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) – April 26, 2005

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

 
					
Cayman Islands	 	1-11778	 	98-0091805	
(State or other jurisdiction
of Incorporation)	 	(Commission File Number)	 	(I.R.S. Employer
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))	

Item 2.02. Results of Operations and Financial Condition
 
On April 26, 2005, ACE Limited issued a press release reporting its first quarter 2005 results and the availability of its first 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 April 26, 2005, reporting first quarter results	
		
99.2	 	First Quarter 2005 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: April 26, 2005

EXHIBIT INDEX

Number
	  	Description
	  	Method of Filing
	
99.1	  	Press release, dated April 26, 2005, reporting first quarter results	  	Furnished herewith	
			
99.2	  	First Quarter 2005 Financial Supplement	  	Furnished herewith	
 
Exhibit 99.1

 
FOR IMMEDIATE RELEASE

 	 	Investor Contact:	  	Helen M. Wilson	
 	 	 	  	(441) 299-9283	
 	 	 	  	helen.wilson@ace.bm	
			
 	 	Media Contact:	  	Robert T. Grieves	
 	 	 	  	(212) 621-8684	
 	 	 	  	robert.grieves@ace-ina.com	
 
ACE LIMITED REPORTS RECORD FIRST QUARTER OPERATING INCOME;
NET INVESTMENT INCOME INCREASED 19%
 
HAMILTON, Bermuda — April 26, 2005 — ACE Limited (NYSE: ACE) today reported net income for the first quarter ended March 31, 2005 of $433 million or $1.46 per common share after payment of preferred dividends, compared with net income of $447 million or $1.53 per share for the same quarter last year. Income excluding net realized gains (losses) for the first quarter was $441 million, or $1.49 per share, compared with $411 million or $1.40 per share for the same quarter a year ago. (1)
 
First Quarter Summary
(in millions, except share and per share amounts)

 	  	 	 	 	 	  	 	 	 	(Per Share - Diluted)
	 	
 	  	2005
	 	 	2004
	  	Change
	 	 	2005
	 	 	2004
	  	Change
	 	
Net income	  	$	433	 	 	$	447	  	(3	)%	 	$	1.46	 	 	$	1.53	  	(5	)%	
Net realized gains (losses), net of tax	  	 	(8	)	 	 	36	  	—  	 	 	 	(0.03	)	 	 	0.13	  	—  	 	
Income excluding net realized gains (losses), net of tax (1)	  	 	441	 	 	 	411	  	7 	%	 	 	1.49	 	 	 	1.40	  	6 	%	
 
Evan Greenberg, President and Chief Executive Officer of ACE Limited, commented: “This was a very good quarter for ACE. We had record operating income, led by substantial increases in earned premiums and net investment income, and excellent P&C underwriting results as reflected in a combined ratio of 89.2%. Our written premium growth rate is naturally slowing in line with a softening rate environment and our determination to maintain underwriting discipline.”
 
Other first quarter operating highlights were as follows:
 
 	•	 	P&C net earned premiums increased 15% over the prior year quarter	
 
 	•	 	The P&C combined ratio was 89.2% for the quarter compared with 88.4% a year ago	
 
 	•	 	Operating cash flow amounted to $1.2 billion for the quarter	
 
 	•	 	Invested assets increased by $756 million from year-end 2004	
 
 	•	 	Net investment income increased 19% to $284 million over the prior year quarter	
 
Page 1/6

 	•	 	Shareholders’ equity increased to $9.9 billion from year-end 2004	
 
 	•	 	Tangible equity rose to $7.3 billion, a gain of 2% from year-end 2004	
 
 	•	 	Debt to total capital ratio improved to 16.1% from 16.3% at year-end 2004	
 
 	•	 	Return on equity for the quarter was 18.4%; excluding FAS 115 it was 19.4% (2)	
 
 	•	 	Diluted book value per share as of March 31, 2005 was $32.62 (3)	
 
Financial results by business segment compared with prior year’s results follow. Further details are available in the financial supplement. Key items include:
 
 	•	 	Insurance-North American: Net premiums written increased 18% for the quarter and the combined ratio was 88.6%.	
 
 	•	 	Insurance-Overseas General: Net premiums written were flat for the quarter. The segment’s combined ratio improved to 87.0%.	
 
 	•	 	Global Reinsurance: Net premiums written were down 7% for the quarter. This segment had a combined ratio of 82.4%.	
 
 	•	 	Financial Services: Income excluding net realized gains (losses) was $40 million for the quarter.	
 
Please refer to the ACE Financial Supplement March 31, 2005, 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, investment portfolio and capital structure. ACE’s website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports/ fin_supp_march_31_2005.xls . (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser’s URL address field.)
 
ACE will host its first quarter 2005 earnings conference call and webcast on Wednesday, April 27, 2005 beginning at 8:30 a.m. EDT. The earnings conference call will be available via live and archived webcast at www.acelimited.com or by dialing 888-889-5602 (within the United States) or 973-582-2734 (international). Please refer to the ACE Limited website in the Investor Information section under Calendar of Events for details. A replay of the call will be available from Wednesday, April 27, 2005 until Friday, May 27, 2005. To listen to the replay dial 877-519-4471 (in the United States) or 973-341-3080 (international); passcode 5826870.
 
The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited, a component of the Standard & Poor’s 500 stock index, the ACE Group conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries. Additional information can be found at: www.acelimited.com.
 
1 	Non-GAAP Financial Measures:	
 
Operating Income or Income excluding net realized gains (losses) 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
 
Page 2/6

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.
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, credit developments among reinsurers, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war and economic, political, regulatory, insurance and reinsurance business conditions, as well as management’s response to these factors, and other factors identified in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
(tables to follow)
 
Page 3/6

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

 	  	March 31
2005
	  	December 31
2004
	
 	  	(Unaudited)	  	 	
Assets	  	 	 	  	 	 	
Total investments	  	$	27,406	  	$	26,650	
Cash	  	 	574	  	 	534	
Insurance and reinsurance balances receivable	  	 	3,692	  	 	3,272	
Reinsurance recoverable	  	 	14,608	  	 	15,254	
Other assets	  	 	10,685	  	 	10,632	
 	  			  			
Total assets	  	$	56,965	  	$	56,342	
 	  			  			
Liabilities	  	 	 	  	 	 	
Unpaid losses and loss expenses	  	$	31,426	  	$	31,513	
Unearned premiums	  	 	6,527	  	 	5,923	
Other liabilities	  	 	9,047	  	 	9,070	
 	  			  			
Total liabilities	  	$	47,000	  	$	46,506	
 	  			  			
Shareholders’ equity	  	 	 	  	 	 	
Total shareholders’ equity	  	$	9,965	  	$	9,836	
 	  			  			
Total liabilities and shareholders’ equity	  	$	56,965	  	$	56,342	
 	  			  			
Diluted book value per ordinary share (3) 	  	$	32.62	  	$	32.48	
 
Page 4/6

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

 	  	Three Months Ended March 31
	 	
 	  	2005
	 	 	2004
	 	
Gross premiums written	  	$	4,543	 	 	$	4,416	 	
Net premiums written	  	 	3,365	 	 	 	3,238	 	
Net premiums earned	  	 	2,876	 	 	 	2,600	 	
			
Losses and loss expenses	  	 	1,786	 	 	 	1,542	 	
Life and annuity benefits	  	 	35	 	 	 	42	 	
Policy acquisition costs	  	 	388	 	 	 	365	 	
Administrative expenses	  	 	356	 	 	 	315	 	
 	  				 				
Underwriting income (1)	  	 	311	 	 	 	336	 	
			
Net investment income	  	 	284	 	 	 	238	 	
Net realized gains (losses)	  	 	(4	)	 	 	57	 	
Interest expense	  	 	42	 	 	 	44	 	
Other (income) expense	  	 	(4	)	 	 	17	 	
Income tax expense	  	 	120	 	 	 	123	 	
 	  				 				
Net income	  	 	433	 	 	 	447	 	
Preference shares dividend	  	 	(11	)	 	 	(11	)	
 	  				 				
Net income available to holders of ordinary shares	  	$	422	 	 	$	436	 	
 	  				 				
Diluted earnings per share:	  	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	1.49	 	 	$	1.40	 	
Net income	  	$	1.46	 	 	$	1.53	 	
			
Weighted average diluted shares outstanding	  	 	287,565,370	 	 	 	284,289,568	 	
			
Loss and loss expense ratio	  	 	63.4	%	 	 	60.5	%	
Policy acquisition cost ratio	  	 	13.6	%	 	 	14.1	%	
Administrative expense ratio	  	 	12.6	%	 	 	12.3	%	
Combined ratio	  	 	89.6	%	 	 	86.9	%	
 
Ratios exclude life reinsurance business
 
Page 5/6

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

 	  	Three Months Ended
March 31
	 	
 	  	2005
	 	 	2004
	 	
Gross Premiums Written	  	 	 	 	 	 	 	 	
			
Insurance - North American	  	$	2,151	 	 	$	1,905	 	
Insurance - Overseas General	  	 	1,635	 	 	 	1,674	 	
Global Reinsurance*	  	 	594	 	 	 	629	 	
Financial Services	  	 	163	 	 	 	208	 	
 	  				 				
Total	  	$	4,543	 	 	$	4,416	 	
 	  				 				
Net Premiums Written	  	 	 	 	 	 	 	 	
			
Insurance - North American	  	$	1,425	 	 	$	1,212	 	
Insurance - Overseas General	  	 	1,194	 	 	 	1,198	 	
Global Reinsurance*	  	 	585	 	 	 	620	 	
Financial Services	  	 	161	 	 	 	208	 	
 	  				 				
