361	 	

P&C combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	57.0	%	 	 	120.2	%	 	 	50.2	%	 	 	48.5	%	 	 	53.9	%	 	 	69.7	%	 	 	50.9	%	
Policy acquisition cost ratio	  	 	19.0	%	 	 	18.0	%	 	 	21.4	%	 	 	19.4	%	 	 	18.9	%	 	 	19.4	%	 	 	19.2	%	
Administrative expense ratio	  	 	4.0	%	 	 	4.5	%	 	 	4.5	%	 	 	5.6	%	 	 	5.5	%	 	 	4.6	%	 	 	5.6	%	
 	  				 				 				 				 				 				 				
P&C combined ratio	  	 	80.0	%	 	 	142.7	%	 	 	76.1	%	 	 	73.5	%	 	 	78.3	%	 	 	93.7	%	 	 	75.7	%	

Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Large losses (before tax)	  	$	31	 	 	$	278	 	 	$	—  	 	 	$	—  	 	 	$	35	 	 	$	309	 	 	$	82	 	
Prior period development	  	$	(13	)	 	$	(22	)	 	$	(13	)	 	$	(13	)	 	$	(11	)	 	$	(61	)	 	$	(27	)	
 
(1)	See page 26 Non-GAAP Financial Measures.	

Global Reinsurance	  	Page 12	

					
	 	ACE Limited
 
Segment Results - Consecutive Quarters - 2
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	
 
Global Reinsurance - Property & Casualty

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	27	%	 	 	24	%	 	 	5	%	 	 	25	%	 	 	99	%	 	 	20	%	 	 	48	%	
Net premiums written	  	 	27	%	 	 	44	%	 	 	6	%	 	 	28	%	 	 	134	%	 	 	24	%	 	 	58	%	
Net premiums earned	  	 	16	%	 	 	32	%	 	 	29	%	 	 	33	%	 	 	42	%	 	 	27	%	 	 	62	%	
								
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	98	%	 	 	91	%	 	 	99	%	 	 	99	%	 	 	98	%	 	 	97	%	 	 	93	%	
								
Global Reinsurance - By Division	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
								
Gross premiums written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	$	64	 	 	$	76	 	 	$	60	 	 	$	126	 	 	$	63	 	 	$	326	 	 	$	343	 	
Tempest USA	  	 	204	 	 	 	205	 	 	 	224	 	 	 	253	 	 	 	148	 	 	 	886	 	 	 	528	 	
Tempest Bermuda	  	 	17	 	 	 	62	 	 	 	83	 	 	 	197	 	 	 	14	 	 	 	359	 	 	 	441	 	
 	  				 				 				 				 				 				 				
Total	  	$	285	 	 	$	343	 	 	$	367	 	 	$	576	 	 	$	225	 	 	$	1,571	 	 	$	1,312	 	
 	  				 				 				 				 				 				 				
Net premiums written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	$	61	 	 	$	74	 	 	$	54	 	 	$	122	 	 	$	53	 	 	$	311	 	 	$	314	 	
Tempest USA	  	 	204	 	 	 	204	 	 	 	224	 	 	 	252	 	 	 	148	 	 	 	884	 	 	 	523	 	
Tempest Bermuda	  	 	14	 	 	 	34	 	 	 	86	 	 	 	195	 	 	 	19	 	 	 	329	 	 	 	388	 	
 	  				 				 				 				 				 				 				
Total	  	$	279	 	 	$	312	 	 	$	364	 	 	$	569	 	 	$	220	 	 	$	1,524	 	 	$	1,225	 	
 	  				 				 				 				 				 				 				
Net premiums earned	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	$	76	 	 	$	77	 	 	$	75	 	 	$	75	 	 	$	72	 	 	$	303	 	 	$	259	 	
Tempest USA	  	 	204	 	 	 	194	 	 	 	189	 	 	 	169	 	 	 	138	 	 	 	756	 	 	 	463	 	
Tempest Bermuda	  	 	79	 	 	 	91	 	 	 	82	 	 	 	85	 	 	 	99	 	 	 	337	 	 	 	378	 	
 	  				 				 				 				 				 				 				
Total	  	$	359	 	 	$	362	 	 	$	346	 	 	$	329	 	 	$	309	 	 	$	1,396	 	 	$	1,100	 	
 	  				 				 				 				 				 				 				
Net premiums written/gross premiums written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	 	95	%	 	 	97	%	 	 	90	%	 	 	97	%	 	 	84	%	 	 	95	%	 	 	92	%	
Tempest USA	  	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	 	 	99	%	
Tempest Bermuda	  	 	82	%	 	 	55	%	 	 	104	%	 	 	99	%	 	 	136	%	 	 	92	%	 	 	88	%	
 	  				 				 				 				 				 				 				
Total NPW/GPW	  	 	98	%	 	 	91	%	 	 	99	%	 	 	99	%	 	 	98	%	 	 	97	%	 	 	93	%	

			
Global Reinsurance 2	  	Page 13	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	FullYear
2004
	 	 	Full Year
2003
	 	
Gross premiums written	  	$	29	 	 	$	68	 	 	$	15	 	 	$	208	 	 	$	289	 	 	$	320	 	 	$	1,046	 	
Net premiums written	  	 	26	 	 	 	68	 	 	 	14	 	 	 	208	 	 	 	276	 	 	 	316	 	 	 	1,039	 	
Net premiums earned	  	 	96	 	 	 	111	 	 	 	134	 	 	 	179	 	 	 	472	 	 	 	520	 	 	 	1,101	 	
Losses and loss expenses	  	 	97	 	 	 	116	 	 	 	89	 	 	 	86	 	 	 	428	 	 	 	388	 	 	 	894	 	
Policy acquisition costs	  	 	—  	 	 	 	2	 	 	 	9	 	 	 	11	 	 	 	16	 	 	 	22	 	 	 	61	 	
Administrative expenses	  	 	2	 	 	 	4	 	 	 	10	 	 	 	24	 	 	 	24	 	 	 	40	 	 	 	84	 	
 	  				 				 				 				 				 				 				
Underwriting income (loss)	  	 	(3	)	 	 	(11	)	 	 	26	 	 	 	58	 	 	 	4	 	 	 	70	 	 	 	62	 	
Net investment income	  	 	29	 	 	 	29	 	 	 	36	 	 	 	53	 	 	 	53	 	 	 	147	 	 	 	202	 	
Other (income) expense	  	 	(15	)	 	 	(22	)	 	 	—  	 	 	 	11	 	 	 	—  	 	 	 	(26	)	 	 	—  	 	
Net realized gains (losses)	  	 	13	 	 	 	(3	)	 	 	(32	)	 	 	5	 	 	 	92	 	 	 	(17	)	 	 	190	 	
Interest expense	  	 	—  	 	 	 	2	 	 	 	1	 	 	 	2	 	 	 	1	 	 	 	5	 	 	 	6	 	
Income tax expense	  	 	4	 	 	 	—  	 	 	 	11	 	 	 	20	 	 	 	10	 	 	 	35	 	 	 	64	 	
 	  				 				 				 				 				 				 				
Net income	  	 	50	 	 	 	35	 	 	 	18	 	 	 	83	 	 	 	138	 	 	 	186	 	 	 	384	 	
Net realized gains (losses)	  	 	13	 	 	 	(3	)	 	 	(32	)	 	 	5	 	 	 	92	 	 	 	(17	)	 	 	190	 	
Tax expense (benefit) on net realized gains (losses)	  	 	2	 	 	 	(2	)	 	 	1	 	 	 	7	 	 	 	11	 	 	 	8	 	 	 	37	 	
 	  				 				 				 				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	39	 	 	$	36	 	 	$	51	 	 	$	85	 	 	$	57	 	 	$	211	 	 	$	231	 	

Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	101.3	%	 	 	104.7	%	 	 	66.1	%	 	 	48.0	%	 	 	90.6	%	 	 	74.6	%	 	 	81.2	%	
Policy acquisition cost ratio	  	 	-0.1	%	 	 	2.3	%	 	 	7.0	%	 	 	5.9	%	 	 	3.2	%	 	 	4.3	%	 	 	5.5	%	
Administrative expense ratio	  	 	1.8	%	 	 	2.7	%	 	 	7.5	%	 	 	13.7	%	 	 	5.1	%	 	 	7.5	%	 	 	7.7	%	
 	  				 				 				 				 				 				 				
Combined ratio	  	 	103.0	%	 	 	109.7	%	 	 	80.6	%	 	 	67.6	%	 	 	98.9	%	 	 	86.4	%	 	 	94.4	%	

Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss portfolio transfers(2)	  	$	8	 	 	$	19	 	 	$	—  	 	 	$	—  	 	 	$	270	 	 	$	27	 	 	$	274	 	
Large losses (before tax)	  	$	—  	 	 	$	11	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	11	 	 	$	—  	 	
Prior period development	  	$	(8	)	 	$	(14	)	 	$	(5	)	 	$	(2	)	 	$	44	 	 	$	(29	)	 	$	43	 	
								
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	-90	%	 	 	-36	%	 	 	-87	%	 	 	-61	%	 	 	21	%	 	 	-69	%	 	 	-32	%	
Net premiums written	  	 	-91	%	 	 	-35	%	 	 	-89	%	 	 	-60	%	 	 	21	%	 	 	-70	%	 	 	-31	%	
Net premiums earned	  	 	-80	%	 	 	-46	%	 	 	-38	%	 	 	-14	%	 	 	62	%	 	 	-53	%	 	 	-2	%	
								
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	90	%	 	 	100	%	 	 	93	%	 	 	100	%	 	 	96	%	 	 	99	%	 	 	99	%	
 
(1)	See page 26 Non-GAAP Financial Measures.	
 
(2)	Total premiums typically included in gross premiums written, net premiums written, and net premiums earned in the quarter it is written; usually accrued at 100% loss ratio.	

Financial Services	  	Page 14	

					
	 	ACE Limited
 
Financial Services
 
Sale of Assured Guaranty
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	
 
Sale of Assured Guaranty Ltd.
 
On April 28, 2004, the Company completed the sale of 65.3 percent of its financial and mortgage guaranty reinsurance and insurance businesses (transferred business) through the initial public offering (IPO) of 49 million common shares of Assured Guaranty Ltd. (Assured Guaranty) at $18.00 per share. Assured Guaranty was incorporated in Bermuda in August 2003 for the sole purpose of becoming a holding company for the transferred business.
 
Pursuant to the completion of the IPO on April 28, 2004, the Company received proceeds, net of related offering costs, of approximately $835 million. Also, in the fourth quarter of 2004 the Company accrued $5.4 million in realized gains on sale related to the 338(h)(10) tax election entered into with Assured Guaranty as part of the IPO transaction. The transaction resulted in a pre-tax loss of $1.3 million, that reduces net realized gains in the consolidated income statement, and an after-tax loss of $14.6 million, which consists of the following:

Loss on sale of financial and mortgage guaranty businesses	  	$	(44.3	)	
Income tax expense	  	 	13.3	 	
 	  				
After tax reduction in book value	  	 	(57.6	)	
Realization of accumulated other comprehensive income on companies sold	  	 	43.0	 	
 	  				
After tax loss	  	$	(14.6	)	

A description of each component of the loss is as follows:
 
 	•	 	The loss on the sale of the financial and mortgage guaranty businesses of $44.3 million represents the difference between the carrying value of the Company’s interest in Assured Guaranty sold and net proceeds of the Offering of $49.7 million and $5.4 million of income relating to the tax election.	
 
 	•	 	Income tax expense of $13.3 million principally relates to $11.4 million of federal income taxes incurred from the transfer of ACE’s U.S. financial and mortgage guaranty operations to Assured Guaranty and attributed to the Assured Guaranty shares sold by the Company. The income tax expense results from a higher basis in the assets of the transferred subsidiaries for financial reporting purposes compared to the corresponding tax basis. In connection with its sale and pursuant to a tax allocation agreement, Assured Guaranty will make a tax election that will have the effect of increasing the tax basis of tangible and intangible assets to fair value. Future tax benefits that Assured Guaranty derives from this election (338(h)(10)) will be payable to ACE and recognized by ACE when realized by Assured Guaranty. In the fourth quarter the Company received $5.4 million related to this election and recorded tax expense of $1.9 million.	
 
 	•	 	The realization of accumulated other comprehensive income on companies sold of $43.0 million principally relates to the unrealized appreciation of available-for-sale securities included in the carrying value of the interest in Assured Guaranty sold; such gains had no effect on shareholders’ equity.	

Financial Services 2	  	Page 15	

					
	 	ACE Limited
 
Loss Reserve Rollforward
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	

 	  	Total
	 	 	Ongoing
	 	 	Run-off (1)
	 	
 	  	Unpaid Losses
	 	 	Unpaid Losses
	 	 	Unpaid Losses
	 	
 	  	Gross
	 	 	Ceded
	 	 	Net
	 	 	Gross
	 	 	Ceded
	 	 	Net
	 	 	Gross
	 	 	Ceded
	 	 	Net
	 	
Balance at December 31, 2002	  	$	24,315	 	 	$	12,997	 	 	$	11,318	 	 	$	15,832	 	 	$	6,798	 	 	$	9,034	 	 	$	8,483	 	 	$	6,199	 	 	$	2,284	 	
Losses and loss expenses incurred	  	 	2,390	 	 	 	1,107	 	 	 	1,283	 	 	 	2,365	 	 	 	1,104	 	 	 	1,261	 	 	 	25	 	 	 	3	 	 	 	22	 	
Losses and loss expenses paid	  	 	(2,155	)	 	 	(984	)	 	 	(1,171	)	 	 	(1,910	)	 	 	(893	)	 	 	(1,017	)	 	 	(245	)	 	 	(91	)	 	 	(154	)	
Other (incl. foreign exch. revaluation)	  	 	86	 	 	 	16	 	 	 	70	 	 	 	79	 	 	 	16	 	 	 	63	 	 	 	7	 	 	 	—  	 	 	 	7	 	
 	  				 				 				 				 				 				 				 				 				
Balance at March 31, 2003	  	 	24,636	 	 	 	13,136	 	 	 	11,500	 	 	 	16,366	 	 	 	7,025	 	 	 	9,341	 	 	 	8,270	 	 	 	6,111	 	 	 	2,159	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	2,511	 	 	 	1,052	 	 	 	1,459	 	 	 	2,463	 	 	 	1,020	 	 	 	1,443	 	 	 	48	 	 	 	32	 	 	 	16	 	
Losses and loss expenses paid	  	 	(2,415	)	 	 	(1,357	)	 	 	(1,058	)	 	 	(1,964	)	 	 	(1,134	)	 	 	(830	)	 	 	(451	)	 	 	(223	)	 	 	(228	)	
Other (incl. foreign exch. revaluation)	  	 	208	 	 	 	123	 	 	 	85	 	 	 	208	 	 	 	123	 	 	 	85	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
 	  				 				 				 				 				 				 				 				 				