Total	  	$	3,365	 	 	$	3,238	 	
 	  				 				
Net Premiums Earned	  	 	 	 	 	 	 	 	
			
Insurance - North American	  	$	1,283	 	 	$	1,007	 	
Insurance - Overseas General	  	 	1,089	 	 	 	1,034	 	
Global Reinsurance*	  	 	414	 	 	 	380	 	
Financial Services	  	 	90	 	 	 	179	 	
 	  				 				
Total	  	$	2,876	 	 	$	2,600	 	
 	  				 				
Income (Loss) Excluding Net Realized Gains (Losses) (1) 	  	 	 	 	 	 	 	 	
			
Insurance - North American	  	$	193	 	 	$	148	 	
Insurance - Overseas General	  	 	162	 	 	 	112	 	
Global Reinsurance*	  	 	118	 	 	 	122	 	
Financial Services	  	 	40	 	 	 	85	 	
Corporate	  	 	(72	)	 	 	(56	)	
 	  				 				
Total	  	$	441	 	 	$	411	 	

*	Includes both property and casualty reinsurance and life reinsurance	
 
# # #
 
Page 6/6
  
Exhibit 99.2

 
			
Investor Contact	  	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.	
Helen M. Wilson	  	 	
Phone: (441) 299-9283	  	 	
Fax: (441) 292-8675	  	 	
email: investorrelations@ace.bm	  	Cautionary Statement Regarding Forward-Looking Statements:	
		
 	  	Any forward-looking statements made in this financial supplement reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from those set forth in these statements. For example, the Company’s forward-looking statements, such as statements concerning exposures, reserves and recoverables, could be affected by 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 receivable and credit developments among reinsurers. The Company’s forward-looking statements could also be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, market acceptance, changes in demand, 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. 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, 2004, the Company’s quarterly reports on Form 10-Q and in the Company’s earnings press release, which are available on the Company’s website.	

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

					
	 	ACE Limited
 
Financial Supplement Table of Contents	 	 	

 	  	 	  	Page
	
I.	  	Financial Highlights	  	 	
 	  	- Consolidated Financial Highlights	  	1	
			
II.	  	Consolidated Results	  	 	
 	  	- Consolidated Results - Consecutive Quarters	  	2-3	
 	  	- Summary Consolidated Balance Sheets	  	4	
 	  	- Consolidated Premiums by Line of Business	  	5	
 	  	- Consolidating Statement of Operations	  	6	
			
III.	  	Segment Results	  	 	
 	  	- Insurance-North American	  	7	
 	  	- Insurance-Overseas General	  	8	
 	  	- Global Reinsurance	  	9-10	
 	  	- Financial Services	  	11	
			
IV.	  	Balance Sheet Details	  	 	
 	  	- Loss Reserve Rollforward	  	12	
 	  	- Reinsurance Recoverable Analysis	  	13-16	
 	  	- Investment Portfolio	  	17	
 	  	- Realized and Unrealized Gains (Losses)	  	18	
 	  	- Capital Structure	  	19	
 	  	- Computation of Basic and Diluted Earnings Per Share	  	20	
			
V.	  	Other Disclosures	  	 	
 	  	- Non-GAAP Financial Measures	  	21	
 	  	- Diluted Book Value per Ordinary Share	  	22	
 	  	- Comprehensive Income	  	23	
 	  	- Glossary	  	24	

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

 	  	 	 	 	 	 	 	% Change
1Q-05 vs.
1Q-04
	 	
  	  	Three months ended March 31
	 	 			
 	  	2005
	 	 	2004
	 	 			
Gross premiums written	  	$	4,543	 	 	$	4,416	 	 	3	%	
Net premiums written	  	$	3,365	 	 	$	3,238	 	 	4	%	
Net premiums earned	  	$	2,876	 	 	$	2,600	 	 	11	%	
Net investment income	  	$	284	 	 	$	238	 	 	19	%	
Net income	  	$	433	 	 	$	447	 	 	-3	%	
Income excluding net realized gains (losses) (1)	  	$	441	 	 	$	411	 	 	7	%	
Comprehensive income	  	$	156	 	 	$	581	 	 	-73	%	
Operating cash flow	  	$	1,210	 	 	$	1,172	 	 	3	%	
				
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	63.4	%	 	 	60.5	%	 	 	 	
Underwriting and administrative expense ratio	  	 	26.2	%	 	 	26.4	%	 	 	 	
 	  				 				 	 	 	
Combined ratio	  	 	89.6	%	 	 	86.9	%	 	 	 	
				
Annualized ROE*	  	 	18.4	%	 	 	18.7	%	 	 	 	
Annualized ROE, excluding FAS 115*	  	 	19.4	%	 	 	20.4	%	 	 	 	
				
Diluted earnings per share	  	 	 	 	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	1.49	 	 	$	1.40	 	 	6	%	
Net income	  	$	1.46	 	 	$	1.53	 	 	-5	%	
				
Diluted book value per ordinary share	  	$	32.62	 	 	$	31.36	 	 	4	%	
Diluted tangible book value per ordinary share	  	$	23.83	 	 	$	22.41	 	 	6	%	
				
Weighted average diluted ordinary shares outstanding	  	 	287.6	 	 	 	284.3	 	 	 	 	
				
Debt/ total capitalization	  	 	16.1	%	 	 	16.1	%	 	 	 	

(1)	See page 21 Non-GAAP Financial Measures.	
 *	Calculated using income excluding net realized gains (losses).	

Financial Highlights	 	Page 1	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Property and Casualty (1)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	4,322	 	 	$	3,575	 	 	$	3,854	 	 	$	3,969	 	 	$	4,155	 	 	 	15,553	 	
Net premiums written	  	 	3,146	 	 	 	2,574	 	 	 	2,641	 	 	 	2,798	 	 	 	2,979	 	 	 	10,992	 	
Net premiums earned	  	 	2,728	 	 	 	2,744	 	 	 	2,682	 	 	 	2,600	 	 	 	2,370	 	 	 	10,396	 	
Losses and loss expenses	  	 	1,703	 	 	 	2,116	 	 	 	2,118	 	 	 	1,636	 	 	 	1,456	 	 	 	7,326	 	
Policy acquisition costs	  	 	382	 	 	 	406	 	 	 	378	 	 	 	381	 	 	 	349	 	 	 	1,514	 	
Administrative expenses	  	 	350	 	 	 	335	 	 	 	321	 	 	 	298	 	 	 	290	 	 	 	1,244	 	
 	  				 				 				 				 				 				
P& C underwriting income (loss)	  	$	293	 	 	$	(113	)	 	$	(135	)	 	$	285	 	 	$	275	 	 	$	312	 	
							
Financial Services underwriting income (loss)	  	 	1	 	 	 	(3	)	 	 	(11	)	 	 	26	 	 	 	58	 	 	 	70	 	
Life underwriting income (loss) excluding investment income	  	 	17	 	 	 	11	 	 	 	5	 	 	 	3	 	 	 	3	 	 	 	22	 	
Net investment income	  	 	284	 	 	 	275	 	 	 	252	 	 	 	236	 	 	 	238	 	 	 	1,001	 	
Net realized gains (losses)	  	 	(4	)	 	 	128	 	 	 	(33	)	 	 	43	 	 	 	57	 	 	 	195	 	
Interest expense	  	 	42	 	 	 	44	 	 	 	48	 	 	 	47	 	 	 	44	 	 	 	183	 	
Other (income) expense	  	 	(4	)	 	 	—  	 	 	 	(21	)	 	 	6	 	 	 	17	 	 	 	2	 	
Income tax expense (benefit)	  	 	120	 	 	 	(28	)	 	 	54	 	 	 	127	 	 	 	123	 	 	 	276	 	
 	  				 				 				 				 				 				
Net income (loss)	  	$	433	 	 	$	282	 	 	$	(3	)	 	$	413	 	 	$	447	 	 	$	1,139	 	
							
Net realized gains (losses)	  	 	(4	)	 	 	128	 	 	 	(33	)	 	 	43	 	 	 	57	 	 	 	195	 	
Tax expense on net realized gains (losses)	  	 	4	 	 	 	12	 	 	 	1	 	 	 	10	 	 	 	21	 	 	 	44	 	
 	  				 				 				 				 				 				
Income excluding net realized gains (losses) (2)	  	$	441	 	 	$	166	 	 	$	31	 	 	$	380	 	 	$	411	 	 	$	988	 	
 	  				 				 				 				 				 				
% Change versus prior year period (1) 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written	  	 	6	%	 	 	14	%	 	 	23	%	 	 	25	%	 	 	26	%	 	 	22	%	
Net premiums earned	  	 	15	%	 	 	19	%	 	 	25	%	 	 	27	%	 	 	31	%	 	 	25	%	
							
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	73	%	 	 	72	%	 	 	69	%	 	 	70	%	 	 	72	%	 	 	71	%	
Effective tax rate on income excluding net realized gains (losses)	  	 	21	%	 	 	-32	%	 	 	63	%	 	 	24	%	 	 	20	%	 	 	19	%	
							
ROE	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Annualized ROE*	  	 	18.4	%	 	 	6.8	%	 	 	0.9	%	 	 	16.9	%	 	 	18.7	%	 	 	10.7	%	
Annualized ROE, excluding FAS 115*	  	 	19.4	%	 	 	7.3	%	 	 	0.9	%	 	 	17.7	%	 	 	20.4	%	 	 	11.6	%	

(1)	Property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance. 	
(2)	See page 21 Non-GAAP Financial Measures. 	
 *	Calculated using income excluding net realized gains (losses). 	