Balance at June 30, 2003	  	 	24,940	 	 	 	12,954	 	 	 	11,986	 	 	 	17,073	 	 	 	7,034	 	 	 	10,039	 	 	 	7,867	 	 	 	5,920	 	 	 	1,947	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	2,552	 	 	 	1,033	 	 	 	1,519	 	 	 	2,472	 	 	 	977	 	 	 	1,495	 	 	 	80	 	 	 	56	 	 	 	24	 	
Losses and loss expenses paid	  	 	(1,833	)	 	 	(863	)	 	 	(970	)	 	 	(1,557	)	 	 	(663	)	 	 	(894	)	 	 	(276	)	 	 	(200	)	 	 	(76	)	
Other (incl. foreign exch. revaluation)	  	 	(22	)	 	 	(19	)	 	 	(3	)	 	 	(12	)	 	 	(19	)	 	 	7	 	 	 	(10	)	 	 	—  	 	 	 	(10	)	
 	  				 				 				 				 				 				 				 				 				
Balance at September 30, 2003	  	 	25,637	 	 	 	13,105	 	 	 	12,532	 	 	 	17,976	 	 	 	7,329	 	 	 	10,647	 	 	 	7,661	 	 	 	5,776	 	 	 	1,885	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	2,812	 	 	 	956	 	 	 	1,856	 	 	 	2,779	 	 	 	932	 	 	 	1,847	 	 	 	33	 	 	 	24	 	 	 	9	 	
Losses and loss expenses paid	  	 	(1,810	)	 	 	(1,104	)	 	 	(706	)	 	 	(1,433	)	 	 	(797	)	 	 	(636	)	 	 	(377	)	 	 	(307	)	 	 	(70	)	
Other (incl. foreign exch. revaluation) (2)	  	 	516	 	 	 	235	 	 	 	281	 	 	 	513	 	 	 	235	 	 	 	278	 	 	 	3	 	 	 	—  	 	 	 	3	 	
 	  				 				 				 				 				 				 				 				 				
Balance at December 31, 2003	  	 	27,155	 	 	 	13,192	 	 	 	13,963	 	 	 	19,835	 	 	 	7,699	 	 	 	12,136	 	 	 	7,320	 	 	 	5,493	 	 	 	1,827	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	2,298	 	 	 	756	 	 	 	1,542	 	 	 	2,256	 	 	 	724	 	 	 	1,532	 	 	 	42	 	 	 	32	 	 	 	10	 	
Losses and loss expenses paid	  	 	(1,873	)	 	 	(781	)	 	 	(1,092	)	 	 	(1,652	)	 	 	(545	)	 	 	(1,107	)	 	 	(221	)	 	 	(236	)	 	 	15	 	
Other (incl. foreign exch. revaluation)	  	 	117	 	 	 	110	 	 	 	7	 	 	 	117	 	 	 	110	 	 	 	7	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
 	  				 				 				 				 				 				 				 				 				
Balance at March 31, 2004	  	 	27,697	 	 	 	13,277	 	 	 	14,420	 	 	 	20,556	 	 	 	7,988	 	 	 	12,568	 	 	 	7,141	 	 	 	5,289	 	 	 	1,852	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	2,452	 	 	 	727	 	 	 	1,725	 	 	 	2,482	 	 	 	761	 	 	 	1,721	 	 	 	(30	)	 	 	(34	)	 	 	4	 	
Losses and loss expenses paid	  	 	(1,692	)	 	 	(593	)	 	 	(1,099	)	 	 	(1,401	)	 	 	(399	)	 	 	(1,002	)	 	 	(291	)	 	 	(194	)	 	 	(97	)	
Other (incl. foreign exch. revaluation) (3)	  	 	(233	)	 	 	166	 	 	 	(399	)	 	 	(233	)	 	 	166	 	 	 	(399	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	
 	  				 				 				 				 				 				 				 				 				
Balance at June 30, 2004	  	$	28,224	 	 	$	13,577	 	 	$	14,647	 	 	$	21,404	 	 	$	8,516	 	 	$	12,888	 	 	$	6,820	 	 	$	5,061	 	 	$	1,759	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	3,310	 	 	 	1,076	 	 	 	2,234	 	 	 	3,281	 	 	 	1,058	 	 	 	2,223	 	 	 	29	 	 	 	18	 	 	 	11	 	
Losses and loss expenses paid	  	 	(1,958	)	 	 	(1,079	)	 	 	(879	)	 	 	(1,750	)	 	 	(754	)	 	 	(996	)	 	 	(208	)	 	 	(325	)	 	 	117	 	
Other (incl. foreign exch. revaluation)	  	 	27	 	 	 	48	 	 	 	(21	)	 	 	(396	)	 	 	(375	)	 	 	(21	)	 	 	423	 	 	 	423	 	 	 	—  	 	
 	  				 				 				 				 				 				 				 				 				
Balance at September 30, 2004	  	$	29,603	 	 	$	13,622	 	 	$	15,981	 	 	$	22,539	 	 	$	8,445	 	 	$	14,094	 	 	$	7,064	 	 	$	5,177	 	 	$	1,887	 	
 	  				 				 				 				 				 				 				 				 				
Losses and loss expenses incurred	  	 	3,727	 	 	 	1,514	 	 	 	2,213	 	 	 	2,687	 	 	 	1,090	 	 	 	1,597	 	 	 	1,040	 	 	 	424	 	 	 	616	 	
Losses and loss expenses paid	  	 	(2,348	)	 	 	(987	)	 	 	(1,361	)	 	 	(2,239	)	 	 	(939	)	 	 	(1,300	)	 	 	(109	)	 	 	(48	)	 	 	(61	)	
Other (incl. foreign exch. revaluation)	  	 	531	 	 	 	188	 	 	 	343	 	 	 	244	 	 	 	(141	)	 	 	385	 	 	 	287	 	 	 	329	 	 	 	(42	)	
 	  				 				 				 				 				 				 				 				 				
Balance at December 31, 2004	  	$	31,513	 	 	$	14,337	 	 	$	17,176	 	 	$	23,231	 	 	$	8,455	 	 	$	14,776	 	 	$	8,282	 	 	$	5,882	 	 	$	2,400	 	

(1)	The run-off reserves primarily include Brandywine group, the Commercial Insurance Service - Middle Market Worker’s Comp. reserves and the pre-1997 Westchester Specialty reserves.	
 
(2)	Other includes approximately $220 million of gross losses and $140 million of reinsurance recoverable related to ACE increasing its participation in the Lloyds syndicate to 100%.	
 
(3)	Other includes reductions in reserves related to the sale of Assured Guaranty Ltd.	

Loss Reserve Rollforward	  	Page 16	

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

 	  	Asbestos
	 	 	Asbestos-
December 31, 2004*
	
 	  	Gross
	 	 	Ceded
	 	 	Net
	 	 	Gross 3
year
survival
ratio
	  	Gross 1
year
survival
ratio
	
Balance at December 31, 2003 (1)	  	$	3,067	 	 	$	2,769	 	 	$	298	 	 	13.0	  	12.0	
Prior period development	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(96	)	 	 	(101	)	 	 	5	 	 	 	  	 	
Foreign exchange revaluation	  	 	21	 	 	 	11	 	 	 	10	 	 	 	  	 	

Balance at March 31, 2004	  	$	2,992	 	 	$	2,679	 	 	$	313	 	 	 	  	 	
 	  				 				 				 	 	  	 	
Prior period development	  	 	6	 	 	 	4	 	 	 	2	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(138	)	 	 	(120	)	 	 	(18	)	 	 	  	 	
Foreign exchange revaluation	  	 	(7	)	 	 	2	 	 	 	(9	)	 	 	  	 	

Balance at June 30, 2004	  	$	2,853	 	 	$	2,565	 	 	$	288	 	 	 	  	 	
 	  				 				 				 	 	  	 	
Prior period development	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(66	)	 	 	(52	)	 	 	(14	)	 	 	  	 	
Foreign exchange revaluation and other	  	 	(16	)	 	 	(16	)	 	 	—  	 	 	 	  	 	

Balance at September 30, 2004	  	$	2,771	 	 	$	2,497	 	 	$	274	 	 	 	  	 	
 	  				 				 				 	 	  	 	
Prior period development	  	 	1,061	 	 	 	635	 	 	 	426	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(26	)	 	 	(35	)	 	 	9	 	 	 	  	 	
Foreign exchange revaluation and other	  	 	105	 	 	 	91	 	 	 	14	 	 	 	  	 	

Balance at December 31, 2004	  	$	3,911	 	 	$	3,188	 	 	$	723	 	 	 	  	 	

 	  	Environmental & Other Latent Exposures
	 	 	 	  	 	
 	  	Gross
	 	 	Ceded
	 	 	Net

Balance at December 31, 2003	  	$	1,205	 	 	$	978	 	 	$	227	 	 	 	  	 	
Prior period development	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(47	)	 	 	(48	)	 	 	1	 	 	 	  	 	
Foreign exchange revaluation	  	 	3	 	 	 	1	 	 	 	2	 	 	 	  	 	

Balance at March 31, 2004	  	$	1,161	 	 	$	931	 	 	$	230	 	 	 	  	 	
 	  				 				 				 	 	  	 	
Prior period development	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(56	)	 	 	(52	)	 	 	(4	)	 	 	  	 	
Foreign exchange revaluation	  	 	(3	)	 	 	(1	)	 	 	(2	)	 	 	  	 	

Balance at June 30, 2004	  	$	1,102	 	 	$	878	 	 	$	224	 	 	 	  	 	
 	  				 				 				 	 	  	 	
Prior period development	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(38	)	 	 	(39	)	 	 	1	 	 	 	  	 	
Foreign exchange revaluation	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	

Balance at September 30, 2004	  	$	1,064	 	 	$	839	 	 	$	225	 	 	 	  	 	
 	  				 				 				 	 	  	 	
Prior period development	  	 	38	 	 	 	9	 	 	 	29	 	 	 	  	 	
Losses and loss expenses paid (2)	  	 	(47	)	 	 	(48	)	 	 	1	 	 	 	  	 	
Foreign exchange revaluation	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	  	 	

Balance at December 31, 2004	  	$	1,055	 	 	$	800	 	 	$	255	 	 	 	  	 	

(1)	Reclassification of asbestos claims from other lines of business for comparative purposes.	
 
(2)	Reclassification of losses paid in quarter 1, 2 and 3 for cash received from NICO.	
 
*	The survival ratios are adversely affected by the timing of certain previously agreed upon settlements. These payments were anticipated in our 2004 asbestos study.	

Loss Reserves - A&E	  	Page 17	

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

 	  	December 31
2004
	 	 	September 30
2004
	 	 	June 30
2004
	 	 	March 31
2004
	 	 	December 31
2003
	 	
Reinsurance recoverable on paid losses & loss expenses	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Active operations	  	$	789	 	 	$	884	 	 	$	932	 	 	$	898	 	 	$	835	 	
Brandywine	  	 	398	 	 	 	502	 	 	 	478	 	 	 	405	 	 	 	419	 	
Westchester	  	 	24	 	 	 	23	 	 	 	28	 	 	 	26	 	 	 	23	 	
 	  				 				 				 				 				
Total	  	$	1,211	 	 	$	1,409	 	 	$	1,438	 	 	$	1,329	 	 	$	1,277	 	

Reinsurance recoverable on unpaid losses & loss expenses	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Active operations(1)	  	$	9,465	 	 	$	9,049	 	 	$	9,397	 	 	$	8,954	 	 	$	8,494	 	
Brandywine	  	 	4,789	 	 	 	4,357	 	 	 	4,013	 	 	 	4,203	 	 	 	4,729	 	
Westchester	  	 	717	 	 	 	482	 	 	 	525	 	 	 	539	 	 	 	541	 	
 	  				 				 				 				 				
Total	  	$	14,971	 	 	$	13,888	 	 	$	13,935	 	 	$	13,696	 	 	$	13,764	 	

Gross reinsurance recoverable	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Active operations	  	$	10,254	 	 	$	9,933	 	 	$	10,329	 	 	$	9,852	 	 	$	9,329	 	
Brandywine(1)	  	 	5,187	 	 	 	4,859	 	 	 	4,491	 	 	 	4,608	 	 	 	5,148	 	
Westchester	  	 	741	 	 	 	505	 	 	 	553	 	 	 	565	 	 	 	564	 	
 	  				 				 				 				 				
Total	  	$	16,182	 	 	$	15,297	 	 	$	15,373	 	 	$	15,025	 	 	$	15,041	 	

Bad debt reserve	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Active operations	  	$	(547	)	 	$	(625	)	 	$	(634	)	 	$	(590	)	 	$	(562	)(2)	
Brandywine	  	 	(341	)	 	 	(379	)	 	 	(336	)	 	 	(344	)	 	 	(369	)(2)	
Westchester	  	 	(40	)	 	 	(25	)	 	 	(29	)	 	 	(29	)	 	 	(29	)	
 	  				 				 				 				 				
Total	  	$	(928	)	 	$	(1,029	)	 	$	(999	)	 	$	(963	)	 	$	(960	)	

Net reinsurance recoverable	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Active operations	  	$	9,707	 	 	$	9,308	 	 	$	9,695	 	 	$	9,262	 	 	$	8,767	 	
Brandywine	  	 	4,846	 	 	 	4,480	 	 	 	4,155	 	 	 	4,264	 	 	 	4,779	 	
Westchester	  	 	701	 	 	 	480	 	 	 	524	 	 	 	536	 	 	 	535	 	
 	  				 				 				 				 				
Total	  	$	15,254	 	 	$	14,268	 	 	$	14,374	 	 	$	14,062	 	 	$	14,081	 	

(1)	Reclassification of cash received from NICO from Active operations recoverable on paid losses to Brandywine recoverable on unpaid losses in 1st, 2nd and 3rd quarters.	
 
(2)	Reclassification of prior year bad debt provision from Brandywine to Active operations for comparative purposes.	