Consolidated Results	 	Page 2	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	63.4	%	 	 	77.9	%	 	 	80.0	%	 	 	63.1	%	 	 	60.5	%	 	 	70.7	%	
Policy acquisition cost ratio	  	 	13.6	%	 	 	14.3	%	 	 	13.6	%	 	 	14.3	%	 	 	14.1	%	 	 	14.1	%	
Administrative expense ratio	  	 	12.6	%	 	 	11.8	%	 	 	11.6	%	 	 	11.3	%	 	 	12.3	%	 	 	11.8	%	
 	  				 				 				 				 				 				
Combined ratio	  	 	89.6	%	 	 	104.0	%	 	 	105.2	%	 	 	88.7	%	 	 	86.9	%	 	 	96.6	%	

Property and Casualty (1) 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
							
 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	62.4	%	 	 	77.1	%	 	 	78.9	%	 	 	62.9	%	 	 	61.5	%	 	 	70.5	%	
Policy acquisition cost ratio	  	 	14.0	%	 	 	14.8	%	 	 	14.1	%	 	 	14.6	%	 	 	14.7	%	 	 	14.6	%	
Administrative expense ratio	  	 	12.8	% (2)	 	 	12.2	%	 	 	12.0	%	 	 	11.5	%	 	 	12.2	%	 	 	12.0	%	
 	  				 				 				 				 				 				
Combined ratio	  	 	89.2	%	 	 	104.1	%	 	 	105.0	%	 	 	89.0	%	 	 	88.4	%	 	 	97.1	%	
 	  				 				 				 				 				 				
Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asbestos, environmental and other run-off losses	  	$	—  	 	 	$	465	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	465	 	
Catastrophe and other large losses	  	$	3	 	 	$	31	 	 	$	457	 	 	$	—  	 	 	$	—  	 	 	$	488	 	
Prior period development (3)	  	$	29	 	 	$	109	 	 	$	12	 	 	$	25	 	 	$	(6	)	 	$	140	 	

(1)	Property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.	
(2)	Includes $30M of legal expenses related to the investigations.	
(3)	See Financial Services schedule for prior period development related to that segment.	

Consolidated Results 2	 	Page 3	

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

 	  	March 31
2005
	  	December 31
2004
	
 	  	(Unaudited)	  	(Audited)	
Assets	  	 	 	  	 	 	
Fixed maturities available for sale, at fair value	  	$	20,188	  	$	22,741	
Fixed maturities held to maturity, at amortized cost	  	 	3,211	  	 	—  	
Equity securities, at fair value	  	 	1,351	  	 	1,265	
Short-term investments	  	 	2,135	  	 	2,140	
Other investments	  	 	521	  	 	504	
 	  			  			
Total investments	  	 	27,406	  	 	26,650	
			
Cash	  	 	574	  	 	534	
Securities lending collateral	  	 	1,255	  	 	1,059	
Insurance and reinsurance balances receivable	  	 	3,692	  	 	3,272	
Reinsurance recoverable	  	 	14,608	  	 	15,254	
Deferred policy acquisition costs	  	 	999	  	 	944	
Prepaid reinsurance premiums	  	 	1,427	  	 	1,320	
Goodwill	  	 	2,608	  	 	2,612	
Deferred tax assets	  	 	1,172	  	 	1,161	
Investments in partially owned insurance companies	  	 	823	  	 	797	
Other assets	  	 	2,401	  	 	2,739	
 	  			  			
Total assets	  	$	56,965	  	$	56,342	
 	  			  			
Liabilities	  	 	 	  	 	 	
Unpaid losses and loss expenses	  	$	31,426	  	$	31,513	
Unearned premiums	  	 	6,527	  	 	5,923	
Future policy benefits for life and annuity contracts	  	 	507	  	 	509	
Insurance and reinsurance balances payable	  	 	2,260	  	 	2,308	
Deposit liabilities	  	 	302	  	 	343	
Securities lending payable	  	 	1,255	  	 	1,059	
Payable for investments purchased	  	 	630	  	 	717	
Accounts payable, accrued expenses and other liabilities	  	 	1,685	  	 	1,727	
Short-term debt	  	 	147	  	 	146	
Long-term debt	  	 	1,849	  	 	1,849	
Trust preferred securities	  	 	412	  	 	412	
 	  			  			
Total liabilities	  	 	47,000	  	 	46,506	
			
Shareholders’ equity	  	 	 	  	 	 	
Total shareholders’ equity, excl. AOCI	  	 	9,506	  	 	9,100	
Accumulated other comprehensive income (AOCI)	  	 	459	  	 	736	
 	  			  			
Total shareholders’ equity	  	 	9,965	  	 	9,836	
 	  			  			
Total liabilities and shareholders’ equity	  	$	56,965	  	$	56,342	
 	  			  			
Diluted book value per ordinary share (1) 	  	$	32.62	  	$	32.48	
Diluted tangible book value per ordinary share (1) 	  	$	23.83	  	$	23.63	

(1)	See page 21 Non-GAAP Financial Measures.	

Consol Bal Sheet	 	Page 4	

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

 	  	1Q-05
	  	% of
Total
Consolidated
	 	 	1Q-04
	  	% of
Total
Consolidated
	 	 	% Change
1Q-05 vs.
1Q-04
	 	
Net premiums written	  	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Property and all other	  	$	1,051	  	31	%	 	$	1,029	  	32	%	 	2	%	
Casualty	  	 	1,765	  	52	%	 	 	1,667	  	51	%	 	6	%	
Personal accident	  	 	330	  	10	%	 	 	283	  	9	%	 	17	%	
 	  			  			 			  			 			
Total P&C	  	 	3,146	  	93	%	 	 	2,979	  	92	%	 	6	%	
 	  			  			 			  			 			
Global Re - life	  	 	58	  	2	%	 	 	51	  	2	%	 	14	%	
Financial Services	  	 	161	  	5	%	 	 	208	  	6	%	 	-23	%	
 	  			  			 			  			 			
Total Consolidated	  	$	3,365	  	100	%	 	$	3,238	  	100	%	 	4	%	
 	  			  			 			  			 			
Net premiums earned	  	 	 	  	 	 	 	 	 	  	 	 	 	 	 	
Property and all other	  	$	873	  	30	%	 	$	785	  	30	%	 	11	%	
Casualty	  	 	1,556	  	54	%	 	 	1,330	  	51	%	 	17	%	
Personal accident	  	 	299	  	11	%	 	 	255	  	10	%	 	17	%	
 	  			  			 			  			 			
Total P&C	  	 	2,728	  	95	%	 	 	2,370	  	91	%	 	15	%	
 	  			  			 			  			 			
Global Re - life	  	 	58	  	2	%	 	 	51	  	2	%	 	14	%	
Financial Services	  	 	90	  	3	%	 	 	179	  	7	%	 	-50	%	
 	  			  			 			  			 			
Total Consolidated	  	$	2,876	  	100	%	 	$	2,600	  	100	%	 	11	%	

			
Line of Business	 	Page 5	

					
	 	ACE Limited
 
Consolidating Statement of Operations
 
Three months ended March 31, 2005 and 2004
 
(in millions of U.S. dollars)
 
(Unaudited)	 	 	

 	  	Insurance -
North
American
	 	 	Insurance -
Overseas
General
	  	Global
Reinsurance
	 	 	Corporate
& Other
	 	 	Consolidated
P&C
	 	 	Financial
Services
	 	 	ACE
Consolidated
	 	
March 31, 2005	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	2,151	 	 	$	1,635	  	$	536	 	 	$	—  	 	 	$	4,322	 	 	$	163	 	 	$	4,485	 	
Net premiums written	  	 	1,425	 	 	 	1,194	  	 	527	 	 	 	—  	 	 	 	3,146	 	 	 	161	 	 	 	3,307	 	
Net premiums earned	  	 	1,283	 	 	 	1,089	  	 	356	 	 	 	—  	 	 	 	2,728	 	 	 	90	 	 	 	2,818	 	
Losses and loss expenses	  	 	888	 	 	 	611	  	 	205	 	 	 	(1	)	 	 	1,703	 	 	 	83	 	 	 	1,786	 	
Policy acquisition costs	  	 	117	 	 	 	192	  	 	73	 	 	 	—  	 	 	 	382	 	 	 	2	 	 	 	384	 	
Administrative expenses	  	 	132	 	 	 	144	  	 	15	 	 	 	59	 	 	 	350	 	 	 	4	 	 	 	354	 	
 	  				 			  				 				 				 				 				
Underwriting income (loss)	  	 	146	 	 	 	142	  	 	63	 	 	 	(58	)	 	 	293	 	 	 	1	 	 	 	294	 	
								
Life underwriting income (includes investment income)	  	 	—  	 	 	 	—  	  	 	26	 	 	 	—  	 	 	 	26	 	 	 	—  	 	 	 	26	 	
Net investment income - property and casualty	  	 	128	 	 	 	74	  	 	40	 	 	 	1	 	 	 	243	 	 	 	32	 	 	 	275	 	
Net realized gains (losses)	  	 	(4	)	 	 	18	  	 	(22	)	 	 	(5	)	 	 	(13	)	 	 	9	 	 	 	(4	)	
Interest expense	  	 	5	 	 	 	—  	  	 	1	 	 	 	36	 	 	 	42	 	 	 	—  	 	 	 	42	 	
Other (income) expense	  	 	—  	 	 	 	6	  	 	1	 	 	 	—  	 	 	 	7	 	 	 	(11	)	 	 	(4	)	
Income tax expense (benefit)	  	 	73	 	 	 	53	  	 	9	 	 	 	(21	)	 	 	114	 	 	 	6	 	 	 	120	 	
 	  				 			  				 				 				 				 				