			
Reinsurance Recoverable	  	Page 18	

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

 	  	September 30, 2004
	 	
 	  	Recoverable
	  	Bad Debt
	  	% of Gross
	 	
Categories	  	 	 	  	 	 	  	 	 	
Top 10 reinsurers	  	$	4,762	  	$	90	  	1.9	%	
Other reinsurers balances >$20 million	  	 	2,312	  	 	70	  	3.0	%	
Other reinsurers balances <$20 million	  	 	830	  	 	92	  	11.1	%	
Mandatory pools and government agencies	  	 	661	  	 	3	  	0.5	%	
Captives	  	 	931	  	 	1	  	0.1	%	
Other(1)	  	 	437	  	 	369	  	84.4	%	
 	  			  			  			
Total	  	$	9,933	  	$	625	  	6.3	%	

At September 30, 2004, $7.2 billion of the active operations’ recoverables were from rated reinsurers, of which 83.7% were rated the equivalent of A- or better by internationally recognized rating agencies. The Company held collateral of $2.6 billion, of which $1.6 billion was matched and usable against existing recoverables.

Top 10 Reinsurers (net of collateral) (2)
	  	Other Reinsurers Balances Greater Than $20 million (net of collateral) (2)
	
American International Group	  	AGRI General Ins Co	  	Hartford Insurance Group	
Berkshire Hathaway Insurance Group	  	AIOI Insurance	  	Independence Blue Cross (Amerihealth)	
CIGNA	  	Allied World Assurance	  	Liberty Mutual Insurance Companies	
Electric Insurance Company	  	Arch Capital	  	Overseas Partners Ltd	
GE Insurance Solutions	  	Aspen Insurance Holdings Ltd	  	Partner Re	
HDI Haftpflichtverband Der Deutschen Industrie VAG	  	AXA	  	Platinum Underwriters	
Lloyd’s of London	  	Chubb Insurance Group	  	Renaissance Re Holdings Ltd	
Munich Re	  	CNA Insurance Companies	  	Royal & Sun Alliance Insurance Group	
Swiss Re Group	  	DaimlerChrysler Insurance Company	  	SCOR Group	
XL Capital Group	  	Endurance Specialty	  	Sompo Japan	
 	  	Equitas	  	St. Paul Travelers Companies	
 	  	Everest Re Group	  	Toa Reinsurance Company	
 	  	Fairfax Financial	  	White Mountains Insurance Group	
 	  	Federal Crop Insurance Corp	  	WR Berkley Corp	
 	  	FM Global Group	  	Zurich Financial Services Group	
 	  	Gerling Group	  	 	
 
(1)	Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our estimate of bad debt reserve associated with Other considers the credit quality of the reinsurer, and whether we have received collateral or other credit protections such as parental guarantees.	
 
(2)	Excludes recoverable amounts from companies who are in supervision, rehabilitation or liquidation, or are captive reinsurers, mandatory pools or voluntary pools.	

Rein Rec-Active	  	Page 19	

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

 	  	September 30, 2004
	 	
 	  	Recoverable
	  	Bad Debt
	  	% of Gross
	 	
Categories	  	 	 	  	 	 	  	 	 	
Top 10 reinsurers	  	$	7,871	  	$	106	  	1.3	%	
Other reinsurers balances > $20 million	  	 	3,158	  	 	142	  	4.5	%	
Other reinsurers balances < $20 million	  	 	1,246	  	 	113	  	9.1	%	
Mandatory pools and government agencies	  	 	689	  	 	3	  	0.4	%	
Structured settlements	  	 	424	  	 	2	  	0.5	%	
Captives	  	 	945	  	 	1	  	0.1	%	
Other	  	 	964	  	 	662	  	68.7	%	
 	  			  			  			
Total	  	$	15,297	  	$	1,029	  	6.7	%	

At September 30, 2004, $11.0 billion of consolidated recoverables were from rated reinsurers, of which 87.7% were rated the equivalent of A- or better by internationally recognized rating agencies.

Top 10 Reinsurers (net of collateral) (2)
	  	Other Reinsurers Balances Greater Than $20 million (net of collateral) (2)
	
American International Group	  	AGRI General Ins Co	  	Gerling Group	
Berkshire Hathaway Insurance Group	  	AIOI Insurance	  	Hartford Insurance Group	
CIGNA	  	Allianz Group	  	Independence Blue Cross (Amerihealth)	
Equitas	  	Allied World Assurance	  	IRB - Brasil Resseguros S.A.	
GE Insurance Solutions	  	Arch Capital	  	Liberty Mutual Insurance Companies	
HDI Haftpflichtverband Der
Deutschen Industrie VAG	  	Aspen Insurance Holdings Ltd	  	Millea Holdings	
Lloyd’s of London	  	AVIVA	  	Overseas Partners Ltd	
Munich Re	  	AXA	  	Partner Re	
Swiss Re Group	  	Chubb Insurance Group	  	Platinum Underwriters	
XL Capital Group	  	CNA Insurance Companies	  	Renaissance Re Holdings Ltd	
 	  	Constellation Rein Co	  	Royal & Sun Alliance Insurance Group	
 	  	Converium Group	  	SCOR Group	
 	  	DaimlerChrysler Insurance Company	  	Sompo Japan	
 	  	Dominion Ins. Co. Ltd	  	St. Paul Travelers Companies	
 	  	Electric Insurance Company	  	Toa Reinsurance Company	
 	  	Endurance Specialty	  	Trenwick Group	
 	  	Everest Re Group	  	White Mountains Insurance Group	
 	  	Fairfax Financial	  	WR Berkley Corp	
 	  	Federal Crop Insurance Corp	  	Zurich Financial Services Group	
 	  	FM Global Group	  	 	
 
(1)	Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our estimate of bad debt reserve associated with Other considers the credit quality of the reinsurer, and whether we have received collateral or other credit protections such as parental guarantees.	
 
(2)	Excludes recoverable amounts from companies who are in supervision, rehabilitation or liquidation, or are captive reinsurers, mandatory pools or voluntary pools.	

Rein Rec-Consolidated	  	Page 20	

					
	 	ACE Limited
 
Reinsurance Recoverable Analysis - 4
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	
 
Detail on Reinsurance Recoverable on Paid Losses and Loss Expenses

 	  	General
Collections (1)
	 	 	Other (2)
	 	 	Total
	 	
Gross balance at December 31, 2003	  	$	730	 	 	$	547	 	 	$	1,277	 	
Bad debt reserve at 12/31/03	  	 	45	 	 	 	358	 	 	 	403	 	
% of gross	  	 	6.2	%	 	 	65.4	%	 	 	31.6	%	
 	  				 				 				
Net balance at December 31, 2003	  	$	685	 	 	$	189	 	 	$	874	 	

Gross balance at March 31, 2004	  	$	713	 	 	$	616	 	 	$	1,329	 	
Bad debt reserve at 3/31/04	  	 	44	 	 	 	378	 	 	 	422	 	
% of gross	  	 	6.2	%	 	 	61.4	%	 	 	31.8	%	
 	  				 				 				
Net balance at March 31, 2004	  	$	669	 	 	$	238	 	 	$	907	 	

Gross balance at June 30, 2004	  	$	728	 	 	$	710	 	 	$	1,438	 	
Bad debt reserve at 6/30/04	  	 	36	 	 	 	405	 	 	 	441	 	
% of gross	  	 	4.9	%	 	 	57.0	%	 	 	30.7	%	
 	  				 				 				
Net balance at June 30, 2004	  	$	692	 	 	$	305	 	 	$	997	 	

Gross balance at September 30, 2004	  	$	732	 	 	$	677	 	 	$	1,409	 	
Bad debt reserve at 9/30/04	  	 	46	 	 	 	382	 	 	 	428	 	
% of gross	  	 	6.3	%	 	 	56.4	%	 	 	30.4	%	
 	  				 				 				
Net balance at September 30, 2004	  	$	686	 	 	$	295	 	 	$	981	 	

Gross balance at December 31, 2004	  	$	567	 	 	$	644	 	 	$	1,211	 	
Bad debt reserve at 12/31/04	  	 	30	 	 	 	279	 	 	 	309	 	
% of gross	  	 	5.3	%	 	 	43.3	%	 	 	25.5	%	
 	  				 				 				
Net balance at December 31, 2004	  	$	537	 	 	$	365	 	 	$	902	 	

(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 as parental guarantees.	
 
Note:	Quarter 1, 2 and 3 balances have been restated for NICO cash received now classified as recoverable on unpaid losses.	

Reinsurance Recoverable 4	  	Page 21	

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

 	  	December 31
2004
	  	September 30
2004
	  	June 30
2004
	  	March 31
2004
	  	December 31
2003
	
Market Value	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Fixed maturities	  	$	21,739	  	$	20,791	  	$	18,348	  	$	19,920	  	$	18,645	
Securities on loan	  	 	1,038	  	 	1,044	  	 	1,515	  	 	1,183	  	 	684	
Short-term investments	  	 	3,199	  	 	3,360	  	 	4,040	  	 	3,290	  	 	2,928	
Cash	  	 	534	  	 	626	  	 	663	  	 	614	  	 	562	
 	  			  			  			  			  			
Total	  	$	26,510	  	$	25,821	  	$	24,566	  	$	25,007	  	$	22,819	

Asset Allocation by Market Value	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Treasury	  	$	1,536	  	$	1,491	  	$	1,773	  	$	1,491	  	$	1,715	
Agency	  	 	1,527	  	 	1,506	  	 	1,217	  	 	1,723	  	 	1,512	
Corporate	  	 	7,566	  	 	7,418	  	 	6,809	  	 	7,201	  	 	6,304	
Mortgage-backed securities	  	 	5,010	  	 	4,940	  	 	4,405	  	 	4,536	  	 	3,894	
Asset-backed securities	  	 	1,217	  	 	958	  	 	832	  	 	800	  	 	737	
Municipal	  	 	566	  	 	591	  	 	623	  	 	1,498	  	 	1,445	
Non-US	  	 	5,376	  	 	4,955	  	 	4,203	  	 	3,854	  	 	3,723	
Cash & cash equivalent	  	 	3,712	  	 	3,962	  	 	4,704	  	 	3,904	  	 	3,489	
 	  			  			  			  			  			
Total	  	 	26,510	  	$	25,821	  	$	24,566	  	$	25,007	  	$	22,819	

Credit Quality by Market Value	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
AAA	  	$	13,800	  	$	13,250	  	$	12,780	  	$	13,211	  	$	12,315	
AA	  	 	4,247	  	 	4,146	  	 	4,159	  	 	4,200	  	 	3,389	
A	  	 	4,336	  	 	4,378	  	 	3,901	  	 	3,847	  	 	3,534	
BBB	  	 	2,269	  	 	2,248	  	 	2,048	  	 	2,002	  	 	1,783	
BB	  	 	774	  	 	752	  	 	664	  	 	653	  	 	709	
B	  	 	1,041	  	 	994	  	 	973	  	 	1,045	  	 	1,029	
Other	  	 	43	  	 	53	  	 	41	  	 	49	  	 	60	
 	  			  			  			  			  			
Total	  	 	26,510	  	$	25,821	  	$	24,566	  	$	25,007	  	$	22,819	

Cost/Amortized Cost	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Fixed maturities	  	$	21,296	  	$	20,325	  	$	18,226	  	$	19,129	  	$	18,006	
Securities on loan	  	 	997	  	 	1,000	  	 	1,488	  	 	1,113	  	 	650	
Short term investments	  	 	3,199	  	 	3,360	  	 	4,040	  	 	3,290	  	 	2,928	
Cash	  	 	534	  	 	626	  	 	663	  	 	614	  	 	562	
 	  			  			  			  			  			
Subtotal	  	 	26,026	  	 	25,311	  	 	24,417	  	 	24,146	  	 	22,146	
Equity securities	  	 	1,039	  	 	849	  	 	846	  	 	414	  	 	401	
Other investments	  	 	1,205	  	 	1,159	  	 	1,143	  	 	595	  	 	602	
 	  			  			  			  			  			
Total	  	 	28,270	  	$	27,319	  	$	26,406	  	$	25,155	  	$	23,149	

Avg. duration of fixed maturities, adj. for int. rate swaps	  	 	3.4 years	  	 	3.4 years	  	 	3.6 years	  	 	3.4 years	  	 	3.4 years	
Avg. market yield of fixed maturities	  	 	4.1%	  	 	4.0%	  	 	4.6%	  	 	3.6%	  	 	4.0%	
Avg. credit quality	  	 	AA	  	 	AA	  	 	AA	  	 	AA	  	 	AA	

Investments	  	Page 22	

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

Top 10 Exposures - Fixed Maturity Investments excluding Assured Guaranty
	  	Including Assured Guaranty (Single Name
Credit Default Swaps)
	
December 31, 2004
	  	September 30, 2004
	  	June 30, 2004
	  	(Restated)
March 31, 2004
	
General Electric Co	  	$	254	  	Citigroup Inc	  	$	225	  	HSBC Holdings Plc	  	$	187	  	HSBC Holdings Plc	  	$	200	
Citigroup Inc	  	 	234	  	HSBC Holdings Plc	  	 	219	  	Citigroup Inc	  	 	174	  	General Electric	  	 	195	
HSBC Holdings Plc	  	 	211	  	General Electric	  	 	219	  	General Electric	  	 	167	  	Citigroup Inc	  	 	166	
JP Morgan Chase & Co	  	 	147	  	JP Morgan Chase & Co.	  	 	148	  	General Motors	  	 	130	  	Goldman Sachs Group Inc	  	 	123	
General Motors Corp	  	 	135	  	General Motors	  	 	131	  	Goldman Sachs Group Inc	  	 	124	  	Morgan Stanley	  	 	117	
Bank of America Corp	  	 	131	  	Goldman Sachs Group Inc	  	 	130	  	Bank of America Corp	  	 	121	  	General Motors	  	 	114	
Wells Fargo & Co	  	 	128	  	Morgan Stanley	  	 	124	  	Morgan Stanley	  	 	114	  	Bank of America Corp	  	 	106	
Morgan Stanley	  	 	123	  	Bank of America Corp	  	 	121	  	JP Morgan Chase & Co.	  	 	102	  	Ford Motor Co	  	 	89	
Verizon Communications Inc	  	 	109	  	Wells Fargo & Co.	  	 	108	  	Ford Motor Co	  	 	100	  	Verizon Communications	  	 	83	
American International Group	  	 	105	  	Ford Motor Co	  	 	104	  	Verizon Communications	  	 	91	  	Vodafone Group PLC	  	 	82	

Investments 2	  	Page 23	

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

 	  	Three months ended December 31, 2004
	 	 	Year ended December 31, 2004
	 	
 	  	Net Realized
Gains
(Losses) (1)
	 	 	Net Unrealized
Gains
(Losses)
	 	 	Net
Impact
	 	 	Net Realized
Gains
(Losses) (1)
	 	 	Net Unrealized
Gains
(Losses)
	 	 	Net
Impact
	 	