Net income (loss)	  	 	192	 	 	 	175	  	 	96	 	 	 	(77	)	 	 	386	 	 	 	47	 	 	 	433	 	
								
Net realized gains (losses)	  	 	(4	)	 	 	18	  	 	(22	)	 	 	(5	)	 	 	(13	)	 	 	9	 	 	 	(4	)	
Tax expense (benefit) on net realized gains (losses)	  	 	(3	)	 	 	5	  	 	—  	 	 	 	—  	 	 	 	2	 	 	 	2	 	 	 	4	 	
 	  				 			  				 				 				 				 				
Income (loss) excluding net realized gains (losses) (1)	  	$	193	 	 	$	162	  	$	118	 	 	$	(72	)	 	$	401	 	 	$	40	 	 	$	441	 	
 	  				 			  				 				 				 				 				
March 31, 2004	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	1,905	 	 	$	1,674	  	$	576	 	 	$	 —  	 	 	$	4,155	 	 	$	208	 	 	$	4,363	 	
Net premiums written	  	 	1,212	 	 	 	1,198	  	 	569	 	 	 	—  	 	 	 	2,979	 	 	 	208	 	 	 	3,187	 	
Net premiums earned	  	 	1,007	 	 	 	1,034	  	 	329	 	 	 	—  	 	 	 	2,370	 	 	 	179	 	 	 	2,549	 	
Losses and loss expenses	  	 	696	 	 	 	601	  	 	159	 	 	 	—  	 	 	 	1,456	 	 	 	86	 	 	 	1,542	 	
Policy acquisition costs	  	 	101	 	 	 	184	  	 	64	 	 	 	—  	 	 	 	349	 	 	 	11	 	 	 	360	 	
Administrative expenses	  	 	103	 	 	 	138	  	 	19	 	 	 	30	 	 	 	290	 	 	 	24	 	 	 	314	 	
 	  				 			  				 				 				 				 				
Underwriting income (loss)	  	 	107	 	 	 	111	  	 	87	 	 	 	(30	)	 	 	275	 	 	 	58	 	 	 	333	 	
								
Life underwriting income (includes investment income)	  	 	—  	 	 	 	—  	  	 	11	 	 	 	—  	 	 	 	11	 	 	 	—  	 	 	 	11	 	
Net investment income - property and casualty	  	 	104	 	 	 	48	  	 	27	 	 	 	(2	)	 	 	177	 	 	 	53	 	 	 	230	 	
Net realized gains (losses)	  	 	52	 	 	 	24	  	 	(10	)	 	 	(14	)	 	 	52	 	 	 	5	 	 	 	57	 	
Interest expense	  	 	5	 	 	 	—  	  	 	—  	 	 	 	37	 	 	 	42	 	 	 	2	 	 	 	44	 	
Other (income) expense	  	 	3	 	 	 	3	  	 	—  	 	 	 	—  	 	 	 	6	 	 	 	11	 	 	 	17	 	
Income tax expense (benefit)	  	 	62	 	 	 	51	  	 	3	 	 	 	(13	)	 	 	103	 	 	 	20	 	 	 	123	 	
 	  				 			  				 				 				 				 				
Net income (loss)	  	 	193	 	 	 	129	  	 	112	 	 	 	(70	)	 	 	364	 	 	 	83	 	 	 	447	 	
								
Net realized gains (losses)	  	 	52	 	 	 	24	  	 	(10	)	 	 	(14	)	 	 	52	 	 	 	5	 	 	 	57	 	
Tax expense (benefit) on net realized gains (losses)	  	 	7	 	 	 	7	  	 	—  	 	 	 	—  	 	 	 	14	 	 	 	7	 	 	 	21	 	
 	  				 			  				 				 				 				 				
Income (loss) excluding net realized gains (losses) (1)	  	$	148	 	 	$	112	  	$	122	 	 	$	(56	)	 	$	326	 	 	$	85	 	 	$	411	 	

(1)	See page 21 Non-GAAP Financial Measures.	

Segment 2005 Qtr	 	Page 6	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Gross premiums written	  	$	2,151	 	 	$	1,898	 	 	$	2,219	 	 	$	2,102	 	 	$	1,905	 	 	$	8,124	 	
Net premiums written	  	 	1,425	 	 	 	1,208	 	 	 	1,349	 	 	 	1,329	 	 	 	1,212	 	 	 	5,098	 	
Net premiums earned	  	 	1,283	 	 	 	1,259	 	 	 	1,234	 	 	 	1,178	 	 	 	1,007	 	 	 	4,678	 	
Losses and loss expenses	  	 	888	 	 	 	1,359	 	 	 	1,010	 	 	 	837	 	 	 	696	 	 	 	3,902	 	
Policy acquisition costs	  	 	117	 	 	 	114	 	 	 	114	 	 	 	111	 	 	 	101	 	 	 	440	 	
Administrative expenses	  	 	132	 	 	 	135	 	 	 	129	 	 	 	115	 	 	 	103	 	 	 	482	 	
 	  				 				 				 				 				 				
Underwriting income (loss)	  	 	146	 	 	 	(349	)	 	 	(19	)	 	 	115	 	 	 	107	 	 	 	(146	)	
							
Net investment income	  	 	128	 	 	 	129	 	 	 	120	 	 	 	107	 	 	 	104	 	 	 	460	 	
Net realized gains (losses)	  	 	(4	)	 	 	32	 	 	 	9	 	 	 	31	 	 	 	52	 	 	 	124	 	
Interest expense	  	 	5	 	 	 	6	 	 	 	5	 	 	 	5	 	 	 	5	 	 	 	21	 	
Other (income) expense	  	 	—  	 	 	 	1	 	 	 	(2	)	 	 	3	 	 	 	3	 	 	 	5	 	
Income tax expense (benefit)	  	 	73	 	 	 	(96	)	 	 	33	 	 	 	69	 	 	 	62	 	 	 	68	 	
 	  				 				 				 				 				 				
Net income (loss)	  	 	192	 	 	 	(99	)	 	 	74	 	 	 	176	 	 	 	193	 	 	 	344	 	
							
Net realized gains (losses)	  	 	(4	)	 	 	32	 	 	 	9	 	 	 	31	 	 	 	52	 	 	 	124	 	
Tax expense on net realized gains (losses)	  	 	(3	)	 	 	5	 	 	 	2	 	 	 	8	 	 	 	7	 	 	 	22	 	
 	  				 				 				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	193	 	 	$	(126	)	 	$	67	 	 	$	153	 	 	$	148	 	 	$	242	 	
 	  				 				 				 				 				 				
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	69.2	%	 	 	108.0	%	 	 	81.8	%	 	 	71.1	%	 	 	69.1	%	 	 	83.4	%	
Policy acquisition cost ratio	  	 	9.1	%	 	 	9.0	%	 	 	9.3	%	 	 	9.5	%	 	 	10.0	%	 	 	9.4	%	
Administrative expense ratio	  	 	10.3	%	 	 	10.7	%	 	 	10.5	%	 	 	9.7	%	 	 	10.3	%	 	 	10.3	%	
 	  				 				 				 				 				 				
Combined ratio	  	 	88.6	%	 	 	127.7	%	 	 	101.6	%	 	 	90.3	%	 	 	89.4	%	 	 	103.1	%	
 	  				 				 				 				 				 				
Large losses and other items (before tax)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asbestos, environmental and other run-off losses	  	$	—  	 	 	$	459	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	459	 	
Catastrophe losses (before tax)	  	$	—  	 	 	$	—  	 	 	$	126	 	 	$	—  	 	 	$	—  	 	 	$	126	 	
Prior period development	  	$	22	 	 	$	96	 	 	$	42	 	 	$	42	 	 	$	15	 	 	$	195	 	
							
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written	  	 	18	%	 	 	15	%	 	 	27	%	 	 	37	%	 	 	30	%	 	 	27	%	
Net premiums earned	  	 	27	%	 	 	27	%	 	 	25	%	 	 	28	%	 	 	34	%	 	 	28	%	
							
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	66	%	 	 	64	%	 	 	61	%	 	 	63	%	 	 	64	%	 	 	63	%	

(1)	See page 21 Non-GAAP Financial Measures.	

Insurance-North American	 	Page 7	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Gross premiums written	  	$	1,635	 	 	$	1,392	 	 	$	1,292	 	 	$	1,500	 	 	$	1,674	 	 	$	5,858	 	
Net premiums written	  	 	1,194	 	 	 	1,087	 	 	 	980	 	 	 	1,105	 	 	 	1,198	 	 	 	4,370	 	
Net premiums earned	  	 	1,089	 	 	 	1,126	 	 	 	1,086	 	 	 	1,076	 	 	 	1,034	 	 	 	4,322	 	
Losses and loss expenses	  	 	611	 	 	 	547	 	 	 	653	 	 	 	625	 	 	 	601	 	 	 	2,426	 	
Policy acquisition costs	  	 	192	 	 	 	224	 	 	 	199	 	 	 	196	 	 	 	184	 	 	 	803	 	
Administrative expenses	  	 	144	 	 	 	138	 	 	 	139	 	 	 	139	 	 	 	138	 	 	 	554	 	
 	  				 				 				 				 				 				
Underwriting income	  	$	142	 	 	$	217	 	 	$	95	 	 	$	116	 	 	$	111	 	 	$	539	 	
							
Net investment income	  	 	74	 	 	 	69	 	 	 	61	 	 	 	55	 	 	 	48	 	 	 	233	 	
Net realized gains (losses)	  	 	18	 	 	 	18	 	 	 	2	 	 	 	3	 	 	 	24	 	 	 	47	 	
Interest expense	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
Other (income) expense	  	 	6	 	 	 	15	 	 	 	3	 	 	 	4	 	 	 	3	 	 	 	25	 	
Income tax expense	  	 	53	 	 	 	84	 	 	 	42	 	 	 	61	 	 	 	51	 	 	 	238	 	
 	  				 				 				 				 				 				