Investment Portfolio Gains (Losses)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fixed maturities	  	$	45	 	 	$	(26	)	 	$	19	 	 	$	112	 	 	$	(195	)	 	$	(83	)	
Interest rate swaps	  	 	(1	)	 	 	—  	 	 	 	(1	)	 	 	8	 	 	 	—  	 	 	 	8	 	
Equity securities	  	 	9	 	 	 	80	 	 	 	89	 	 	 	84	 	 	 	54	 	 	 	138	 	
Equity and fixed income derivatives	  	 	11	 	 	 	—  	 	 	 	11	 	 	 	25	 	 	 	—  	 	 	 	25	 	
Foreign exchange gains (losses)	  	 	3	 	 	 	—  	 	 	 	3	 	 	 	1	 	 	 	—  	 	 	 	1	 	
Other	  	 	—  	 	 	 	26	 	 	 	26	 	 	 	(21	)	 	 	52	 	 	 	31	 	
 	  				 				 				 				 				 				
Total inv. portfolio gains (losses)	  	 	67	 	 	 	80	 	 	 	147	 	 	 	209	 	 	 	(89	)	 	 	120	 	
Other FAS 133 adjustments	  	 	61	 	 	 	—  	 	 	 	61	 	 	 	(14	)	 	 	—  	 	 	 	(14	)	
 	  				 				 				 				 				 				
Total gains (losses)	  	 	128	 	 	 	80	 	 	 	208	 	 	 	195	 	 	 	(89	)	 	 	106	 	
Income tax expense (benefit)	  	 	12	 	 	 	7	 	 	 	19	 	 	 	44	 	 	 	(39	)	 	 	5	 	
 	  				 				 				 				 				 				
Net gains (losses)	  	$	116	 	 	$	73	 	 	$	189	 	 	$	151	 	 	$	(50	)	 	$	101	 	

(1)	The quarter includes impairments of $3M for fixed maturities, $4M for equities and $2M for other investments. Year to date includes impairments for $18M for fixed maturities, $9M for equities and $12M for other investments.	

 	  	Three months ended December 31, 2003
	 	 	Year ended December 31, 2003
	 	
 	  	Net Realized
Gains
(Losses) (2)
	 	 	Net Unrealized
Gains
(Losses)
	 	 	Net
Impact
	 	 	Net Realized
Gains
(Losses) (2)
	 	 	Net Unrealized
Gains
(Losses)
	  	Net
Impact
	 	
Investment Portfolio Gains (Losses)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Fixed maturities	  	$	23	 	 	$	(68	)	 	$	(45	)	 	$	100	 	 	$	22	  	$	122	 	
Interest rate swaps	  	 	3	 	 	 	—  	 	 	 	3	 	 	 	(6	)	 	 	—  	  	 	(6	)	
Equity securities	  	 	12	 	 	 	49	 	 	 	61	 	 	 	(41	)	 	 	189	  	 	148	 	
Equity and fixed income derivatives	  	 	12	 	 	 	—  	 	 	 	12	 	 	 	40	 	 	 	—  	  	 	40	 	
Foreign exchange gains (losses)	  	 	3	 	 	 	—  	 	 	 	3	 	 	 	21	 	 	 	—  	  	 	21	 	
Other	  	 	(12	)	 	 	3	 	 	 	(9	)	 	 	(25	)	 	 	12	  	 	(13	)	
 	  				 				 				 				 			  				
Total inv. portfolio gains (losses)	  	 	41	 	 	 	(16	)	 	 	25	 	 	 	89	 	 	 	223	  	 	312	 	
Other FAS 133 adjustments	  	 	87	 	 	 	—  	 	 	 	87	 	 	 	163	 	 	 	—  	  	 	163	 	
 	  				 				 				 				 			  				
Total gains (losses)	  	 	128	 	 	 	(16	)	 	 	112	 	 	 	252	 	 	 	223	  	 	475	 	
Income tax expense (benefit)	  	 	12	 	 	 	(13	)	 	 	(1	)	 	 	32	 	 	 	15	  	 	47	 	
 	  				 				 				 				 			  				
Net gains (losses)	  	$	116	 	 	$	(3	)	 	$	113	 	 	$	220	 	 	$	208	  	$	428	 	

(2)	The quarter includes impairments of $4M for fixed maturities and $2M for equities and $9M for other. Year to date includes impairments of $29M for fixed maturities and $63M for equities and $29M for other.	

Investment Gains (Losses)	  	Page 24	

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

 	  	December 31
2004
	 	 	September 30
2004
	 	 	June 30
2004
	 	 	March 31
2004
	 	 	December 31
2003
	 	 	December 31
2002
	 	
Total short-term debt	  	$	146	 	 	$	146	 	 	$	546	 	 	$	546	 	 	$	546	 	 	$	146	 	
Total long-term debt	  	$	1,849	 	 	$	1,849	 	 	 	1,849	 	 	 	1,349	 	 	 	1,349	 	 	 	1,749	 	
 	  				 				 				 				 				 				
Total debt	  	 	1,995	 	 	 	1,995	 	 	 	2,395	 	 	 	1,895	 	 	 	1,895	 	 	 	1,895	 	
Total trust preferreds	  	 	412	 	 	 	412	 	 	 	487	 	 	 	487	 	 	 	475	 	 	 	475	 	
Mezzanine equity (1)	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	311	 	
Perpetual preferred (2)	  	 	557	 	 	 	557	 	 	 	557	 	 	 	557	 	 	 	557	 	 	 	—  	 	
Ordinary shareholders’ equity	  	 	9,279	 	 	 	8,922	 	 	 	8,663	 	 	 	8,840	 	 	 	8,278	 	 	 	6,389	 	
 	  				 				 				 				 				 				
Total shareholders’ equity	  	$	9,836	 	 	$	9,479	 	 	$	9,220	 	 	$	9,397	 	 	$	8,835	 	 	$	6,389	 	
 	  				 				 				 				 				 				
Total capitalization	  	$	12,243	 	 	$	11,886	 	 	$	12,102	 	 	$	11,779	 	 	$	11,205	 	 	$	9,070	 	
Tangible shareholders’ equity (3)	  	$	7,224	 	 	$	6,867	 	 	$	6,606	 	 	$	6,698	 	 	$	6,124	 	 	$	3,672	 	
							
Leverage ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Debt/ total capitalization	  	 	16.3	%	 	 	16.8	%	 	 	19.8	%	 	 	16.1	%	 	 	16.9	%	 	 	20.9	%	
Debt plus trust preferreds/ total capitalization	  	 	19.7	%	 	 	20.3	%	 	 	23.8	%	 	 	20.2	%	 	 	21.2	%	 	 	26.1	%	
Debt/ tangible equity	  	 	27.6	%	 	 	29.1	%	 	 	36.3	%	 	 	28.3	%	 	 	30.9	%	 	 	51.6	%	
Debt plus trust preferreds and mezzanine equity/ tangible equity	  	 	33.3	%	 	 	35.1	%	 	 	43.6	%	 	 	35.6	%	 	 	38.7	%	 	 	73.0	%	
Debt plus total preferred stock/ total capitalization	  	 	24.2	%	 	 	24.9	%	 	 	28.4	%	 	 	25.0	%	 	 	26.1	%	 	 	26.1	%	
 
(1)	The FELINE PRIDES converted in the second quarter of 2003.	
 
(2)	Preferred shares $575 million, net of issuance costs $18 million.	
 
(3)	Tangible equity is equal to shareholders’ equity less goodwill.	

Capital Structure	  	Page 25	

					
	 	ACE Limited
 
Non-GAAP Financial Measures
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	
 
Regulation G - Non-GAAP Financial Measures
 
In presenting our results, we have included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations; however, they should not be viewed as a substitute for measures determined in accordance with GAAP. A reconciliation of book value per share to diluted book value per ordinary share is provided on page 27.
 
In presenting our segment operating results we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting losses and loss expenses, life and annuity benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense and net realized gains (losses).
 
The following non-GAAP measure is a common performance measurement and is defined as income (loss) excluding net realized gains (losses) on investments and the tax benefit (expense) on net realized gains (losses) on investments. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) on investments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. We believe these amounts are largely independent of our business and including them would distort the analysis of trends. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

 	  	4Q-04
	  	3Q-04
	 	 	2Q-04
	  	1Q-04
	  	4Q-03
	  	Full Year
2004
	  	Full Year
2003
	
Net income (loss), as reported	  	$	282	  	$	(3	)	 	$	413	  	$	447	  	$	444	  	$	1,139	  	$	1,417	
Net realized gains (losses)	  	 	128	  	 	(33	)	 	 	43	  	 	57	  	 	128	  	 	195	  	 	252	
Tax expense on net realized gains (losses)	  	 	12	  	 	1	 	 	 	10	  	 	21	  	 	12	  	 	44	  	 	32	
 	  			  				 			  			  			  			  			
Income excluding net realized gains (losses)	  	$	166	  	$	31	 	 	$	380	  	$	411	  	$	328	  	$	988	  	$	1,197	

			
Reconciliation Non-GAAP	  	Page 26	

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

 	  	December 31
2004
	 	 	September 30
2004
	 	 	June 30
2004
	 	 	March 31
2004
	 	 	December 31
2003
	 	
Shareholders’ equity	  	$	9,836	 	 	$	9,479	 	 	$	9,220	 	 	$	9,397	 	 	$	8,835	 	
Net proceeds from assumed conversions of options	  	 	312	 	 	 	315	 	 	 	331	 	 	 	622	 	 	 	390	 	
Proceeds from issuance of preferred shares	  	 	(557	)	 	 	(557	)	 	 	(557	)	 	 	(557	)	 	 	(557	)	
 	  				 				 				 				 				
Numerator for diluted book value per share calculation	  	 	9,591	 	 	 	9,237	 	 	 	8,994	 	 	 	9,462	 	 	 	8,668	 	
Less: goodwill	  	 	2,612	 	 	 	2,612	 	 	 	2,614	 	 	 	2,699	 	 	 	2,711	 	
 	  				 				 				 				 				
Numerator for diluted tangible book value per share	  	$	6,979	 	 	$	6,625	 	 	$	6,380	 	 	$	6,763	 	 	$	5,957	 	
 	  				 				 				 				 				
Ordinary shares outstanding - end of period	  	 	284,478,525	 	 	 	284,112,866	 	 	 	283,604,445	 	 	 	282,714,909	 	 	 	279,897,193	 	
Shares issued from assumed conversions of options	  	 	10,830,932	 	 	 	11,061,417	 	 	 	11,670,422	 	 	 	18,951,480	 	 	 	14,305,419	 	
 	  				 				 				 				 				
Denominator for diluted and diluted tangible book value	  	 	295,309,457	 	 	 	295,174,283	 	 	 	295,274,867	 	 	 	301,666,389	 	 	 	294,202,612	 	
 	  				 				 				 				 				
Book value per ordinary share	  	$	32.62	 	 	$	31.40	 	 	$	30.55	 	 	$	31.27	 	 	$	29.57	 	
Diluted book value per ordinary share	  	$	32.48	 	 	$	31.29	 	 	$	30.46	 	 	$	31.36	 	 	$	29.46	 	
Diluted tangible book value per ordinary share	  	$	23.63	 	 	$	22.44	 	 	$	21.61	 	 	$	22.41	 	 	$	20.25	 	

Reconciliation Book Value	  	Page 27	

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

 	  	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	4Q-03
	 	 	Full Year
2004
	 	 	Full Year
2003
	 	
Consolidated Statement of Comprehensive Income	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	282	 	 	$	(3	)	 	$	413	 	 	$	447	 	 	$	444	 	 	$	1,139	 	 	$	1,417	 	
Net unrealized appreciation (depreciation) on investments	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized appreciation (depreciation) on investments	  	 	176	 	 	 	393	 	 	 	(622	)	 	 	236	 	 	 	3	 	 	 	183	 	 	 	304	 	
Reclassification adjustment for net realized gains (losses) included in net income	  	 	(96	)	 	 	(32	)	 	 	(83	)	 	 	(61	)	 	 	(19	)	 	 	(272	)	 	 	(81	)	
Cumulative translation adjustment	  	 	128	 	 	 	21	 	 	 	(24	)	 	 	2	 	 	 	62	 	 	 	127	 	 	 	144	 	
Minimum pension liability adjustment	  	 	(45	)	 	 	3	 	 	 	1	 	 	 	(2	)	 	 	8	 	 	 	(43	)	 	 	(54	)	
Income tax (expense) benefit related to other comprehensive income items	  	 	(35	)	 	 	(83	)	 	 	180	 	 	 	(41	)	 	 	(2	)	 	 	21	 	 	 	(33	)	
 	  				 				 				 				 				 				 				
Other comprehensive income (loss)	  	 	128	 	 	 	302	 	 	 	(548	)	 	 	134	 	 	 	52	 	 	 	16	 	 	 	280	 	
 	  				 				 				 				 				 				 				
Comprehensive income (loss)	  	$	410	 	 	$	299	 	 	$	(135	)	 	$	581	 	 	$	496	 	 	$	1,155	 	 	$	1,697	 	

			
Comprehensive Income	  	Page 28	

					
	 	ACE Limited
 
Glossary	 	 	
 
Annualized return on ordinary shareholders’ equity (ROE): Income (loss) excluding net realized gains (losses) less perpetual preferred securities and mezzanine equity dividends divided by average ordinary shareholders' equity for the period. To annualize a quarterly rate multiply by four.
 
Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio for the property and casualty and financial services operations. Calculated on a GAAP basis.
 
Diluted book value per ordinary share: Ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued.
 
Diluted tangible book value per ordinary share: Ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options less goodwill divided by the sum of shares outstanding and the number of options assumed issued.
 
Effective tax rate: Income tax expense divided by the sum of income tax expense and income (loss) excluding net realized gains (losses).
 
FAS 115: Unrealized gains (losses) on investments and the deferred tax component included in shareholders’ equity.
 
Life underwriting income: Net premium earned and net investment income less future policy benefits, acquisition costs and administrative expenses.
 
NM: Not meaningful.
 
Ordinary shareholders’ equity: Shareholders’ equity less perpetual preferred shares.
 
P & C: Property and casualty.
 
Property and casualty combined ratios: Loss and loss expense ratios, policy acquisition cost ratios and administrative expense ratios excluding life reinsurance business and financial services segment. Calculated on a GAAP basis.
 
Return on ordinary shareholders’ equity (ROE): Income (loss) excluding net realized gains (losses) less perpetual preferred securities and mezzanine equity dividends divided by average ordinary shareholders’ equity.
 
Tangible equity: Shareholders’ equity less goodwill.
 
Total capitalization: Short-term debt, long-term debt, trust preferreds, mezzanine equity, perpetual preferred shares and shareholders’ equity.
 
YTD: Year to date.

Glossary	  	Page 29