Net income	  	$	175	 	 	$	205	 	 	$	113	 	 	$	109	 	 	$	129	 	 	$	556	 	
							
Net realized gains (losses)	  	 	18	 	 	 	18	 	 	 	2	 	 	 	3	 	 	 	24	 	 	 	47	 	
Tax expense on net realized gains (losses)	  	 	5	 	 	 	5	 	 	 	1	 	 	 	1	 	 	 	7	 	 	 	14	 	
 	  				 				 				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	162	 	 	$	192	 	 	$	112	 	 	$	107	 	 	$	112	 	 	$	523	 	
 	  				 				 				 				 				 				
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	56.1	%	 	 	48.6	%	 	 	60.1	%	 	 	58.1	%	 	 	58.1	%	 	 	56.1	%	
Policy acquisition cost ratio	  	 	17.6	%	 	 	19.9	%	 	 	18.3	%	 	 	18.2	%	 	 	17.9	%	 	 	18.6	%	
Administrative expense ratio	  	 	13.3	%	 	 	12.2	%	 	 	12.8	%	 	 	13.0	%	 	 	13.3	%	 	 	12.8	%	
 	  				 				 				 				 				 				
Combined ratio	  	 	87.0	%	 	 	80.7	%	 	 	91.2	%	 	 	89.3	%	 	 	89.3	%	 	 	87.5	%	
 	  				 				 				 				 				 				
Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Asbestos, environmental and other run-off losses	  	$	—  	 	 	$	6	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	6	 	
Large losses (before tax)	  	$	—  	 	 	$	—  	 	 	$	53	 	 	$	—  	 	 	$	—  	 	 	$	53	 	
Prior period development	  	$	7	 	 	$	26	 	 	$	(8	)	 	$	(4	)	 	$	(8	)	 	$	6	 	
							
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written	  	 	0	%	 	 	11	%	 	 	12	%	 	 	21	%	 	 	22	%	 	 	17	%	
Net premiums earned	  	 	5	%	 	 	12	%	 	 	23	%	 	 	25	%	 	 	27	%	 	 	21	%	
							
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	73	%	 	 	78	%	 	 	76	%	 	 	74	%	 	 	72	%	 	 	75	%	
 
(1)	See page 21 Non-GAAP Financial Measures.	

Insurance-Overseas General	 	Page 8	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Property and casualty	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	$	536	 	 	$	285	 	 	$	343	 	 	$	367	 	 	$	576	 	 	$	1,571	 	
Net premiums written	  	 	527	 	 	 	279	 	 	 	312	 	 	 	364	 	 	 	569	 	 	 	1,524	 	
Net premiums earned	  	 	356	 	 	 	359	 	 	 	362	 	 	 	346	 	 	 	329	 	 	 	1,396	 	
Losses and loss expenses	  	 	205	 	 	 	204	 	 	 	436	 	 	 	174	 	 	 	159	 	 	 	973	 	
Policy acquisition costs	  	 	73	 	 	 	68	 	 	 	65	 	 	 	74	 	 	 	64	 	 	 	271	 	
Administrative expenses	  	 	15	 	 	 	15	 	 	 	16	 	 	 	15	 	 	 	19	 	 	 	65	 	
 	  				 				 				 				 				 				
P&C underwriting income (loss)	  	 	63	 	 	 	72	 	 	 	(155	)	 	 	83	 	 	 	87	 	 	 	87	 	
							
Life	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross premiums written	  	 	58	 	 	 	55	 	 	 	60	 	 	 	56	 	 	 	53	 	 	 	224	 	
Net premiums written	  	 	58	 	 	 	55	 	 	 	59	 	 	 	55	 	 	 	51	 	 	 	220	 	
Net premiums earned	  	 	58	 	 	 	55	 	 	 	60	 	 	 	54	 	 	 	51	 	 	 	220	 	
Losses and loss expenses	  	 	35	 	 	 	38	 	 	 	48	 	 	 	44	 	 	 	42	 	 	 	172	 	
Policy acquisition costs	  	 	4	 	 	 	5	 	 	 	6	 	 	 	6	 	 	 	5	 	 	 	22	 	
Administrative expenses	  	 	2	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	1	 	 	 	4	 	
Net investment income	  	 	9	 	 	 	9	 	 	 	8	 	 	 	8	 	 	 	8	 	 	 	33	 	
 	  				 				 				 				 				 				
Life underwriting income	  	 	26	 	 	 	20	 	 	 	13	 	 	 	11	 	 	 	11	 	 	 	55	 	
							
Total underwriting income (loss)	  	 	89	 	 	 	92	 	 	 	(142	)	 	 	94	 	 	 	98	 	 	 	142	 	
Net investment income - property and casualty	  	 	40	 	 	 	39	 	 	 	31	 	 	 	29	 	 	 	27	 	 	 	126	 	
Net realized gains (losses)	  	 	(22	)	 	 	67	 	 	 	(35	)	 	 	12	 	 	 	(10	)	 	 	34	 	
Interest expense	  	 	1	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
Other (income) expense	  	 	1	 	 	 	(1	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(1	)	
Income tax expense (benefit)	  	 	9	 	 	 	12	 	 	 	(1	)	 	 	1	 	 	 	3	 	 	 	15	 	
 	  				 				 				 				 				 				
Net income (loss)	  	 	96	 	 	 	187	 	 	 	(145	)	 	 	134	 	 	 	112	 	 	 	288	 	
							
Net realized gains (losses)	  	 	(22	)	 	 	67	 	 	 	(35	)	 	 	12	 	 	 	(10	)	 	 	34	 	
Tax expense on net realized gains (losses)	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
 	  				 				 				 				 				 				
Income (loss) excluding net realized gains (losses) (1)	  	$	118	 	 	$	120	 	 	$	(110	)	 	$	122	 	 	$	122	 	 	$	254	 	
 	  				 				 				 				 				 				
P&C combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	57.6	%	 	 	57.0	%	 	 	120.2	%	 	 	50.2	%	 	 	48.5	%	 	 	69.7	%	
Policy acquisition cost ratio	  	 	20.5	%	 	 	19.0	%	 	 	18.0	%	 	 	21.4	%	 	 	19.4	%	 	 	19.4	%	
Administrative expense ratio	  	 	4.3	%	 	 	4.0	%	 	 	4.5	%	 	 	4.5	%	 	 	5.6	%	 	 	4.6	%	
 	  				 				 				 				 				 				
P&C combined ratio	  	 	82.4	%	 	 	80.0	%	 	 	142.7	%	 	 	76.1	%	 	 	73.5	%	 	 	93.7	%	
 	  				 				 				 				 				 				
Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Large losses (before tax)	  	$	3	 	 	$	31	 	 	$	278	 	 	$	—  	 	 	$	—  	 	 	$	309	 	
Prior period development	  	$	—  	 	 	$	(13	)	 	$	(22	)	 	$	(13	)	 	$	(13	)	 	$	(61	)	

(1)	See page 21 Non-GAAP Financial Measures.	

Global Reinsurance	 	Page 9	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written	  	 	-7	%	 	 	27	%	 	 	44	%	 	 	6	%	 	 	28	%	 	 	24	%	
Net premiums earned	  	 	8	%	 	 	16	%	 	 	32	%	 	 	29	%	 	 	33	%	 	 	27	%	
							
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	98	%	 	 	98	%	 	 	91	%	 	 	99	%	 	 	99	%	 	 	97	%	
							
Global Reinsurance - By Division	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
							
Gross premiums written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	$	105	 	 	$	64	 	 	$	76	 	 	$	60	 	 	$	126	 	 	$	326	 	
Tempest USA	  	 	248	 	 	 	204	 	 	 	205	 	 	 	224	 	 	 	253	 	 	 	886	 	
Tempest Bermuda	  	 	183	 	 	 	17	 	 	 	62	 	 	 	83	 	 	 	197	 	 	 	359	 	
 	  				 				 				 				 				 				
Total	  	$	536	 	 	$	285	 	 	$	343	 	 	$	367	 	 	$	576	 	 	$	1,571	 	
 	  				 				 				 				 				 				
Net premiums written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	$	102	 	 	$	61	 	 	$	74	 	 	$	54	 	 	$	122	 	 	$	311	 	
Tempest USA	  	 	247	 	 	 	204	 	 	 	204	 	 	 	224	 	 	 	252	 	 	 	884	 	
Tempest Bermuda	  	 	178	 	 	 	14	 	 	 	34	 	 	 	86	 	 	 	195	 	 	 	329	 	
 	  				 				 				 				 				 				
Total	  	$	527	 	 	$	279	 	 	$	312	 	 	$	364	 	 	$	569	 	 	$	1,524	 	
 	  				 				 				 				 				 				
Net premiums earned	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	$	76	 	 	$	76	 	 	$	77	 	 	$	75	 	 	$	75	 	 	$	303	 	
Tempest USA	  	 	212	 	 	 	204	 	 	 	194	 	 	 	189	 	 	 	169	 	 	 	756	 	
Tempest Bermuda	  	 	68	 	 	 	79	 	 	 	91	 	 	 	82	 	 	 	85	 	 	 	337	 	
 	  				 				 				 				 				 				
Total	  	$	356	 	 	$	359	 	 	$	362	 	 	$	346	 	 	$	329	 	 	$	1,396	 	
 	  				 				 				 				 				 				
Net premiums written/gross premiums written	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tempest Europe	  	 	97	%	 	 	95	%	 	 	97	%	 	 	90	%	 	 	97	%	 	 	95	%	
Tempest USA	  	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%	
Tempest Bermuda	  	 	97	%	 	 	82	%	 	 	55	%	 	 	104	%	 	 	99	%	 	 	92	%	
 	  				 				 				 				 				 				
Total NPW/GPW	  	 	98	%	 	 	98	%	 	 	91	%	 	 	99	%	 	 	99	%	 	 	97	%	

			
Global Reinsurance 2	 	Page 10	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Gross premiums written	  	$	163	 	 	$	29	 	 	$	68	 	 	$	15	 	 	$	208	 	 	$	320	 	
Net premiums written	  	 	161	 	 	 	26	 	 	 	68	 	 	 	14	 	 	 	208	 	 	 	316	 	
Net premiums earned	  	 	90	 	 	 	96	 	 	 	111	 	 	 	134	 	 	 	179	 	 	 	520	 	
Losses and loss expenses	  	 	83	 	 	 	97	 	 	 	116	 	 	 	89	 	 	 	86	 	 	 	388	 	
Policy acquisition costs	  	 	2	 	 	 	—  	 	 	 	2	 	 	 	9	 	 	 	11	 	 	 	22	 	
Administrative expenses	  	 	4	 	 	 	2	 	 	 	4	 	 	 	10	 	 	 	24	 	 	 	40	 	
 	  				 				 				 				 				 				
Underwriting income (loss)	  	 	1	 	 	 	(3	)	 	 	(11	)	 	 	26	 	 	 	58	 	 	 	70	 	
							
Net investment income	  	 	32	 	 	 	29	 	 	 	29	 	 	 	36	 	 	 	53	 	 	 	147	 	
Net realized gains (losses)	  	 	9	 	 	 	13	 	 	 	(3	)	 	 	(32	)	 	 	5	 	 	 	(17	)	
Interest expense	  	 	—  	 	 	 	—  	 	 	 	2	 	 	 	1	 	 	 	2	 	 	 	5	 	
Other (income) expense	  	 	(11	)	 	 	(15	)	 	 	(22	)	 	 	—  	 	 	 	11	 	 	 	(26	)	
Income tax expense	  	 	6	 	 	 	4	 	 	 	—  	 	 	 	11	 	 	 	20	 	 	 	35	 	
 	  				 				 				 				 				 				
Net income	  	 	47	 	 	 	50	 	 	 	35	 	 	 	18	 	 	 	83	 	 	 	186	 	
							
Net realized gains (losses)	  	 	9	 	 	 	13	 	 	 	(3	)	 	 	(32	)	 	 	5	 	 	 	(17	)	
Tax expense (benefit) on net realized gains (losses)	  	 	2	 	 	 	2	 	 	 	(2	)	 	 	1	 	 	 	7	 	 	 	8	 	
 	  				 				 				 				 				 				
Income excluding net realized gains (losses) (1)	  	$	40	 	 	$	39	 	 	$	36	 	 	$	51	 	 	$	85	 	 	$	211	 	
 	  				 				 				 				 				 				
Combined ratio	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss and loss expense ratio	  	 	92.2	%	 	 	101.3	%	 	 	104.7	%	 	 	66.1	%	 	 	48.0	%	 	 	74.6	%	
Policy acquisition cost ratio	  	 	2.2	%	 	 	-0.1	%	 	 	2.3	%	 	 	7.0	%	 	 	5.9	%	 	 	4.3	%	
Administrative expense ratio	  	 	4.6	%	 	 	1.8	%	 	 	2.7	%	 	 	7.5	%	 	 	13.7	%	 	 	7.5	%	
 	  				 				 				 				 				 				
Combined ratio	  	 	99.0	%	 	 	103.0	%	 	 	109.7	%	 	 	80.6	%	 	 	67.6	%	 	 	86.4	%	
 	  				 				 				 				 				 				
Large losses and other items	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss portfolio transfers (2)	  	$	—  	 	 	$	8	 	 	$	19	 	 	$	—  	 	 	$	—  	 	 	$	27	 	
Large losses (before tax)	  	$	—  	 	 	$	—  	 	 	$	11	 	 	$	—  	 	 	$	—  	 	 	$	11	 	
Prior period development	  	$	1	 	 	$	(8	)	 	$	(14	)	 	$	(5	)	 	$	(2	)	 	$	(29	)	
							
% Change versus prior year period	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written	  	 	-23	%	 	 	-91	%	 	 	-35	%	 	 	-89	%	 	 	-60	%	 	 	-70	%	
Net premiums earned	  	 	-50	%	 	 	-80	%	 	 	-46	%	 	 	-38	%	 	 	-14	%	 	 	-53	%	
							
Other ratios	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net premiums written/gross premiums written	  	 	99	%	 	 	90	%	 	 	100	%	 	 	93	%	 	 	100	%	 	 	99	%	

(1)	See page 21 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 11	

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

 	  	Total
	 	 	Ongoing
	 	 	Run-off (1)
	 	
 	  	Unpaid Losses
	 	 	Unpaid Losses
	 	 	Unpaid Losses
	 	
 	  	Gross
	 	 	Ceded
	 	 	Net
	 	 	Gross
	 	 	Ceded
	 	 	Net
	 	 	Gross
	 	 	Ceded
	 	 	Net
	 	
Balance at December 31, 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)	  	 	(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	 	
										
Losses and loss expenses incurred	  	 	2,536	 	 	 	750	 	 	 	1,786	 	 	 	2,492	 	 	 	728	 	 	 	1,764	 	 	 	44	 	 	 	22	 	 	 	22	 	
Losses and loss expenses paid	  	 	(2,028	)	 	 	(797	)	 	 	(1,231	)	 	 	(1,847	)	 	 	(695	)	 	 	(1,152	)	 	 	(181	)	 	 	(102	)	 	 	(79	)	
Other (incl. foreign exch. revaluation) (2)	  	 	(595	)	 	 	(596	)	 	 	1	 	 	 	(669	)	 	 	(671	)	 	 	2	 	 	 	74	 	 	 	75	 	 	 	(1	)	
 	  				 				 				 				 				 				 				 				 				
Balance at March 31, 2005	  	$	31,426	 	 	$	13,694	 	 	$	17,732	 	 	$	23,207	 	 	$	7,817	 	 	$	15,390	 	 	$	8,219	 	 	$	5,877	 	 	$	2,342	 	

(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)	Novation of a contract for $597M.	

Loss Reserve Rollforward	 	Page 12	

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

 	  	March 31
2005
	 	 	December 31
2004
	 	
Reinsurance recoverable on paid losses & loss expenses	  	 	 	 	 	 	 	 	
Active operations	  	$	796	 	 	$	789	 	
Brandywine	  	 	385	 	 	 	398	 	
Westchester	  	 	24	 	 	 	24	 	
 	  				 				
Total	  	$	1,205	 	 	$	1,211	 	
 	  				 				
Reinsurance recoverable on unpaid losses & loss expenses	  	 	 	 	 	 	 	 	
Active operations	  	$	8,819	 	 	$	9,534	 	
Brandywine	  	 	4,796	 	 	 	4,720	 	
Westchester	  	 	705	 	 	 	717	 	
 	  				 				
Total	  	$	14,320	 	 	$	14,971	 	
 	  				 				
Gross reinsurance recoverable	  	 	 	 	 	 	 	 	
Active operations	  	$	9,615	 	 	$	10,323	 	
Brandywine	  	 	5,181	 	 	 	5,118	 	
Westchester	  	 	729	 	 	 	741	 	
 	  				 				
Total	  	$	15,525	 	 	$	16,182	 	
 	  				 				
Bad debt reserve	  	 	 	 	 	 	 	 	
Active operations	  	$	(577	)	 	$	(547	)	
Brandywine	  	 	(302	)	 	 	(341	)	
Westchester	  	 	(38	)	 	 	(40	)	
 	  				 				
Total	  	$	(917	)	 	$	(928	)	
 	  				 				
Net reinsurance recoverable	  	 	 	 	 	 	 	 	
Active operations	  	$	9,038	 	 	$	9,776	 	
Brandywine	  	 	4,879	 	 	 	4,777	 	
Westchester	  	 	691	 	 	 	701	 	
 	  				 				
Total	  	$	14,608	 	 	$	15,254	 	

			
Reinsurance Recoverable	 	Page 13	

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

 	  	December 31, 2004
	 	
 	  	Recoverable
	  	Bad Debt
	  	% of Gross
	 	
Categories	  	 	 	  	 	 	  	 	 	
Top 10 reinsurers	  	$	5,015	  	$	95	  	1.9	%	
Other reinsurers balances >$20 million	  	 	2,381	  	 	76	  	3.2	%	
Other reinsurers balances <$20 million	  	 	577	  	 	31	  	5.4	%	
Mandatory pools and government agencies	  	 	693	  	 	3	  	0.4	%	
Structured settlements	  	 	207	  	 	1	  	0.5	%	
Captives	  	 	931	  	 	1	  	0.1	%	
Other (1)	  	 	519	  	 	340	  	65.5	%	
 	  			  			  			
Total	  	$	10,323	  	$	547	  	5.3	%	

At December 31, 2004, $7.3 billion of the active operations’ recoverables were from rated reinsurers, of which 85.7% were rated the equivalent of A- or better by internationally recognized rating agencies. The Company held collateral of $2.9 billion, of which $1.7 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 (including Transatlantic	  	AGRI General Ins Co	  	Independence Blue Cross (Amerihealth)	
    Reinsurance Company)	  	AIOI Insurance	  	ING - Internationale Nederlanden GRP	
Berkshire Hathaway Insurance Group	  	Allianz	  	IRB - Brasil Reaseguros S.A.	
CIGNA (3)	  	Arch Capital	  	Liberty Mutual Insurance Companies	
Electric Insurance Company	  	Aspen Insurance Holdings Ltd	  	Overseas Partners Ltd	
GE Insurance Solutions	  	AVIVA	  	Partner Re	
HDI Haftpflichtverband Der Deutschen Industrie VAG	  	AXA	  	Platinum Underwriters	
Lloyd’s of London	  	Chubb Insurance Group	  	QBE Insurance	
Munich Re	  	CNA Insurance Companies	  	Renaissance Re Holdings Ltd	
Swiss Re Group	  	Converium Group	  	Royal & Sun Alliance Insurance Group	
XL Capital Group	  	DaimlerChrysler Insurance Company	  	SCOR Group	
 	  	Endurance Specialty	  	Sompo Japan	
 	  	Everest Re Group	  	St. Paul Travelers Companies	
 	  	Fairfax Financial	  	Toa Reinsurance Company	
 	  	Federal Crop Insurance Corp	  	White Mountains Insurance Group	
 	  	FM Global Group	  	WR Berkley Corp	
 	  	Gerling Group	  	Zurich Financial Services Group	

(1)	Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our 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.	
(3)	Contract was novated in the first quarter of 2005.	

Reinsurance Rec-Active	 	Page 14	

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

 	  	December 31, 2004
	 	
 	  	Recoverable
	  	Bad Debt
	  	% of Gross
	 	
Categories	  	 	 	  	 	 	  	 	 	
Top 10 reinsurers	  	$	8,222	  	$	121	  	1.5	%	
Other reinsurers balances >$20 million	  	 	3,799	  	 	183	  	4.8	%	
Other reinsurers balances <$20 million	  	 	866	  	 	68	  	7.9	%	
Mandatory pools and government agencies	  	 	726	  	 	4	  	0.6	%	
Structured settlements	  	 	489	  	 	2	  	0.4	%	
Captives	  	 	1,052	  	 	1	  	0.1	%	
Other (1)	  	 	1,028	  	 	549	  	53.4	%	
 	  			  			  			
Total	  	$	16,182	  	$	928	  	5.7	%	

At December 31, 2004, $11.8 billion of consolidated recoverables were from rated reinsurers, of which 89% 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)
	
Berkshire Hathaway Insurance Group	  	AGRI General Ins Co	  	Hartford Insurance Group	
CIGNA (3)	  	AIOI Insurance	  	Independence Blue Cross (Amerihealth)	
Electric Insurance Company	  	Allianz	  	ING - Internationale Nederlanden GRP	
Equitas	  	Allstate	  	IRB - Brasil Reaseguros S.A.	
GE Insurance Solutions	  	American International Group	  	Kemper	
HDI Haftpflichtverband Der Deutschen Industrie VAG	  	Arch Capital	  	Koren Reinsurance Company	
Lloyd’s of London	  	Aspen Insurance Holdings Ltd	  	Liberty Mutual Insurance Companies	
Munich Re	  	Assicurazioni Generali SPA	  	Millea Holdings	
Swiss Re Group	  	AVIVA	  	Mitsui Sumitomo Insurance Company Ltd.	
XL Capital Group	  	AXA	  	Overseas Partners Ltd	
 	  	Chubb Insurance Group	  	Partner Re	
 	  	CNA Insurance Companies	  	Platinum Underwriters	
 	  	Converium Group	  	QBE Insurance	
 	  	DaimlerChrysler Insurance Company	  	Renaissance Re Holdings Ltd	
 	  	Dominion Ins. Co. Ltd	  	Royal & Sun Alliance Insurance Group	
 	  	Dukes Place Holdings	  	SCOR Group	
 	  	Endurance Specialty	  	Sompo Japan	
 	  	Everest Re Group	  	St. Paul Travelers Companies	
 	  	Fairfax Financial	  	Toa Reinsurance Company	
 	  	Federal Crop Insurance Corp	  	Trenwick Group	
 	  	FM Global Group	  	White Mountains Insurance Group	
 	  	Gerling Group	  	WR Berkley Corp	
 	  	 	  	Zurich Financial Services Group	

(1)	Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our 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.	
(3)	Contract was novated in the first quarter of 2005.	

Reinsurance Rec-Consolidated	 	Page 15	

					
	 	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, 2004	  	$	717	 	 	$	494	 	 	$	1,211	 	
Bad debt reserve at 12/31/04	  	 	37	 	 	 	272	 	 	 	309	 	
% of gross	  	 	5.2	%	 	 	55.1	%	 	 	25.5	%	
 	  				 				 				
Net balance at December 31, 2004 (3) 	  	$	680	 	 	$	222	 	 	$	902	 	
 	  				 				 				
Gross balance at March 31, 2005	  	$	713	 	 	$	492	 	 	$	1,205	 	
Bad debt reserve at 3/31/05	  	 	37	 	 	 	268	 	 	 	305	 	
% of gross	  	 	5.2	%	 	 	54.5	%	 	 	25.3	%	
 	  				 				 				
Net balance at March 31, 2005 (3) 	  	$	676	 	 	$	224	 	 	$	900	 	

(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.	
(3)	The current quarter allocation between general collections and other is estimated based on prior quarter balances. Balances are adjusted to actual in the next quarter.	

Reinsurance Recoverable 4	 	Page 16	

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

 	  	March 31
2005
	 	 	December 31
2004
	 	
Market Value	  	 	 	 	 	 	 	 	
Fixed maturities available for sale	  	$	20,188	 	 	$	22,741	 	
Fixed maturities held to maturity	  	 	3,207	 	 	 	—  	 	
Short-term investments	  	 	2,135	 	 	 	2,140	 	
 	  				 				
Total	  	$	25,530	 	 	$	24,881	 	
 	  				 				
Asset Allocation by Market Value	  	 	 	 	 	 	 	 	
Treasury	  	$	1,713	 	 	$	1,536	 	
Agency	  	 	1,495	 	 	 	1,527	 	
Corporate	  	 	7,532	 	 	 	7,530	 	
Mortgage-backed securities	  	 	5,482	 	 	 	5,010	 	
Asset-backed securities	  	 	1,209	 	 	 	1,217	 	
Municipal	  	 	559	 	 	 	566	 	
Non-US	  	 	5,405	 	 	 	5,376	 	
Cash & cash equivalent	  	 	2,135	 	 	 	2,119	 	
 	  				 				
Total	  	 	25,530	 	 	$	24,881	 	
 	  				 				
Credit Quality by Market Value	  	 	 	 	 	 	 	 	
AAA	  	$	14,655	 	 	$	13,800	 	
AA	  	 	2,459	 	 	 	2,618	 	
A	  	 	4,392	 	 	 	4,336	 	
BBB	  	 	2,176	 	 	 	2,269	 	
BB	  	 	817	 	 	 	774	 	
B	  	 	982	 	 	 	1,041	 	
Other	  	 	49	 	 	 	43	 	
 	  				 				
Total	  	 	25,530	 	 	$	24,881	 	
 	  				 				
Cost/Amortized Cost	  	 	 	 	 	 	 	 	
Fixed maturities available for sale	  	$	20,066	 	 	$	22,271	 	
Fixed maturities held to maturity	  	 	3,211	 	 	 	—  	 	
Short term investments	  	 	2,135	 	 	 	2,140	 	
 	  				 				
Subtotal	  	 	25,412	 	 	 	24,411	 	
Equity securities	  	 	1,170	 	 	 	1,061	 	
Other investments	  	 	463	 	 	 	450	 	
 	  				 				
Total	  	 	27,045	 	 	$	25,922	 	
 	  				 				
Avg. duration of fixed maturities, adj. for int. rate swaps	  	 	3.1 years	 	 	 	3.4 years	 	
Avg. market yield of fixed maturities	  	 	4.5	%	 	 	4.1	%	
Avg. credit quality	  	 	AA	 	 	 	AA	 	

Investments	 	Page 17	

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

 	  	Three months ended March 31, 2005
	 	
 	  	Net Realized
Gains
(Losses) (1)
	 	 	Net Unrealized
Gains
(Losses)
	 	 	Net
Impact
	 	
Investment Portfolio Gains (Losses)	  	 	 	 	 	 	 	 	 	 	 	 	
Fixed maturities	  	$	(3	)	 	$	(332	)	 	$	(335	)	
Interest rate swaps	  	 	2	 	 	 	—  	 	 	 	2	 	
Equity securities	  	 	14	 	 	 	(23	)	 	 	(9	)	
Equity and fixed income derivatives	  	 	(2	)	 	 	—  	 	 	 	(2	)	
Foreign exchange gains (losses)	  	 	(3	)	 	 	—  	 	 	 	(3	)	
Other	  	 	2	 	 	 	16	 	 	 	18	 	
 	  				 				 				
Total inv. portfolio gains (losses)	  	 	10	 	 	 	(339	)	 	 	(329	)	
Other FAS 133 adjustments	  	 	(14	)	 	 	—  	 	 	 	(14	)	
 	  				 				 				
Total gains (losses)	  	 	(4	)	 	 	(339	)	 	 	(343	)	
Income tax expense (benefit)	  	 	4	 	 	 	(69	)	 	 	(65	)	
 	  				 				 				
Net gains (losses)	  	$	(8	)	 	$	(270	)	 	$	(278	)	

(1)	The quarter includes impairments of $20M for fixed maturities and $1M for equities.	

 	  	Three months ended March 31, 2004
	 	
 	  	Net Realized
Gains
(Losses) (2)
	 	 	Net Unrealized
Gains
(Losses)
	 	 	Net
Impact
	 	
Investment Portfolio Gains (Losses)	  	 	 	 	 	 	 	 	 	 	 	 	
Fixed maturities	  	$	55	 	 	$	175	 	 	$	230	 	
Interest rate swaps	  	 	(14	)	 	 	—  	 	 	 	(14	)	
Equity securities	  	 	28	 	 	 	(4	)	 	 	24	 	
Equity and fixed income derivatives	  	 	13	 	 	 	—  	 	 	 	13	 	
Foreign exchange gains (losses)	  	 	5	 	 	 	—  	 	 	 	5	 	
Other	  	 	(7	)	 	 	4	 	 	 	(3	)	
 	  				 				 				
Total inv. portfolio gains (losses)	  	 	80	 	 	 	175	 	 	 	255	 	
Other FAS 133 adjustments	  	 	(23	)	 	 	—  	 	 	 	(23	)	
 	  				 				 				
Total gains (losses)	  	 	57	 	 	 	175	 	 	 	232	 	
Income tax expense (benefit)	  	 	21	 	 	 	48	 	 	 	69	 	
 	  				 				 				
Net gains (losses)	  	$	36	 	 	$	127	 	 	$	163	 	

(2)	The quarter includes impairments of $1M for fixed maturities and $1M for equities.	

Investment Gains (Losses)	 	Page 18	

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

 	  	March 31
2005
	 	 	December 31
2004
	 	 	December 31
2003
	 	
Total short-term debt	  	$	147	 	 	$	146	 	 	$	546	 	
Total long-term debt	  	 	1,849	 	 	 	1,849	 	 	 	1,349	 	
 	  				 				 				
Total debt	  	 	1,996	 	 	 	1,995	 	 	 	1,895	 	
				
Total trust preferreds	  	 	412	 	 	 	412	 	 	 	475	 	
				
Perpetual preferred	  	 	557	 	 	 	557	 	 	 	557	 	
Ordinary shareholders’ equity	  	 	9,408	 	 	 	9,279	 	 	 	8,278	 	
 	  				 				 				
Total shareholders’ equity	  	$	9,965	 	 	$	9,836	 	 	$	8,835	 	
 	  				 				 				
Total capitalization	  	$	12,373	 	 	$	12,243	 	 	$	11,205	 	
Tangible shareholders’ equity (1)	  	$	7,357	 	 	$	7,224	 	 	$	6,124	 	
				
Leverage ratios	  	 	 	 	 	 	 	 	 	 	 	 	
Debt/ total capitalization	  	 	16.1	%	 	 	16.3	%	 	 	16.9	%	
Debt plus trust preferreds/ total capitalization	  	 	19.5	%	 	 	19.7	%	 	 	21.2	%	
Debt/ tangible equity	  	 	27.1	%	 	 	27.6	%	 	 	30.9	%	
Debt plus trust preferreds/ tangible equity	  	 	32.7	%	 	 	33.3	%	 	 	38.7	%	
Debt plus total preferred stock/ total capitalization	  	 	24.0	%	 	 	24.2	%	 	 	26.1	%	

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

Capital Structure	 	Page 19	

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

 	  	Three months ended March 31
	 	
 	  	2005
	 	 	2004
	 	
Numerator	  	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	441	 	 	$	411	 	
Perpetual preferred dividend	  	 	(11	)	 	 	(11	)	
 	  				 				
Income to ordinary shares, excl. net realized gains (losses)	  	 	430	 	 	 	400	 	
			
Net realized gains (losses), net of income tax	  	 	(8	)	 	 	36	 	
 	  				 				
Net income available to the holders of ordinary shares	  	$	422	 	 	$	436	 	
 	  				 				
Rollforward of ordinary shares	  	 	 	 	 	 	 	 	
Ordinary shares - beginning of period	  	 	284,478,525	 	 	 	279,897,193	 	
Issued under employee stock purchase plan	  	 	109,411	 	 	 	125,631	 	
Stock (cancelled) granted	  	 	1,344,217	 	 	 	1,259,605	 	
Issued for option exercises	  	 	1,421,174	 	 	 	1,432,480	 	
 	  				 				
Ordinary shares - end of period	  	 	287,353,327	 	 	 	282,714,909	 	
 	  				 				
Denominator	  	 	 	 	 	 	 	 	
Weighted average shares outstanding	  	 	283,179,820	 	 	 	278,937,204	 	
Effect of other dilutive securities	  	 	4,385,550	 	 	 	5,352,364	 	
 	  				 				
Adj. wtd. avg. shares outstanding and assumed conversions	  	 	287,565,370	 	 	 	284,289,568	 	
 	  				 				
Basic earnings per share	  	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	1.52	 	 	$	1.43	 	
Net realized gains (losses)	  	 	(0.03	)	 	 	0.13	 	
 	  				 				
Net income	  	$	1.49	 	 	$	1.56	 	
 	  				 				
Diluted earnings per share	  	 	 	 	 	 	 	 	
Income excluding net realized gains (losses) (1)	  	$	1.49	 	 	$	1.40	 	
Net realized gains (losses)	  	 	(0.03	)	 	 	0.13	 	
 	  				 				
Net income	  	$	1.46	 	 	$	1.53	 	

(1)	See page 21 Non-GAAP Financial Measures.	

Earnings per share	 	Page 20	

					
	 	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 22.
 
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) and the tax expense on net realized gains (losses). 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. We believe these amounts are largely independent of our business and including them would distort the analysis of trends. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

 	  	1Q-05
	 	 	4Q-04
	  	3Q-04
	 	 	2Q-04
	  	1Q-04
	  	Full Year
2004
	
Net income (loss), as reported	  	$	433	 	 	$	282	  	$	(3	)	 	$	413	  	$	447	  	$	1,139	
Net realized gains (losses)	  	 	(4	)	 	 	128	  	 	(33	)	 	 	43	  	 	57	  	 	195	
Tax expense on net realized gains (losses)	  	 	4	 	 	 	12	  	 	1	 	 	 	10	  	 	21	  	 	44	
 	  				 			  				 			  			  			
Income excluding net realized gains (losses)	  	$	441	 	 	$	166	  	$	31	 	 	$	380	  	$	411	  	$	988	

			
Reconciliation Non-GAAP	 	Page 21	

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

 	  	March 31
2005
	 	 	December 31
2004
	 	
Shareholders’ equity	  	$	9,965	 	 	$	9,836	 	
Net proceeds from assumed conversions of options	  	 	271	 	 	 	312	 	
Proceeds from issuance of preferred shares	  	 	(557	)	 	 	(557	)	
 	  				 				
Numerator for diluted book value per share calculation	  	 	9,679	 	 	 	9,591	 	
Less: goodwill	  	 	2,608	 	 	 	2,612	 	
 	  				 				
Numerator for diluted tangible book value per share	  	$	7,071	 	 	$	6,979	 	
 	  				 				
Ordinary shares outstanding - end of period	  	 	287,353,327	 	 	 	284,478,525	 	
Shares issued from assumed conversions of options	  	 	9,346,765	 	 	 	10,830,932	 	
 	  				 				
Denominator for diluted and diluted tangible book value	  	 	296,700,092	 	 	 	295,309,457	 	
 	  				 				
Book value per ordinary share	  	$	32.74	 	 	$	32.62	 	
Diluted book value per ordinary share	  	$	32.62	 	 	$	32.48	 	
Diluted tangible book value per ordinary share	  	$	23.83	 	 	$	23.63	 	

Reconciliation Book Value	 	Page 22	

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

 	  	1Q-05
	 	 	4Q-04
	 	 	3Q-04
	 	 	2Q-04
	 	 	1Q-04
	 	 	Full Year
2004
	 	
Net income (loss)	  	$	433	 	 	$	282	 	 	$	(3	)	 	$	413	 	 	$	447	 	 	$	1,139	 	
Net unrealized appreciation (depreciation) on investments	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized appreciation (depreciation) on investments	  	 	(271	)	 	 	176	 	 	 	393	 	 	 	(622	)	 	 	236	 	 	 	183	 	
Reclassification adjustment for net realized gains (losses) included in net income	  	 	(84	)	 	 	(96	)	 	 	(32	)	 	 	(83	)	 	 	(61	)	 	 	(272	)	
Unrealized appreciation on investments transferred from available for sale to held to maturity during the period	  	 	16	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
Cumulative translation adjustment	  	 	(13	)	 	 	128	 	 	 	21	 	 	 	(24	)	 	 	2	 	 	 	127	 	
Minimum pension liability adjustment	  	 	2	 	 	 	(45	)	 	 	3	 	 	 	1	 	 	 	(2	)	 	 	(43	)	
Income tax (expense) benefit related to other comprehensive income items	  	 	73	 	 	 	(35	)	 	 	(83	)	 	 	180	 	 	 	(41	)	 	 	21	 	
 	  				 				 				 				 				 				
Other comprehensive income (loss)	  	 	(277	)	 	 	128	 	 	 	302	 	 	 	(548	)	 	 	134	 	 	 	16	 	
 	  				 				 				 				 				 				
Comprehensive income (loss)	  	$	156	 	 	$	410	 	 	$	299	 	 	$	(135	)	 	$	581	 	 	$	1,155	 	

			
Comprehensive Income	 	Page 23	

					
	 	ACE Limited
 
Glossary	 	 	
 
Annualized return on ordinary shareholders’ equity (ROE): Income (loss) excluding net realized gains (losses) less perpetual preferred securities 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 divided by average ordinary shareholders’ equity. 
 
Tangible equity: Shareholders’ equity less goodwill. 
 
Total capitalization: Short-term debt, long-term debt, trust preferreds, perpetual preferred shares and shareholders’ equity. 
 
YTD: Year to date. 

Glossary	 	Page 24